Item
1.01 Entry into a Material Definitive Agreement.
On
March 23, 2022, Can B Corp., a Florida corporation (the “Company”) entered into a definitive agreement (the “Agreement”)
with Mast Hill Fund, L.P. (“Mast Hill”) for the sale of a promissory note (“Note”) and warrants (“Warrants”)
to Mast Hill for total consideration of $315,000.
The
Note is in the principal amount of $350,000 with an original issue discount of 10%. The Note is convertible into common stock of the
Company at a price per share of $4.00, subject to adjustment pursuant to the terms of the Note. The Note bears interest at the rate of
12% per year, which increases to 16% per year in the event of default. The Company has agreed to pay $500 to Mast Hill for each conversion
under the Note to cover its expenses related thereto. The Company has agreed to reserve at least two times the number of shares convertible
under the Note at all times and has entered into an irrevocable letter agreement with its transfer agent to issue Mast Hill shares resulting
from its conversion of the Note and exercise of Warrants. In the event that the Company issues common stock or securities convertible
into common stock at a price per share less than the conversion price under the Note, the Note’s conversion price will be decreased
to match such dilutive issuance; provided that, in the event a dilutive issuance occurs in the first 180 days after Note issuance, such
adjustment will not be applied until the date 180 days after the Note is issued. The Note contains similar most favored nations terms
where the adjustments will take place, if any, no sooner than 180 days after the Note is issued. The Company may prepay the Note subject
to a 10% prepayment penalty and shall repay all of the Note in the event its current S-1 offering, as amended, is declared effective
by the Securities and Exchange Commission (“SEC”) and shall repay at least 50% of the Note in the event of an alternative
financing occurring after the company has raised at least $1,250,000 in bridge financing. The Company has agreed to offer mast Hill the
first right to participate in future financings. The Note otherwise contains default and other restrictive terms typical of debt finance
deals of this nature. The Note may be accelerated upon an event of default.
In
conjunction with the issuance of the Note to Mast Hill, the Company also issued Mast Hill Warrants to purchase 54,687 shares of common
stock at a price per share of $6.40. However, if within 180 days after the Warrant issuance the Company’s current S-1 offering,
as amended, is declared effective by the SEC, the exercise price will be adjusted to 120% of the offering price per unit or share offered.
The Company has agreed to register the common stock issuable upon exercise of the Warrant with the SEC pursuant to a registration rights
agreement. If the shares are not so registered within 180 days from Warrant issuance, the Warrant shall have a cashless exercise feature.
No fractional shares will be issued upon exercise of any potion of the Warrant. There are penalties to the Company in the event it does
not timely issue shares upon exercise of the Warrant. The Warrant has anti-dilution terms similar to the Warrant, except that if the
Company’s current S-1 offering, as amended, is declared effective by the SEC and the Note is paid in full, the exercise price shall
never be adjusted due to a dilutive issuance.
In
addition to the foregoing, the Company has agreed to pay $5,000 in Mast Hill’s legal fees and to grant Mast Hill piggyback registration
rights requiring the Company to register all common shares held by Mast Hill resulting from conversion of the Note or exercise of the
Warrants in the event it files a registration statement with the SEC, excluding certain types of registration statements where such piggyback
rights would not apply. Otherwise, the Note, Warrants, registration rights agreement and Agreement contain covenants, representations
and warranties typical of transactions of this type. All such agreements are governed by Delaware law.
On
March 24, 2022 the Company executed a set of documents nearly identical to the Mast Hill documents whereby it sold a promissory note
and warrants to Blue Lake Partners, LLC (“Blue Lake”) for $225,000. The note was for a principal amount of $250,000 and the
warrant is to purchase 39,062 shares of common stock.
The
foregoing descriptions of definitive agreements are qualified in their entirety by the terms of the full text of the agreements, respectively,
attached hereto as exhibits.
The
transactions described above each closed March 25, 2022.
