Item 2. Unregistered Sales of Equity Securities
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
Pursuant to the Secured SPA, Unsecured SPA, Unsecured Streeterville SPA, and all other eligible unsecured notes (together referred to as the “Notes”), each as amended or supplemented, the Company sold approximately $21.60 million in principal amount of convertible notes to investors since March 31, 2024. On August 2, 2024, Senyun International Ltd. (“Senyun”) exercised its right to convert the outstanding balance of its unsecured notes into Unsecured Convertible Notes pursuant to terms contained in the Securities Purchase Agreement between the Company and Senyun dated as of May 8, 2023. Senyun converted its outstanding balance and accrued interest into $21.1 million of Unsecured Convertible Notes. Under the Secured SPA, Unsecured SPA and Unsecured Streeterville SPA, investors can purchase an additional $506.8 million in aggregate principal amount of convertible notes. The Notes were issued, to the extent issued, or will be issued, to the extent unissued, pursuant to the exemption from registration requirements of the Securities Act, provided by Section 4(a)(2) thereof. See Note 7, Notes Payable in the notes to the Unaudited Condensed Consolidated Financial Statements for additional information regarding the Notes.
The SPA Notes, upon the funding, may be converted into shares of Class A Common Stock on a cashless basis at any time, at the request of the holders subject to the availability of registered shares or the note holder satisfying the holding period pursuant to Rule 144 of the Securities Act. As of August 9, 2024, the principal conversion price of the Notes under Secured SPA, Unsecured SPA and Unsecured Streeterville SPA was $0.7332 per share and the interest make whole conversion price was $10.896 per share. The principal conversion price is subject to a full ratchet anti-dilution price protection if the Company has a subsequent equity sale below $0.7332 per share. On August 2, 2024, the Company entered into a Waiver Agreement with certain investors, which allowed the investors to, upon the delivery of a conversion notice, adjust the principal conversion price and the interest conversion price to the lower of (i) the existing principal conversion price and (ii) 90% of prior day VWAP of the Company’s Common Stock. For every $1.0 million of notes converted, the Company would issue 25,555,555, 12,777,777, 5,111,111, 2,555,555, 1,568,466, 1,568,466, and 1,568,466 shares at a hypothetical per share price of common stock of $0.05, $0.10, $0.25, $0.50, $1.00, $2.50, and $5.00, respectively.
The shares to be issued upon conversion of the principal amounts under the convertible notes to each of the holders will be issued pursuant to the exemption from the registration requirements of the Securities Act provided by Section 3(a)(9) thereof.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
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