SUBSEQUENT EVENTS |
6 Months Ended |
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Mar. 31, 2025 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13. SUBSEQUENT EVENTS
We have evaluated all subsequent events through the date of this quarterly report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of March 31, 2025, and events that occurred after March 31, 2025, but which were not recognized in the financial statements as indicated below.
Red Road Holdings Corporation
Effective as of May 13, 2025, we entered into a Securities Purchase Agreement with Red Road Holdings Corporation (“Red Road” and such agreement, the “Red Road Securities Purchase Agreement”) for the principal amount of one hundred sixty-five thousand nine hundred dollars ($165,900), which is convertible into shares of our common stock, $ par value per share, upon the terms and subject to the limitations and conditions set forth in the Convertible Promissory Note (the “Red Road Convertible Note”), also effective as of May 13, 2025.
The Red Road Convertible Note matures on February 28, 2026, with an interest rate of ten percent (10%) per annum accruing from May 13, 2025, until maturity, upon acceleration or by prepayment. The Red Road Convertible Note may be prepaid as follows: (1) the period beginning on May 13, 2025, and ending on the date which is one hundred twenty (120) days with a prepayment percentage of 120%; or (2) the period beginning on the date which is one hundred twenty-one (121) days following May 13, 2025, and ending on the date which is one hundred eighty (180) days following with a prepayment percentage of 125%.
Red Road may convert all or part of the outstanding and unpaid amount of the Red Road Convertible Note into fully paid and non-assessable shares of our common stock. The number of shares of our common stock to be issued upon each conversion shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price (as defined below) then in effect on the date specified in the notice of conversion. The Conversion Amount equals the sum of the principal amount of the Red Road Convertible Note plus accrued and unpaid interest. The Conversion Price equals 70% multiplied by the Market Price (as defined below), representing a discount rate of 30%. The Market Price means the average of the three (3) lowest Trading Prices (as defined below) for our common stock during the fifteen (15) Trading Day period ending on the latest complete trading day prior to the conversion date. Trading Price means the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market as reported by a reliable reporting service. In no event shall Red Road be entitled to convert any portion of the Red Road Convertible Note such that the number of shares of our common stock issuable upon the conversion would result in beneficial ownership by Red Road and its affiliates of more than 4.99% of the outstanding shares of our common stock.
During the period the conversion right exists, we will reserve from our authorized and unissued common stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of common stock upon the full conversion of the Red Road Convertible Note. We are required at all times to have authorized and reserved three times the number of shares that are actually issuable upon full conversion of the Red Road Convertible Note, based on the Conversion Price in effect from time to time.
The Red Road Securities Purchase Agreement was executed and delivered in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the SEC under the Securities Act of 1933, as amended (the “1933 Act”).
The descriptions of the Red Road Securities Purchase Agreement and the Red Road Convertible Note are qualified in their entirety by reference to the full texts of the Red Road Securities Purchase Agreement and the Red Road Convertible Note, which are incorporated by reference herein. Copies of the Red Road Securities Purchase Agreement and the Red Road Convertible Note are included herein as Exhibits 10.5 and 4.3, respectively. |