Item 3.02
Unregistered Sales of Equity Securities.
On
August 11, 2017, Monaker Group, Inc. (the “
Company
”, “
we
” and “
us
”),
closed the transactions contemplated by that certain July 31, 2017, Common Stock and Warrant Purchase Agreement (the “
Purchase
Agreement
”), entered into between the Company and the 17 accredited investors named therein (collectively, the “
Purchasers
”),
as described in greater detail in the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission
on August 1, 2017 (the “
Prior Form 8-K
”).
In
total, the Company sold the Purchasers 1,532,500 shares of common stock and warrants to purchase 1,532,500 shares of common stock,
with an exercise price of $2.10 per share (the “
Warrants
”), for an aggregate of $3,065,000, or $2.00 per unit
of one share and one Warrant (the “
Securities
” and the “
Offering
”).
William
Kerby, the Chief Executive Officer and Chairman of the Company purchased $50,000 of the Securities (25,000 shares and Warrants);
Simon Orange, a member of the Board of Directors of the Company purchased $175,000 of the Securities (87,500 shares and Warrants);
Donald Monaco, a member of the Board of Directors of the Company purchased $175,000 of the Securities (87,500 shares and Warrants);
Pat LaVecchia, a member of the Board of Directors of the Company purchased $10,000 of the Securities (5,000 shares and Warrants);
and Robert J. Post, a member of the Board of Directors of the Company purchased $25,000 of the Securities (12,500 shares and Warrants).
Additionally, Stephen Romsdahl, a greater than 5% shareholder of the Company purchased $50,000 of the Securities (25,000 shares
and Warrants) and another non-related party, who is a key distributor of the Company, purchased $100,000 of the Securities (50,000
shares and Warrants).
The
shares and Warrants were offered and sold to the Purchasers under the Purchase Agreement in transactions exempt from registration
under the Securities Act of 1933, as amended (the “
Securities Act
”), and state securities laws, in reliance
on Section 4(a)(2) thereof and Rule 506(b) of Regulation D of the Securities Act and in reliance on similar exemptions under
applicable state laws. Each of the Purchasers represented that it is an accredited investor within the meaning of Rule 501(a)
of Regulation D, and is acquiring the shares and Warrants for investment only and not with a view towards, or for resale in connection
with, the public sale or distribution thereof. The shares and Warrants were offered without any general solicitation by the Company
or its representatives. In the event the Warrants are exercised in full, an aggregate of 1,532,500 shares of common stock would
be issuable to the Purchasers (without taking into account any cashless exercise rights).
Pursuant
to a Placement Agency Agreement (the “
Agent Agreement
”) entered into with Northland Securities, Inc. (the “
Agent
”)
on July 31, 2017 in connection with the Offering, the Agent served as the Company’s exclusive placement agent for the Offering.
In consideration therewith, we paid the Agent 8% of the gross proceeds from the sale of the Securities ($245,200) and, for the
consideration of $50, sold the Agent a warrant to purchase shares of common stock equal to 5% of the shares sold in the Offering
(i.e., warrants to purchase 76,625 shares of common stock)(the “
Agent Warrants
”).
The
Agent Warrants were offered and sold to the Agent under the Agent Agreement in a transaction exempt from registration under the
Securities Act, or state securities laws, in reliance on Section 4(a)(2) thereof and Rule 506(b) of Regulation D of the Securities
Act and in reliance on similar exemptions under applicable state laws. In the event the Agent Warrants are exercised in full an
aggregate of 76,625 shares of common stock would be issuable to the Agent (without taking into account any cashless exercise rights).
A
required term of the Offering was that William Kerby, our Chief Executive Officer and Chairman and Donald P. Monaco, our Director,
on behalf of themselves and the entities which they control, convert the 1,869,611 shares of Series A 10% Cumulative Convertible
Preferred Stock (“
Series A Preferred Stock”)
beneficially owned by them into 3,789,222 shares of common stock of the Company, which conversion has occurred to date. The conversion
is exempt from registration pursuant to Section 3(a)(9) of the Securities Act, as the securities will be exchanged by us with
our existing security holders in a transaction where no commission or other remuneration was paid or given directly or indirectly
for soliciting such exchange.
The
Company intends to use the net cash proceeds of the Offering, approximately $2.7 million, to expand its technology division, increase
its alternative lodging rental, and general corporate purposes.
The
Purchase Agreement, terms of the Offering, the Warrants, the Agent Agreement and certain other transactions and agreements related
to the Offering (including a Board Representation Agreement) are described in greater detail in the Prior Form 8-K, the descriptions
of which are incorporated by reference herein.