Pursuant to the Initial Financing Agreement, the Investors agreed to waive certain existing and prospective defaults and events of default under the Existing Notes, including the events of default under the Existing Notes described in the Company’s current report on Form 8-K filed with the SEC on November 3, 2023, and the requirement for the Company to comply with the minimum liquidity financial covenant in the Existing Notes until November 17, 2023 (the “Compliance Deadline”) to provide the Company with time to raise additional liquidity through various capital raising and cost cutting initiatives and strategic transactions (the “Strategic Plan”).
As of November 17, 2023, the Company has not been able to regain compliance with the minimum liquidity financial covenant in the Existing Note or other covenants which the Investors waived in connection with the Initial Financing. In addition, the Initial Financing Agreement included other covenants and agreements for which the Company has received waivers or extensions of its obligations to comply. The Company and the Investors continue to negotiate with respect to a refinancing of the Initial Financing and Additional Advance and have mutually agreed to extend the maturity date for the approximately $5.5 million, plus accrued interest, due on the Bridge Notes on November 17, 2023.
The Investors have agreed to extend the Compliance Deadline with respect to the minimum liquidity financial covenant in the Existing Notes, and the waiver of certain other events of default under the Existing Notes, to November 21, 2023, and the Maturity Date under the Bridge Notes to November 21, 2023. However, there can be no assurance that the Company and the Investors will be able to negotiate definitive documentation with respect to a refinancing of the Initial Financing and the Additional Advance by the amended Maturity Date or at all or that additional waivers or extensions of the Compliance Deadline will be granted.
The statements made herein concerning the refinancing of the Initial Financing and the Additional Advance include “forward-looking statements.” Specific forward- forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and can be identified by the use of, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “would,” “could” or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe any objectives, the Strategic Plan, the negotiation with respect to a refinancing of the Initial Financing and the Additional Advance are forward-looking. The forward- forward-looking statements are based on the Company’s current intent, belief, expectations, estimates and projections regarding the Company and a refinancing of the Initial Financing and the Additional Advance. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially. Accordingly, readers should not rely upon forward-looking statements as a prediction of actual results and actual results may vary materially from what is expressed in or indicated by the forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained herein.
| Item 2.03. |
Creation of a Direct Financial Obligation. |
The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the Additional Advance under the JMCM Note is incorporated by reference into this Item 2.03.
| Item 2.04. |
Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the events of default under the Existing Notes, the inability to repay the Bridge Notes and the Investors’ waiver thereof and extension of both the Compliance Deadline with respect to the Existing Notes and the Maturity Date under the Bridge Notes is incorporated by reference into this Item 2.04.
| Item 3.02. |
Unregistered Sales of Equity Securities. |
The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the issuance of the Additional Bridge Warrants is incorporated herein by reference into this Item 3.02.
The Additional Bridge Warrants and any Additional Warrant Shares issuable upon exercise of the Additional Bridge Warrants (collectively, the “Securities”) have not been, and will not be, registered under the Securities Act, or the securities laws of any other jurisdiction. The Securities were, and will be, offered and sold to JMCM in a transaction exempt from registration under the Securities Act in reliance on Section 4(a)(2) thereof and Rule 506(b) of Regulation D thereunder. JMCM is an “accredited investor” as defined in Regulation D, and is acquiring the Securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the Securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.
This current report on Form 8-K does not constitute an offer to sell any security, including the Additional Bridge Warrants or the Additional Warrant Shares, nor a solicitation for an offer to purchase any security, including the Additional Bridge Warrants or the Additional Warrant Shares, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration, qualification, or exemption under the securities laws of any such jurisdiction.