Item 1.01 Entry into a Material Definitive Agreement.
$5,000,000 Preferred Stock Equity Financing
On
August 7, 2019, the Company entered into a Securities Purchase
Agreement with GHS Investments, LLC for the purchase of up to 5,000
shares of Series C Preferred Stock (the “Preferred
Stock”) at a stated value of $1,200 per share, or for a total
net proceeds of $5,000,000 in the event the entire 5,000 shares of
Preferred Stock are purchased (the “GHS
SPA”).
On
August 18, 2019, the Company received an initial tranche of
$250,000 under the GHS SPA.
$11,000,000 Common Stock Equity Financing
On
August 23, 2019, the Company entered into an Equity Financing
Agreement (“Equity Financing Agreement”) and
Registration Rights Agreement (“Registration Rights
Agreement”) with GHS Investments LLC, a Nevada limited
liability company (“GHS”). Under the terms of the
Equity Financing Agreement, GHS agreed to provide the Company with
up to $11,000,000 upon effectiveness of a registration statement on
Form S-1 (the “Registration Statement”) filed with the
U.S. Securities and Exchange Commission (the
“Commission”).
Following
effectiveness of the Registration Statement, the Company shall have
the discretion to deliver puts to GHS and GHS will be obligated to
purchase shares of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”) based on the
investment amount specified in each put notice. The maximum amount
that the Company shall be entitled to put to GHS in each put notice
shall not exceed two hundred percent (200%) of the average daily
trading dollar volume of the Company’s Common Stock during
the ten (10) trading days preceding the put, so long as such amount
does not exceed $500,000. Pursuant to the Equity Financing
Agreement, GHS and its affiliates will not be permitted to purchase
and the Company may not put shares of the Company’s Common
Stock to GHS that would result in GHS’s beneficial ownership
equaling more than 4.99% of the Company’s outstanding Common
Stock. The price of each put share shall be equal to eighty percent
(80%) of the Market Price (as defined in the Equity Financing
Agreement). Puts may be delivered by the Company to GHS until the
earlier of thirty-six (36) months after the effectiveness of the
Registration Statement or the date on which GHS has purchased an
aggregate of $11,000,000 worth of Common Stock under the terms of
the Equity Financing Agreement.
The
Registration Rights Agreement provides that the Company shall (i)
use its best efforts to file with the Commission the Registration
Statement within 30 days of the date of the Registration Rights
Agreement; and (ii) have the Registration Statement declared
effective by the Commission within 30 days after the date the
Registration Statement is filed with the Commission, but in no
event more than 90 days after the Registration Statement is
filed.
The
foregoing is only a brief description of the material terms of the
Equity Financing Agreement and Registration Rights Agreement, and
does not purport to be a complete description of the rights and
obligations of the parties thereunder, and such descriptions are
qualified in their entirety by reference to the Equity Financing
Agreement and Registration Rights Agreement filed as Exhibits 10.1,
and 10.2, respectively, to this Current Report on Form
8-K.