Item 8.01 Other Events
On October 12, 2021, we entered into a securities purchase agreement (the
"Agreement") with an accredited investor (the "Debenture Holder") to place
Convertible Debentures (the "Debentures") with a maturity date of twelve months
after the issuance thereof in the aggregate principal amount of up to
$30,000,000 (the "Transaction"), provided that in case of an event of default,
the Debentures may become at the Debenture Holder's election immediately due and
payable. Pursuant to the Agreement, we issued a Debenture for $15,000,000 on
October 12, 2021 (the "First Debenture"), a Debenture for $10,000,000 on October
27, 2021 and a Debenture for $5,000,000 on November 12, 2021.
The Debenture Holder may convert the First Debenture in its sole discretion at
any time on or prior to maturity at the lower of $20.00 or 92.5% of the lowest
daily VWAPs during the 5 consecutive trading days immediately preceding the
conversion date or other date of determination, provided that as long as we are
not in default under the Debenture, the conversion price may never be less than
$10.00 (the "Floor Price") unless we lower it pursuant to the Agreement. We may
not convert any portion of a Debenture if such conversion would (i) result in
the holder beneficially owning more than 4.99% of our then issued and common
stock, provided that such limitation may be waived by the holder with 65 days'
notice and (ii) exceed the aggregate number of our shares that we may issue in a
transaction in compliance with our obligations under the rules or regulations of
Nasdaq Stock Market LLC.
Any time beginning 90 days after the issuance of a Debenture that the daily VWAP
is less than the Floor Price for 10 trading days in a period of 15 consecutive
trading days (each such occurrence, a "Triggering Event") and only for so long
as such conditions exist after a Triggering Event, we will be required to make
monthly payments in cash. Each monthly payment shall be in an amount equal to
the sum of (i) the principal amount outstanding as of the Triggering Date
divided by the number of months until the maturity date, (ii) a redemption
premium (as defined below) equal to 10% of the principal amount being redeemed,
and (iii) accrued and unpaid interest hereunder as of each payment date. Each
monthly payment obligation shall be reduced by any amounts converted since the
last monthly payment.
Our obligation to make monthly payments cease if any time after the applicable
Triggering Date, either (i) we provide the Holder a reset notice (each, a "Floor
Reset Notice") setting forth a reduced Floor Price which shall be equal to no
more than 85% of the Closing Bid Price on the Trading Day immediately prior to
such Reset Notice (and in no event greater than $10 per shares) and takes all
steps necessary to implement such Floor Price reset, including, without
limitation, applying for the additional listing of Conversion Shares on the
Primary Market, or (ii) the daily VWAP is greater than the Floor Price for a
period of 10 consecutive Trading Days, unless a subsequent Triggering Date
occurs.
On January 10, 2022, there was Triggering Event. As a result of that Triggering
Event, we have issued a Floor Reset Notice to the holder of the First Debenture
whereby the Floor Price for the First Debenture has been reset to $4.78. The
Floor Reset Notice does not otherwise change any terms of the First Debenture or
the other Debentures issued under the Agreement.
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