| Item 1.01 | Entry into a Material Definitive Agreement. |
Securities Purchase Agreement
On March 3, 2023, the Company
entered into a Securities Purchase Agreement (the “Purchase Agreement”) with each of the purchasers party thereto (each,
including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”) and JGB Collateral, LLC,
a Delaware limited liability company, as collateral agent for the Purchasers (the “Agent”). Pursuant to the Purchase Agreement,
the Company agreed to sell to the Purchasers (i) 7% Original Issue Discount Senior Secured Debentures (the “Debentures”)
with an aggregate principal amount of $21,052,632 and (ii) warrants to purchase up to 5,000,000 shares of the Company’s common
stock, par value $0.00001 per share (the “Common Stock”), for an exercise price of $1.275 per share, a 50% premium to
the VWAP on the closing date (the “JGB Warrants”), subject to adjustments as set forth in the JGB Warrants, for a total purchase
price of $20,000,000. The Purchase Agreement contains customary representations, warranties and covenants. The transactions contemplated
by the Purchase Agreement were consummated on March 3, 2023.
Debentures
The Debentures bear interest
at a rate of 7% per annum, payable monthly in arrears as of the last trading day of each month and on the maturity date. The Debentures
mature on March 3, 2026. At the Company’s election, subject to certain conditions, interest can be paid in cash, shares of the
Company’s common stock, or a combination thereof. The Debentures are subject to an exit payment equal to 5% of the original principal
amount, or $1,052,632, payable on the maturity date or the date the Debentures are paid in full (the “Exit Payment”). Any
time after, March 3, 2024, the Company may irrevocably elect to redeem all of the then outstanding principal amount of the Debentures
for cash in an amount equal to the entire outstanding principal balance, including accrued and unpaid interest, the Exit Payment and a
prepayment premium in an amount equal to 3% of the outstanding principal balance as of the prepayment date (collectively, the “Prepayment
Amount”). Upon the entry into a definitive agreement that would effect a change in control (as defined in the Debentures) of the
Company, the Agent may require the Company to prepay the outstanding principal balance in an amount equal to the Prepayment Amount. Commencing
on March 3, 2024, at its option, the holder of a Debenture may require the Company to redeem 2% of the original principal amount of the
Debentures per calendar month which amount may at the Company’s election, subject to certain exceptions, be paid in cash, shares
of the Company’s common stock, or a combination thereof.
The Debentures contain customary
representations, warranties and covenants including among other things and subject to certain exceptions, covenants that restrict the
Company from incurring additional indebtedness, creating or permitting liens on assets, making or holding any investments, repaying outstanding
indebtedness, paying dividends or distributions and entering into transactions with affiliates. In addition, the Company is required to
maintain at least $7,500,000 on its balance sheet in a separate account and maintain certain quarterly revenue targets. The number of
shares of Company Common Stock issuable under the Debentures is subject to any limitations imposed by the relevant stock exchange on which
the Company’s Common Stock is traded unless shareholder approval is obtained.
The Company’s obligations
under the Debentures can be accelerated upon the occurrence of certain customary events of default. In the event of a default and acceleration
of the Company’s obligations, the Company would be required to pay the Prepayment Amount, liquidated damages and other amounts owing
in respect thereof through the date of acceleration.
JGB Warrants
The JGB Warrants are exercisable
for five years from September 3, 2023, at an exercise price of $1.275 per share, a 50% premium to the VWAP on the closing date, subject,
with certain exceptions, to adjustments in the event of stock splits, dividends, subsequent dilutive offerings and certain fundamental
transactions, as more fully described in the JGB Warrant.
The Company is obligated to
register the shares of Company Common Stock issuable upon exercise of the JGB Warrants pursuant to the terms of the Purchase Agreement.
The foregoing description
of the terms of the Purchase Agreement, Debentures and JGB Warrants and the transactions contemplated thereby do not purport to be complete
and is qualified in its entirety by reference to the Purchase Agreement, form of Debenture and form of JGB Warrant, which are included
as Exhibits 10.1, 4.1 and 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Omnia Subordinated Promissory Note
On March 3, 2023, the
Company executed a Subordinated Promissory Note (the “Subordinated Note”) with a principal amount of $2,864,767 in favor
of Omnia Ventures, LP (“Omnia”). The Subordinated Note refinanced the 12% Secured Promissory Note with a principal
amount of $1,000,000 dated as of October 29, 2021 payable to Omnia (the “October Note”) and the 12% Secured Promissory
Note with a principal amount of $1,500,000 dated as of January 14, 2022 payable to Omnia (the “January Note”, and
together with the October Note, the “Original Notes”), which were assumed by the Company in connection with the
acquisition of GVB Biopharma.
Under the terms of the Subordinated
Note, the Company is obligated to make interest payments in-kind (the “PIK Interest”). The PIK Interest accrues at a rate
of 26.5% per annum, payable monthly. The Company is not permitted to prepay all or any portion of the outstanding balance on the Subordinated
Note prior to maturity.
The Subordinated Note includes
customary event of default provisions.
The Subordinated Note is subordinated
to the Debenture pursuant to a Subordination Agreement between the Company, the Agent and Omnia.
Omnia Warrants
In connection with the
Subordinated Note, the Company issued to Omnia, warrants to purchase up to 675,000 shares of the Company’s Common Stock (the
“Omnia Warrants”). The Omnia Warrants are exercisable for seven years from September 3, 2023, at an exercise price of
$0.855 per share, subject, with certain exceptions, to adjustments in the event of stock splits, dividends, subsequent dilutive
offerings and certain fundamental transactions, as more fully described in the Omnia Warrants.
The foregoing description
of the terms of the Subordinated Promissory Note and Omnia Warrants and the transactions contemplated thereby do not purport to be complete
and is qualified in its entirety by reference to the Subordinate Promissory Note and the Form of Common Stock Purchase Warrant to Omnia,
which will be filed as exhibits to the Company’s Annual Report on Form 10- K for the year ended December 31, 2022.
On March 3, 2023, the Company issued a press
release relating to the transactions described herein which is attached hereto as Exhibit 99.1.
