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Subsequent Events
12 Months Ended
Dec. 31, 2024
Subsequent Events [Abstract]  
Subsequent Events

Note 18 - Subsequent Events

 

Exchange Agreement with Streeterville Capital, LLC

 

On March 20, 2025, the Company entered into an Exchange Agreement with Streeterville Capital, LLC (the “Note Holder”), pursuant to which the Company issued 15,873 shares of its common stock in exchange for the cancellation of a $20,000 portion (the “Partitioned Note”) of an outstanding secured promissory note originally issued on August 14, 2024. The shares were issued at an effective price of $1.26 per share, representing the “Minimum Price” as defined in Nasdaq Listing Rule 5635(d). The Exchange was conducted pursuant to Section 3(a)(9) of the Securities Act of 1933 and did not involve any cash consideration or payment of commissions.

GEM Yield Bahamas Limited Litigation

 

On March 19, 2025, GYBL filed a complaint against the Company in the United States District Court for the Southern District of New York. The complaint relates to the GEM Warrants and asserts claims for breach of contract and declaratory relief regarding the validity and enforceability of the GEM Warrant. GYBL seeks unspecified monetary damages, specific performance of the GEM Warrant, and reimbursement of attorneys’ fees and costs. The Company believes the claims are without merit and intends to vigorously defend against the action. As of the date of this filing, the outcome of this matter is uncertain, and no loss contingency has been recorded in the financial statements.

 

Series A Preferred Stock Designation

 

On February 20, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock with the Delaware Secretary of State, establishing the terms of its Series A Convertible Preferred Stock (the “Series A Preferred Stock”), designating 1,000,000 shares of the 5,000,000 shares authorized but unissued class of the Company’s stock.  The Series A Preferred Stock has a stated value of $20 per share (the “Stated Value”), and a conversion price per share of $20 per share, subject to adjustments provided in the Certificate of Designation (the “Conversion Price”).

 

Acquisition of GTG Financial, Inc.

 

On February 20, 2025, the Company completed the acquisition of GTG Financial, Inc. (“GTG”), a California-based mortgage brokerage, acquired 100% of its outstanding shares from the seller (the “Acquired Shares”), Glenn Groves (the “Seller”), pursuant to a Stock Purchase Agreement (the “GTG Purchase Agreement”). The total purchase consideration is up to $4.2 million, subject to certain adjustments, consisting of $281,250 in shares of Series A Preferred Stock, $1,287,000 in restricted common shares to be issued within 90 days of closing, $1,344,750 in deferred cash payments (the “Cash Portion”) payable in three installments post-closing, and up to $1,287,000 in performance-based earn-out payments payable in cash or stock, subject to GTG achieving certain revenue and EBITDA targets over three successive 12-month periods.

 

Additionally, the GTG Purchase Agreement provides that, to the extent that, upon an Automatic Conversion (as defined in the Certificate of Designation), the aggregate value for the shares issuable upon conversion of the Series A Preferred Stock (the "Conversion Shares”) on the Automatic Conversion Date (as defined in the Certificate of Designation) is less than $281,250, as determined based on the volume-weighted average price of such Conversion Shares on the Automatic Conversion Date, then the Company will pay for such difference in value in cash or in shares of Common Stock, at the Company’s sole discretion, payable or issuable to the holder, as applicable, no later than 30 calendar days after the Automatic Conversion Date.

 

Further, to the extent that the Company does not pay the Cash Portion in full by the date that is 180 days of the closing date, then, beginning on the 181st day following the closing date, the outstanding amount of the Cash Portion will bear interest at a rate per annum equal to 4% and the Seller will have the right, at the Seller’s sole discretion and to the extent permitted by law, to rescind the transactions contemplated under the GTG Purchase Agreement, in which case the Seller will return any and all consideration paid by the Company in exchange for all the Acquired Shares, and the Company will return the Acquired Shares to the Seller, in each case in accordance with and subject to the terms and conditions of the GTG Purchase Agreement.

 

Amendments to the At the Market (ATM) Sales Agreement

 

On January 31, 2025, the Company entered into Amendment No. 1 to its Sales Agreement with A.G.P., which amended the original Sales Agreement. Amendment No. 1 reduced the floor price for sales under the Sales Agreement from $5.00 to $3.90 per share. On February 27, 2025, the Company entered into Amendment No. 2 to the Sales Agreement, further reducing the floor price from $3.90 to $0.01 per share. On the same date, the Company filed a prospectus supplement to reflect this change and to reduce the aggregate offering amount under the Sales Agreement from $14,275,000 to $11,700,000. Sales under the Sales Agreement may be made pursuant to our Form S-3 (as defined above), the related base prospectus, and applicable prospectus supplements. Under the terms of the Sales Agreement, the Company will pay A.G.P. a commission of 3.0% of gross proceeds and will reimburse A.G.P. for certain expenses. The Sales Agreement may be terminated by either party upon five days’ notice and will expire upon the earlier of the 36-month anniversary of the original agreement, the sale of all Placement Shares, or earlier termination by either party.

Subsequent to the year ended December 31, 2024, the Company issued an aggregate of 160,879 shares of its common stock pursuant to its ATM Offering, at an average offering price of $1.37 per share, for total gross proceeds of approximately $231,236. The shares were issued under the Form S-3 and related prospectus supplements.

 

On March 24, 2025, the Company provided notice to A.G.P. of its election to terminate the Sales Agreement, which termination was effective on March 29, 2025 in accordance with the terms of the Sales Agreement.

 

Warrant Adjustment on Follow On Offering

 

On November 24, 2023, the Company issued the Follow-On Warrants (as defined above) to purchase up to 2,400,000 shares of common stock in connection with a best-efforts public offering, pursuant to a placement agency agreement with Maxim Group LLC and a securities purchase agreement with certain purchasers. Pursuant to the anti-dilution adjustment provisions of the Follow-On Warrants, In connection with the Company’s entering into Amendment No. 1 to the Sales Agreement, and in accordance with the anti-dilution adjustment provisions of the Follow-On Warrants, the exercise price was adjusted downwards from $5.00 to $3.90. As a result thereof, the aggregate number of shares of common stock issuable upon exercise of the Follow-On Warrants increased to 3,076,924.

 

Subsequently, on February 27, 2025, in connection with the Company entering into Amendment No. 2 to the Sales Agreement, the exercise price for the Follow-On Warrants was further adjusted from $3.90 to $1.44, which is the floor price set forth in the Follow-On Warrants. As a result of this adjustment, the aggregate number of shares issuable upon exercise of the warrants increased to 8,333,336.

 

Advertising Agreement and Investment Agreement with Mercurius Media Capital LP

 

On March 7, 2025 (the “Closing Date”), the Company simultaneously entered into an Advertising Agreement and an Investment Agreement (collectively, the “Transaction Documents”) with Mercurius Media Capital LP (“MMC”). In accordance with the Transaction Documents, the Company agreed to issue and sell to MMC 250,000 shares of Series A Preferred Stock, for an aggregate purchase price of $5,000,000 (the “Consideration”). The Consideration will be paid to the Company in the form of a Credit (as defined in the Advertising Agreement) issued by MMC to the Company at the Closing Date in accordance with the terms and subject to the conditions set forth in the Advertising Agreement.

 

Additionally, the Investment Agreement further provides that, to the extent that the aggregate value of the Conversion Shares issued upon the Automatic Conversion is less than the Consideration, as determined based on the closing price of our common stock, as reported on the Nasdaq Stock Market on the applicable Automatic Conversion Date, then the Company shall pay for such difference in cash or in shares of common stock, at the Company’s sole discretion, no later than 30 calendar days after the Automatic Conversion Date, on the terms and subject to the conditions set forth in the Investment Agreement. The Investment Agreement further provides that at any time during the 2-month period beginning on the Closing Date, MMC will have the right, but not the obligation, to reinvest up to an additional $5,000,000 in the aggregate in the Company on the same terms and conditions as those set forth in the Transaction Documents.

 

Issuance of Restricted Stock Units Under the 2022 Equity Incentive Plan

 

On February 4, 2025, the compensation committee of the board of directors approved the issuance of 550,000 restricted stock units (“RSUs”) were issued under the 2022 Plan. These RSUs are subject to a two-year vesting schedule as follows: (i) 50% will vest on the date that is 12 months from the date of grant, (ii) 12.5% will vest on the date that is 15 months from the date of grant, (iii) 12.5% will vest on the date that is 18 months from the date of grant, (iv) 12.5% will vest on the date that is 21 months from the date of grant and (v) 12.5% will vest on the date that is 24 months from the date of grant.