Item
1.01 Entry into a Material Definitive Agreement.
On
May 17, 2021, Can B̅ Corp. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with a group of institutional investors (collectively, the “Investors”) for the sale of convertible
promissory notes. The transaction contemplated by the Purchase Agreement closed on May 24, 2021 (the “Closing Date”).
Pursuant to the Purchase Agreement, the Company issued Original Issue Discount Senior Secured Convertible Promissory Notes with
the aggregate principal amount of $1,500,000 (the “Notes”) and warrants to purchase up to an aggregate of 1,923,087
shares of the Company’s common stock (the “Warrants”) to the Investors and entered into a Registration Rights
Agreement, an Addendum to Security Agreement, an Addendum to Intellectual Property Security Agreement, and an Addendum to Subsidiary
Guaranty Agreement (the foregoing, collectively with the Purchase Agreement, Notes and Warrant, the “Transaction Documents”).
The
Investors purchased the Notes, Warrants, and an aggregate of 221,096 commitment shares of the Company’s common stock (the
“Shares”) for a total purchase price equal to $1,350,000 (the “Purchase Price”).
The
Notes will accrue interest at a rate of 12% per annum, and this interest will be payable quarterly in cash or shares (subject
to certain conditions) beginning on July 1, 2021. The Notes mature on January 31, 2022. The Company’s obligations under
the Notes are secured by all of the assets, including intellectual property, of the Company and its subsidiaries. The Company’s
obligations under the Notes are also guaranteed by the Company’s subsidiaries, Duramed Inc., Duramed MI, LLC, Pivt Labs,
LLC, Pure Health Products, LLC, Imbibe Wellness Solutions, LLC, Botanical Biotech, LLC, and Green Grow Farms, Inc.
The
Notes are convertible into common shares of the Company at a rate equal to $0.39 per share. The conversion price of the Notes
may be adjusted upon the occurrence of certain events and may be declared immediately due and payable by the Investors in the
event the Company defaults on any terms of the Notes or the other Transaction Documents. The Notes contain provisions limiting
each Investor’s ability to convert any portion of its Note if such conversion would cause the Investor’s holdings
in the Company to exceed 4.99% of the Company’s issued and outstanding shares of common stock, which limit may be waived
but under no circumstances may any Investor convert any portion of a Note that would cause the Investor’s holdings to exceed
9.99% of the Company’s issued and outstanding shares of common stock. The Company also agreed to register shares converted
by Investors, warrant shares and commitment shares under one or more registration statements filed with the Securities and Exchange
Commission.
The
Warrants are exercisable at a price of $0.45 per share or via cashless exercise in the event that the warrants are not registered
within 180 days. The Warrants terminate on May 17, 2024. The Warrants contain provisions limiting each Investor’s ability
to exercise the Warrants if such exercise would cause the Investor’s holdings in the Company to exceed 4.99% of the Company’s
issued and outstanding shares of common stock, which limit may be waived but under no circumstances may any Investor exercise
any Warrants that would cause the Investor’s holdings to exceed 9.99% of the Company’s issued and outstanding shares
of common stock.
The
Transaction Documents contain other covenants and restrictions common with this type of transaction, including but not limited
to, true-up, anti-dilution, most favored nation and future participation clauses.