On January 15, 2020, Cool Holdings, Inc. received a notice of default of its obligations under a promissory note, reimbursement and indemnification agreement and security agreement (the Promissory Note), between the Company and GameStop Corp. dated September 26, 2019, as previously disclosed in the Company's Current Report on Form 8-K filed on September 26, 2019, for failure to make a quarterly installment payment of principal and interest under the Promissory Note due on December 25, 2019. As a result of the Default, GameStop provided notice to the Company that it was exercising its right under the Promissory Note to declare the entire unpaid balance of all obligations thereunder to be immediately due and payable. As a result of the Acceleration, a total of $8,132,315.74, representing the principal amount of the Promissory Note and interest accrued thereon through January 9, 2020, is immediately due and payable by the Company. Interest will continue to accrue, pursuant to the terms of the Promissory Note, until the amount due thereunder has been paid in full. The Company, working through its professional consultants retained on December 30, 2019, is currently in negotiations with GameStop to finalize an approach to resolve the Company's obligations arising from the Acceleration.