Item 1.01 Entry into a Material Definitive Agreement.
On October 12, 2021, Veritas Farms, Inc. (the "Company") issued a secured
convertible credit line promissory note in the principal amount for up to
$1,500,000 (the "Secured Convertible Promissory Note"), which Secured
Convertible Promissory Note was issued to the Cornelis F. Wit Revocable Living
Trust (the "Wit Trust"), a principal shareholder who holds securities of the
Company that constitute a majority of the voting securities of the Company. The
Secured Convertible Promissory Note is secured by the Company's assets and
contain certain covenants and customary events of default, the occurrence of
which could result in an acceleration of the Secured Convertible Promissory
Note. The Secured Convertible Promissory Note is convertible as follows:
aggregate loaned principal and accrued interest under the Secured Convertible
Promissory Note may, at the option of the holder, be converted in its entirety
into shares of our common stock at a conversion price of $0.05 per share. The
Note will accrue interest on the aggregate amount loaned at a rate of 10% per
annum. All unpaid principal, together with any then unpaid and accrued interest
and other amounts payable under the Secured Convertible Promissory Note, is due
and payable if not converted pursuant to the terms and conditions of the Secured
Convertible Promissory Note on the earlier of (i) October 01, 2024, or (ii)
following an event of default.
The foregoing description of the terms of the Secured Convertible Promissory
Note does not purport to be complete and is qualified in its entirety by
reference to the full text of the Form of Secured Convertible Promissory Note
attached hereto as Exhibit 10.1.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth under Item 1.01of this Current Report on Form 8-K is
incorporated herein by reference.
Item 3.02. Unregistered Sale of Equity Securities.
The disclosure set forth under Item 1.01of this Current Report on Form 8-K with
respect to the issuance of the Secured Convertible Promissory Note is
incorporated by reference into this Item 3.02. The Secured Convertible
Promissory Note issued to the investor was offered and sold in a transaction
exempt from registration under the Securities Act of 1933, as amended, in
reliance on Section 4(a)(2) thereof.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No Description
10.1 Form of Secured Convertible Credit Line Promissory Note dated October
12, 2021
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