Item 1.01 Entry Into a Material Definitive Agreement.

On August 15, 2019 (the “Closing Date”), Conversion Labs, Inc. (the “Company”) entered into securities purchase agreements (the “Purchase Agreements”) with three accredited investors (each an “Investor,” collectively, the “Investors”). Pursuant to the terms of the Purchase Agreements, the Company issued and sold to the Investors convertible promissory notes for the aggregate original principal amount of $1,291,500 (the “Notes”), and warrants to purchase up to 4,679,348 shares of the Company’s common stock (the “Warrants,” and together with the Notes the “Securities”). The Warrants are immediately exercisable and have a term of ten years. The Warrants are exercisable at a price per share of $0.28, subject to adjustment as described herein and contain a cashless exercise mechanism.    

The Notes mature on the first anniversary of the Closing Date (the “Maturity Date”) and accrue interest at a rate of twelve percent (12%) per annum, subject to adjustments.

The Notes may be converted into shares of the Company’s common stock, at the discretion of the holder, at any time following issuance, unless the conversion or share issuance under the conversion would cause the holder to beneficially own shares in excess of 4.99% of the Company’s common stock. The conversion price for the principal and interest, if any, in connection with voluntary conversion by the Investors shall be $0.23 per share of common stock, subject to adjustment (the “Conversion Price”). In the event the average VWAP (as defined in the Note) for the consecutive ten (10) Trading Days (as defined in the Note) preceding but not including either or both of the ninety (90) day and one hundred and eighty (180) day anniversary of the Closing Date is less than the then Conversion Price in effect either or both on such ninety (90) day and one hundred and eighty (180) day anniversary date, then the Conversion Price with respect to unconverted principal and interest on the Note shall be reduced (and only reduced) to eighty percent (80%) of the VWAP for the ten (10) Trading Days following (but not including) such ninety (90) day and one hundred and eighty (180) day anniversary date, subject to further reduction.

The Notes contain standard event of default provisions, certain covenants and restrictions, including, among others, that, for so long as the Notes are outstanding, the Company will not incur any indebtedness, permit liens on its properties (other than permitted indebtedness or permitted liens under the Notes), make dividends or transfer certain assets.

Lock-Up Agreement

As a further condition to the sale of the Securities, the Company’s Chief Executive Officer, Mr. Justin Schreiber, entered into a lock-up agreement on behalf of JOJ Holdings, LLC (“JOJ”), an entity wholly owned by Mr. Schreiber, pursuant to which JOJ agreed not to offer, sell, pledge, contract to sell, hypothecate or otherwise transfer its shares commencing on the date of the Closing and ending on the date that is one year after the Closing Date, subject to certain exceptions.

The foregoing descriptions of the Purchase Agreements, the Notes, the Warrants and the Lock-Up Agreements, are qualified in their entirety by reference to such documents, the forms of which are attached hereto as Exhibits 4.1, 10.1, 4.2 and 10.2, respectively, and are incorporated herein by reference.