Item 8.01 Other Events
Floor Price Reset under 2022 Convertible Debenture
In connection with the Amendment, on March 22, 2023, (the "Reset Notice Date"), the Company issued a notice to the Investor pursuant to which the Floor Price was reset to $0.746 (the “Floor Reset Notice”). The Floor Reset Notice does not otherwise change any terms of the 2022 Convertible Debenture, as amended.
As a result of the adjusted Floor Price, a maximum of 57,555,366 shares of Common Stock may be issued upon conversion of the 2022 Convertible Debenture, including shares issued on or prior to the Reset Notice Date, subject to adjustment provisions included in the 2022 Convertible Debenture.
2023 Convertible Debenture
On March 27, 2023 (the “Effective Date”), the Company entered into a securities purchase agreement (the “2023 Purchase Agreement”) with the Investor, pursuant to which the Company sold and issued to the Investor a convertible debenture (the “2023 Convertible Debenture”) on the Effective Date in the principal amount of $1.0 million, which is convertible into shares of Common Stock, subject to certain conditions and limitations set forth in the 2023 Purchase Agreement.
The 2023 Convertible Debenture bears interest at an annual rate of 6.0% and has a maturity date of March 26, 2024. The 2023 Convertible Debenture provides a conversion right, in which any portion of the principal amount of the 2023 Convertible Debenture, together with any accrued but unpaid interest, may be converted into the Company’s Common Stock at a conversion price equal to the lower of (i) $0.50 or (ii) 90% of the lowest daily volume weighted average price of the Common Stock during the three (3) trading days immediately preceding the date of conversion (but not lower than a certain floor price, currently set at $0.104, that is subject to further adjustment in accordance with the terms of the 2023 Convertible Debenture).
The 2023 Convertible Debenture may not be converted into Common Stock to the extent such conversion would result in the Investor and its affiliates having beneficial ownership of more than 9.99% of the Company’s then outstanding shares of Common Stock; provided that this limitation may be waived by the Investor upon not less than 65 days’ prior notice to the Company. The 2023 Convertible Debenture provides the Company, subject to certain conditions, with a redemption right pursuant to which the Company, upon three (3) business days’ prior notice to the Investor in the case of a partial redemption or ten (10) business days’ notice in the case of a full redemption, may redeem, in whole or in part, any of the outstanding principal and interest thereon at a redemption price equal to 5.0% of the principal amount being redeemed.
In connection with the Purchase Agreement, the Company and Investor entered into a registration rights agreement (the “2023 Registration Rights Agreement”) pursuant to which the Company is required to file a registration statement registering the resale by the Investor of any shares of the Company’s Common Stock issuable upon conversion of the 2023 Convertible Debenture under the Securities Act of 1933, as amended. Pursuant to the 2023 Registration Rights Agreement, the Company is required to meet certain obligations with respect to, among other things, the timeliness of the filing and effectiveness of the Registration Statement. The Company is required to file such registration statement no later than 30 days following the Effective Date.
This Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.