Item 1.01 Entry into a
Material Definitive Agreement.
Convertible Promissory
Note
On March 8, 2023, we
issued and sold a convertible promissory note with an aggregate principal amount of $4.5 million (the “Promissory Note”) in
a private placement to Yorkville under the Standby Equity Purchase Agreement dated as of January 24, 2023 between us and Yorkville.
We
intend to use the proceeds from the sale of the Promissory Note for working capital and other general corporate purposes or, if different,
in a manner consistent with the application thereof described in our prospectus relating to the SEPA filed with the Securities and Exchange
Commission on January 24, 2023, and included as a part of our Registration Statement on Form S-3.
The
holder may convert the Promissory Note into shares of our Class A Common Stock (the “Common Stock”) at a conversion price
of $0.50 (the “Conversion Price”) any time prior to the Maturity Date, subject to the terms and conditions of the Promissory
Note, provided that there may be no such conversion if such conversion would cause the holder to beneficially own more than 4.99% of our
common stock. The Promissory Note is to be repaid in four installments of $1,000,000 beginning on May 15, 2023 and ending on August 15,
2023 and one installment of $500,000 on September 15, 2023 (the “Maturity Date”). Interest shall not accrue on the outstanding
principal balance of the Promissory Note unless and until there is an event of default, upon the occurrence of which, interest shall accrue
at a rate of 15% per year until collected in full. The Promissory Note has a 10% original issue discount for gross proceeds of $4.05 million.
Any repayments of the Promissory Note in cash carries a 5% redemption premium.
The
foregoing description of the Promissory Note does not purport to be complete and is qualified in its entirety by reference to the full
text of the Promissory Note, a copy of which is filed with this Current Report on Form 8-K as Exhibit 4.1 hereto and is hereby incorporated
herein by reference.
Standard Equity Purchase Agreement
On March 8, 2023, we
entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”). Pursuant to the
SEPA, we have the right, but not the obligation, to sell to Yorkville up to $50,000,000 of its shares of Class A common stock, par value
$0.00001 per share, at our any time during the commitment period commencing on March 8, 2023, and terminating on the earliest of (i) the
first day of the month following the 24-month anniversary of the SEPA and (ii) the date on which Yorkville shall have made payment of
any advances requested pursuant to the SEPA for shares of our Class A common stock equal to the commitment amount of $50,000,000. Each
sale we request under the SEPA (an “Advance”) may be for a number of shares of Class A common stock equal to the greater of:
(i) an amount equal to 100% of the average daily traded amount of the shares during the five Trading Day immediately preceding the delivery
of a notice of an Advance (an “Advance Notice"), or (ii) 5,000,000 shares of common stock. The shares would be purchased at
95.0% of the Option 1 Market Price, which is the lowest VWAP (the daily volume weighted average price of our Class A common stock for
the applicable date on the Nasdaq Capital Market as reported by Bloomberg L.P. during regular trading hours) in each of the three consecutive
trading days commencing on the trading day following our submission of an Advance Notice to Yorkville, or 92.0% of the Option 2 Market
Price, which is the VWAP during the period commencing upon receipt of such Advance Notice and ending on 4:00 p.m. on such day. An Advance
with an Option 2 Market Price can only be selected with the consent of Yorkville. The purchase would be subject to certain limitations,
including that Yorkville could not purchase any shares that would result in it owning more than 9.99% of our Class A common stock or any
shares that, aggregated with any related transaction, would exceed 48,119,674,
which amount is equal to 19.9% of all shares of common stock outstanding on the date of the SEPA, unless shareholder approval was obtained
allowing for issuances in excess of such amount (the “Exchange Cap”). The Exchange Cap will not apply under certain circumstances,
including to the extent that (and only for so long as) the average price for all shares of Class A common stock purchased pursuant to
the SEPA shall equal or exceed the Minimum Price (as defined in Nasdaq Listing Rule 5635(d)).
In addition, subject
to Yorkville’s consent, we may, from time to time, request pre-advance loans (each, a “Pre-Advance Loan”) from Yorkville,
in the aggregate not to exceed $50,000,000 and pursuant to the terms and conditions set forth in the SEPA and an accompanying form of
promissory note attached thereto. Pre-Advance Loans may be repaid with cash (including the proceeds of an Advance) or in shares of Class
A common stock if the holder elects to convert the promissory note issued in connection with such Pre-Advance Loan.
In connection with
the execution of the SEPA, we agreed to pay a commitment fee of $750,000 as consideration for its irrevocable commitment to purchase the
shares of Class A common stock upon the terms and subject to the satisfaction of the conditions set forth in the SEPA. Such commitment
fee shall be paid in installments in the amount of $50,000 each, which shall be paid from the proceeds of each Advance, provided that
any unpaid portion of the Commitment Fee shall be due and payable on the 6-month anniversary of the date hereof.
The foregoing is a
summary description of certain terms of the SEPA. For a full description of all terms, please refer to the copy of the SEPA that is filed
herewith as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
This Current Report on Form
8-K shall not constitute an offer to sell or a solicitation of an offer to buy any shares of Class A common stock, nor shall there be
any sale of shares of Class A common stock 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.
Subscription Agreement
On March 13, 2023,
we entered into a subscription agreement with Salvatore Palella (the “Buyer”), pursuant to which the Buyer agreed to purchase
3,000 shares of our Series B Preferred Stock for an aggregate purchase price of $500.
