Item
1.01
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Entry
into a Material Definitive Agreement
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On
November 25, 2020, Innovative Payment Solutions, Inc. (the “Company”), entered into a Securities Purchase Agreement
(the “Securities Purchase Agreement”) with Bellridge Capital, LP (the “Investor”), pursuant to which the
Company received $250,250 in exchange for the issuance of:
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●
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a
Original Issue Discount 10% Convertible Note (the “Note”) in the principal amount of $286,000; and
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●
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a
five-year warrant (the “Warrant”) to purchase 8,171,429 shares of the Company’s common stock at an exercise
price of $0.05 per share.
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The
transactions contemplated under the Securities Purchase Agreement closed on November 27, 2020. The Note matures in 12 months,
bear interest at a rate of 10% per annum, and is initially convertible into the Company’s common stock at a conversion price
of $0.035 per share (as adjusted for stock splits, stock combinations, dilutive issuances and similar events).
The
Note may be prepaid at any time for the first 90 days at face value plus accrued interest. From day 91 through day 180, the Note
may be prepaid in an amount equal to 115% of the principal amount plus accrued interest. From day 181 through day 365, it may
be prepaid in an amount equal to 125% of the principal amount plus accrued interest. The Note contains certain covenants, such
as restrictions on: (i) distributions on capital stock, (ii) stock repurchases, and (iii) sales and the transfer of assets.
The
Note and the Warrant contain conversion limitations providing that a holder thereof may not convert the Note or exercise the Warrant
to the extent (but only to the extent) that, if after giving effect to such conversion, the holder or any of its affiliates would
beneficially own in excess of 4.99% (the “Maximum Percentage”) of the outstanding shares of the Company’s common
stock immediately after giving effect to such conversion or exercise. A holder may increase or decrease its beneficial ownership
limitation upon notice to the Company provided that in no event such limitation exceeds 9.99%, and that any increase shall not
be effective until the 61st day after such notice.
In
connection with the Securities Purchase Agreement, the Company entered into a Registration Rights Agreement, dated November 25,
2020 (“Registration Rights Agreement”), with the Investor pursuant to which it is obligated to file a registration
statement with the SEC within ninety (90) days after the date of the agreement to register the resale by the Investor of shares
of the Company’s common stock issuable under the Notes and upon exercise of the Warrants, and use all commercially reasonable
efforts to have the registration statement declared effective by the SEC within one hundred five (105) days after the registration
statement is filed.
Upon
the occurrence of an event of default under the Notes, the Investor has the right to be prepaid at 140% of the outstanding principal
balance and accrued interest, and interest accrues at 18% per annum (or the maximum amount permitted by law). In addition, if
an event of default under in the Notes has occurred, regardless of whether it has been cured or remains ongoing, the Notes will
thereafter be convertible at 65% of the lowest closing price of the Company’s common stock for the last 10 consecutive trading
days.
The
Note and the Warrant were sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities
Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D promulgated thereunder. The Investor
is an accredited investor which has purchased the securities as an investment in a private placement that did not involve a general
solicitation. The shares to be issued upon conversion of the Note and the exercise of the Warrants have not been registered
under the Securities Act and may not be offered or sold in the United States in the absence of an effective registration statement
or exemption from the registration requirements. This Current Report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation
or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.
The
foregoing description does not purport to be complete and is qualified in its entirety by reference to the full text of the Form
of Note, the Warrant, the Securities Purchase Agreement and the Registration Rights Agreement, attached hereto as Exhibits 4.1,
4.2, 10.1 and 10.2, respectively, each of which are incorporated herein by reference.