On December 16, 2020, Cannabics Pharmaceuticals Inc. (the "Company") reported that it entered into a Securities Purchase Agreement (the "SPA") with an institutional investor (the "investor" or a "holder") to sell a new series of senior secured convertible notes (the "Convertible Notes") of the Company in a four tranche private placement (the "Private Placement") to the investor, with an aggregate principal amount of $2,750,000 having an aggregate original issue discount of 10%, and ranking senior to all outstanding and future indebtedness of the Company (Filing, 8-K, Cannabics Pharmaceuticals, DEC 16, 2020, View Source [SID1234573192]). Pursuant to the SPA, one Convertible Note (the "Initial Note") in an aggregate original principal amount of $825,000 will be issued to the investor in the first tranche in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the "1933 Act"), and Rule 506(b) of Regulation D ("Regulation D") as promulgated by the United States Securities and Exchange Commission (the "SEC") under the 1933 Act, together with the issuance of warrants (the "Warrants" and, together with the Convertible Note, the "Securities") to acquire our common stock , as described below. The Initial Note has a face amount of $825,000 for which the Company shall receive cash proceeds of $750,000. Subject to the satisfaction of customary closing and equity conditions, at any time prior to December 31, 2021 (or such later date as the parties shall mutually agree), the Company has the right to require additional closings of tranches of additional notes (the "Additional Notes", and together with the Initial Notes, the "Notes") as follows: (x) $825,000 in aggregate principal of Additional Notes upon the effectiveness of a registration statement with respect to the shares of our common stock issuable upon conversion of the Notes (or, if earlier the date such underlying shares of our common stock are initially available to be resold pursuant to Rule 144 of the Securities Act of 1933, as amended (or if later, such date as the Company is then current in its public filings)) (the "Applicable Date"), (y) $550,000 in aggregate principal of Additional Notes upon the 90th calendar day anniversary of the Applicable Date and (z) $550,000 in aggregate principal of Additional Notes upon the 180th calendar day anniversary of the Applicable Date s. The Convertible Notes are being sold with an original issue discount of 10% and do not bear interest except upon the occurrence of an event of default.
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The following descriptions of the Convertible Notes, Warrants, Security and Pledge Agreement, Guaranty, Registration Rights Agreement and SPA are not complete and are qualified in their entirety by reference to the full text of such agreements, the forms of which are attached as Exhibit 10.1 through 10.6 to this Form 8-K, respectively.