Item 2. Unregistered Sales of Equity Securities
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following sets forth information regarding all unregistered securities sold by us in transactions that were exempt from the requirements of the Securities Act during the nine months ended September 30, 2025. Except where noted, all of the securities discussed in this Item 2 were all issued in reliance on the exemption under Section 4(a)(2) of the Securities Act as the investors were sophisticated or accredited investors and familiar with our operations.
As previously reported, on March 17, 2025, we issued a junior secured convertible promissory note (the “Initial Note”) to J.J. Astor & Co. (the “Lender”), in the principal amount of $6,625,000 (the “Principal Amount”), in relation to a Loan and Security Agreement by and between the Company, its subsidiaries, and the Lender (the “Loan Agreement”), under which the Company received $5,000,000, before fees; and on July 9, 2025, the Company entered into a Forbearance and Amendment to Loan Agreement and Note and an Additional Junior Secured Convertible Note, all of which amended the terms of the Loan Agreement and the Initial Note.
On July 9, 2025, we entered into a Second Amendment to Loan Agreement and Registration Rights Agreement (the “Amendment”), and an Additional Junior Secured Convertible Note (the “Additional Note”, together with the Amendment, the “New Loan Documents”), under which we agreed to issue the Lender the Additional Note in the principal amount of $5,940,000. Under the New Loan Documents, we received net proceeds of $971,025.65, with the remainder of the principal amount going to (a) a $176,000 origination fee, (b) an aggregate of $3,232,974.35 (the “Holdback Amounts”) representing (i) a $891,000 holdback amount to be applied to pay the first six Weekly Installment Payments when due under the Additional Note (hereinafter defined), (ii) $1,395,540.35 to be applied to pay the seven past due Weekly Installment Payments under the Initial Note, plus accrued interest thereon, and (iii) $946,434 to secure and cover the payment of the next six Weekly Installment Payments due under the Initial Note, (c) $20,000 to pay Lender’s legal fees, and (d) and original issuance discount of $1,540,000. The Additional Note is payable over forty equal weekly installments of $148,500, which may be paid in cash or, at the option of the Company once an applicable registration statement is effective, in free trading shares of its common stock issued at a twenty percent (20%) discount to the lower of either the previous day’s closing price or the average of the four lowest volume-weighted average prices during the prior twenty (20) trading days. The Additional Note does not bear interest unless in default and is subject to mandatory prepayment upon the receipt of proceeds from identified sales of equity interests in the Company and/or the receipt of certain extraordinary cash payments. In the event we default on the terms of the Initial Note or the Additional Note, the conversion price under the notes is a 50% discount to discount to the lower of either the previous day’s closing price or the average of the four lowest volume-weighted average prices during the prior twenty (20) trading days. The lender is secured by a junior lien in all assets of the Company, subject to exceptions for existing debt covenants of the Company. The Company reserved 15,000,000 shares of its common stock for issuance in connection with a conversion under the Additional Note and the Company agreed to issue the Lender 150,000 shares of its common stock as additional consideration for the loan. We received the funds under the New Loan Documents on July 15, 2025.
43
On September 17, 2025, the Lender also submitted a Notice of Conversion electing to convert $200,000 due under the Initial Note in exchange for 720,072 shares of our common stock and we issued the 720,072 shares of our common stock to the Lender, which securities were issued without a restrictive legend pursuant to a Rule 144 legal opinion submitted with the Notice of Conversion.
On September 26, 2025, the Company received a Notice of Conversion to convert $200,000 of the Principal Amount into 1,084,011 shares of the Company’s common stock. Pursuant to the terms of the Initial Note and the Notice of Conversions, the Company issued the Shares. The Shares were issued without a Rule 144 restrictive legend pursuant to a legal opinion received by the Company and its transfer agent
On September 29, 2025, we received another Notice of Conversion from the Lender converting $700,000 of the Principal Amount of the Initial Note into 5,235,602 shares of the Company’s common stock. Pursuant to the terms of the Initial Note and the Notice of Conversions, the Company issued the Shares. The Shares were issued without a Rule 144 restrictive legend pursuant to a legal opinion received by the Company and its transfer agent.
On October 2, 2025, we issued the Lender the 250,000 shares due as Commitment Shares under the Initial Note. These shares were issued as restricted stock with a standard Rule 144 restrictive legend.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.