8K out.
Funding:
1.01 Entry into a Material Definitive Agreement.
On February 8, 2021, the Registrant entered into a material definitive agreement with YA II PN, Ltd., a Cayman Islands exempt company, comprised of a securities purchase agreement, convertible debenture, warrant and registration rights agreement. Except than for the material definitive agreement, no material relationship exists between the Registrant and YA II PN, Ltd.
Pursuant to the securities purchase agreement and Section 4(2) and/or Rule 506 of Regulation D, under the Securities Act of 1933, the Registrant sold YA II PN, Ltd. debentures in the aggregate principal amount of USD $1,000,000, in three separate closings, convertible into shares of the Company’s common stock at the lower of the fixed price of $0.40 per share, or 70% of the lowest VWAP of the Company’s Common Stock during the 20 Trading Days immediately preceding the Conversion Date. The first closing occurred upon the execution of the material definitive agreement in the face amount of $500,000, for a purchase price of $475,000. The second closing is in the face amount of $250,000 for a purchase price of $237,500 and the third closing in the face amount of $250,000 for a purchase price of $237,500.
To induce YA II PN, Ltd.to execute and deliver the securities purchase agreement, the Company agreed to provide certain registration rights under the Securities Act of 1933 for the shares registrable under the convertible debentures and warrants. The second closing is contingent upon the Registrant filing a registration statement with the Securities and Exchange Commission by February 26, 2021. Upon effectiveness of the registration statement, the third closing will be completed. The Registrant reserved an aggregate of 17,971,894 shares in anticipation of conversions under the debentures and warrant.
Contemporaneously with the first closing the Registrant sold to YA II PN, Ltd. a warrant to purchase 2,500,000 shares of the Registrant’s Common Stock at an exercise price of $0.40 per share. The warrant expires February 8, 2026.
YA II PN, Ltd. shall not have the right to convert any portion of the debentures or warrants, or receive shares of common stock as payment of interest hereunder to the extent that after giving effect to such conversion or receipt of such interest payment, YA II PN, Ltd., together with any of its affiliate, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to such conversion or receipt of shares as payment of interest.
