This is good news?
Why did they pay almost 11% in fees?
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On July 24, 2020, we entered into a Securities Purchase Agreement (“SPA”) with Power Up Lending Group Ltd., a Virginia corporation (“Purchaser”), pursuant to which we issued and sold to the Purchaser a convertible promissory note, dated July 24, 2020 in the principal amount of $130,000 (the “Note”). We received $116,100 from the investment after the payment of expenses.
The maturity date for the Note is July 24, 2021. The Note bears interest at the rate of 10% per annum. All principal and accrued interest on the Note is convertible into shares of our common stock at the election of the Purchaser after 180 days at 60% of the lowest trading price for our common stock during the 20 trading day period immediately prior to conversion.
We have the right to prepay the Note at any time prior to 180 days following the closing date. The amount we are required to prepay increases from 120% to 140% of the principal amount plus accrued interest and other charges the closer we get to 180 days from closing.
The Note contains customary default events which, if triggered and not timely cured, will result in default interest and penalties.
The foregoing description of the SPA and the Note, and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the SPA and the Note, which are included in this Current Report as Exhibits 10.1 and 4.1, respectively, and are incorporated herein by reference.
If the Note is converted prior to us paying off such notes under the prepayment provisions, it would lead to substantial dilution to our shareholders as a result of the conversion discounted for the Note. There can be no assurance that there will be any funds available to pay of the Note, or if available, on terms that will be acceptable to us or our shareholders. If we fails to obtain such additional financing on a timely basis, Purchaser may convert the Note and sell the underlying shares, which may result in significant dilution to shareholders due to the conversion discount, as well as a significant decrease in our stock price.
