Item 1.01 Entry Into A Material Agreement.
The information set forth in Item 2.03 is incorporated by reference into this
Item 1.01.
Effective as of April 17, 2023 (the "Effective Date"), Nightfood Holdings, Inc.
(the "Company") entered into Warrant Amendment and Exercise Agreements (the
"Amendment Agreements") with certain existing warrantholders of the Company
(each, a "Warrantholder" and collectively, the "Warrantholders"). The
Warrantholders are registered holders of common stock purchase warrants of the
Company issued pursuant to the terms of Series B Preferred Stock of the Company
(the "Original Warrants").
Pursuant to the Amendment Agreements, (a) the Original Warrants were amended to
reduce the exercise price thereof to $0.05 per share (the "Adjusted Exercise
Price") and to provide that upon the exercise of the Original Warrants pursuant
to the terms and conditions of the Amendment Agreements, upon exercise the
Warrantholders shall also receive, pursuant to the terms of the Amendment
Agreements, a further five-year common stock purchase warrant ("Exercise
Warrant") to purchase an equal number of shares of common stock, par value
$0.001 per share, of the Company (the "Common Stock"), at an initial exercise
price per share of $0.125, (b) the Warrantholders agreed to exercise an
aggregate of 2,750,000 shares of Common Stock (or pre-funded warrants in
substitution thereof) underlying the Original Warrants ("Exercise Shares") at
the Adjusted Exercise Price, or an aggregate of $137,500 and (c) the
Warrantholders were granted the option to exercise up to an aggregate of an
additional 2,750,000 Exercise Shares at the Adjusted Exercise Price, or an
aggregate of up to $137,500, by May 31, 2023. Any remaining shares of Common
Stock underlying the Original Warrant not so exercised shall continue to be
exercisable in accordance with the terms of the Original Warrant and not
pursuant to the Amendment Agreement.
The Company paid to Spencer Clarke LLC $13,750 in cash fees (plus 275,000
warrants at an exercise price of $.05 per share and 275,000 warrants at an
exercise price of $.125 per share (the "Warrant Exercise Commission Warrants")),
pursuant to the Company's existing agreement with Spencer Clarke LLC, in
relation to the transactions contemplated by the Amendment Agreements.
The foregoing is a brief description of the Amendment Agreements and the
Exercise Warrants, and is qualified in its entirety by reference to the full
text of the Amendment Agreements and the Exercise Warrants.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
On the Effective Date, the Company consummated the transactions pursuant to a
Securities Purchase Agreement (the "Purchase Agreement") and issued and sold to
Mast Hill Fund, L.P. ("Mast Hill"), a Promissory Note (the "MH Note") in the
principal amount of $160,941.18 (actual amount of purchase price of $136,800
plus an original issue discount ("OID") in the amount of $24,141.18). Also
pursuant to the Purchase Agreement, in connection with the issuance of the MH
Note, the Company issued (a) common stock purchase warrants (the "First
Warrants"), allowing Mast Hill to purchase an aggregate of 1,790,000 shares of
Common Stock and (b) common stock purchase warrants (the "Second Warrants"),
allowing Mast Hill to purchase an aggregate of 1,820,000 shares of Common Stock.
Also pursuant to the Purchase Agreement, in connection with the issuance of the
MH Note, the First Warrants and the Second Warrants, the Company granted
piggy-back registration rights to Mast Hill.
The Company paid to (a) J.H. Darbie & Co., Inc. $6,840 in cash fees (plus 57,000
warrants at an exercise price of $0.12 per share (the "Darbie Warrants"))
pursuant to the Company's existing agreement with J.H. Darbie & Co., Inc., in
relation to the transactions contemplated by the Purchase Agreement and (b)
Spencer Clarke LLC $13,680 in cash fees (plus 200,000 warrants at an exercise
price of $.08 per share, 170,000 warrants at an exercise price of $.10 per
share, and 182,000 returnable warrants at an exercise price of $.10 per share
(collectively, with the Warrant Exercise Commission Warrants and the Darbie
Warrants, the "Commission Warrants")), pursuant to the Company's existing
agreement with Spencer Clarke LLC, in relation to the transactions contemplated
by the Purchase Agreement.
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The Company intends to use the net proceeds from the sale of the MH Note for
required debt service and general corporate purposes.
The maturity date of the MH Note is the 12-month anniversary of the Effective
Date, and is the date upon which the principal amount, the OID, as well as any
accrued and unpaid interest and other fees, shall be due and payable.
Mast Hill has the right, at any time on or following the six month anniversary
of the Effective Date, to convert all or any portion of the then outstanding and
unpaid principal amount and interest (including any default interest) into
Common Stock, at a conversion price of $0.10, subject to customary adjustments
as provided in the MH Note for stock dividends and stock splits, rights
offerings, pro rata distributions, fundamental transactions and dilutive
issuances. In addition, Mast Hill is entitled to deduct $1,750.00 from the
conversion amount upon each conversion, to cover Mast Hill's fees associated
with each conversion. Any such conversion is subject to customary conversion
limitations set forth in the MH Note so Mast Hill beneficially owns less than
4.99% of the Common Stock.
At any time prior to the date that an Event of Default (as defined in the MH
Note) occurs under the MH Note, the Company may prepay the outstanding principal
amount and interest then due under the MH Note. On any such event, the Company
shall make payment to Mast Hill of an amount in cash equal to the sum of (a)
100% multiplied by the principal amount then outstanding plus (b) accrued and
unpaid interest on the principal amount to the prepayment date plus (c) $750.00
to reimburse Mast Hill for administrative fees.
In addition, if, at any time prior to the full repayment or full conversion of
all amounts owed under the MH Note, the Company receives cash proceeds of more
than $650,000 (the "Minimum Threshold") in the aggregate from any source or
series of related or unrelated sources from the issuance of equity (subject to
exclusions described in the MH Note), debt or the issuance of securities
pursuant to an Equity Line of Credit (as defined in the MH Note) of the Company,
Mast Hill shall have the right in its sole discretion to require the Company to
apply up to 50% of such proceeds after the Minimum Threshold to repay all or any
portion of the outstanding principal amount and interest then due under the MH
Note.
The MH Note contains customary Events of Default for transactions similar to the
transactions contemplated by the Purchase Agreement and the MH Note, which
entitle Mast Hill, among other things, to accelerate the due date of the unpaid
principal amount of, and all accrued and unpaid interest on, the MH Note, in
addition to triggering the conversion rights. Any principal amount or interest
on the MH Note which is not paid when due shall bear interest at the rate of the
lesser of (i) 16% per annum and (ii) the maximum amount permitted by law from
the due date until the same is paid. Upon the occurrence of any Event of
Default, Mast Hill shall no longer be required to cancel and extinguish the
Second Warrants, the MH Note shall become immediately due and payable, and the
Company shall pay to Mast Hill an amount equal to the principal amount then
outstanding plus accrued interest (including any default interest) through the
date of full repayment multiplied by 150%, as well as all costs of collection.
The MH Note contains restrictions on the Company's ability to (a) incur
additional indebtedness, (b) make distributions or pay dividends, (c) redeem,
repurchase or otherwise acquire its securities, (d) sell its assets outside of
the ordinary course, (e) enter into certain affiliate transactions, (f) enter
into 3(a)(9) Transactions or 3(a)(10) Transactions (each as defined in the MH
Note), or (g) change the nature of its business.
Commencing as of the Effective Date, and until such time as the MH Note is fully
converted or repaid, the Company shall not effect or enter into an agreement to
effect any Variable Rate Transaction (as defined in the Purchase Agreement).
The Purchase Agreement contains customary representations and warranties made by
each of the Company and Mast Hill. It further grants to Mast Hill certain rights
of participation and first refusal, and most-favored nation rights, all as set
forth in the Purchase Agreement.
The Company is subject to customary indemnification terms in favor of Mast Hill
and its affiliates and certain other parties.
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The First Warrants have an initial exercise price of $0.10 per share, subject to
customary adjustments (including price-based anti-dilution adjustments), and may
be exercised at any time until the five year anniversary of the First Warrants.
The First Warrants include a cashless exercise provision as set forth therein.
The exercise of the First Warrants are subject to a beneficial ownership
limitation of 4.99% of the number of shares of Common Stock outstanding
immediately after giving effect to such exercise. In the event of the Company's
failure to timely deliver shares of Common Stock upon exercise of the First
Warrants, the Company would be obligated to pay a "Buy-In" amount pursuant to
the terms of the First Warrants.
The Second Warrants have an initial exercise price of $0.10 per share, subject
to customary adjustments (including price-based anti-dilution adjustments), and
may be exercised at any time after April 17, 2024 (if not previously cancelled
in accordance with the terms of the MH Note and the Second Warrant) until the
five year anniversary of such date. The Second Warrants include a cashless
exercise provision as set forth therein. The exercise of the Second Warrants are
subject to a beneficial ownership limitation of 4.99% of the number of shares of
Common Stock outstanding immediately after giving effect to such exercise. In
the event of the Company's failure to timely deliver shares of Common Stock upon
exercise of the Second Warrants, the Company would be obligated to pay a
"Buy-In" amount pursuant to the terms of the Second Warrants.
The foregoing is a brief description of the Purchase Agreement, the MH Note, the
First Warrants and the Second Warrants, and is qualified in its entirety by
reference to the full text of the Purchase Agreement, the MH Note, the First
Warrants and the Second Warrants.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosure set forth above in Items 1.01 and 2.03 of this Current Report on
Form 8-K relating to the Exercise Shares, the Exercise Warrants, the Commission
Warrants, the MH Note, the First Warrants, and the Second Warrants is
incorporated by reference herein.
The Exercise Shares, the Exercise Warrants, the Commission Warrants, the MH
Note, the First Warrants and the Second Warrants each was, and, unless
subsequently registered, the shares underlying the Exercise Warrants, the
Commission Warrants, the MH Note, the First Warrants and the Second Warrants
will be, issued in reliance on the exemption from registration provided by
Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act")
and/or Regulation D promulgated thereunder, as no general solicitation was used
in the offer and sale of such securities.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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