UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 29, 2021

 

CLUBHOUSE MEDIA GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   333-140645   99-0364697

(State or other jurisdiction of

incorporation or organization)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

3651 Lindell Road, D517

Las Vegas, Nevada 89103

(Address of principal executive offices) (Zip code)

 

(702) 479-3016

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
   
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
   
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

 
 

 

Item 1.01 Entry Into A Material Definitive Agreement.

 

Convertible Promissory Note – GS Capital Partners

 

On April 29, 2021, Clubhouse Media Group, Inc. (the “Company”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with GS Capital Partners, LLC (“GS Capital”), pursuant to which, on same date, the Company issued a convertible promissory note to GS Capital in the aggregate principal amount of $550,000 for a purchase price of $500,000, reflecting a $50,000 original issue discount (the “April 2021 GS Capital Note #2”) and, in connection therewith, sold to GS Capital 125,000 shares of the Company’s common stock, par value $0.001 per share (the “Company Common Stock”) at a purchase price of $125, representing a per share price of $0.001 per share. In addition, at the closing of this sale, the Company reimbursed GS Capital the sum of $5,000 for GS Capital’s costs in completing the transaction, which amount GS Capital withheld from the total purchase price paid to the Company.

 

The April 2021 GS Capital Note #2 has a maturity date of April 29, 2022 and bears interest at 10% per year. No payments of the principal amount or interest are due prior to the maturity date other than as specifically set forth in the April 2021 GS Capital Note #2, and the Company may prepay all or any portion of the principal amount and any accrued and unpaid interest at any time without penalty.

 

The April 2021 GS Capital Note #2 (and the principal amount and any accrued and unpaid interest) is convertible into shares of the Company’s common stock, par value $0.001 per share (the “Company Common Stock”) at GS Capital’s election at any time following the time that the SEC qualifies the Company’s offering statement related to the Company’s planned offering of Company Common Stock pursuant to Regulation A under the Securities Act of 1933, as amended (the “Regulation A Offering”). At such time, the April 2021 GS Capital Note #2 (and the principal amount and any accrued and unpaid interest) will be convertible at a conversion price equal to 70% of the initial offering price of the Company Common Stock in the Regulation A Offering, subject to a customary beneficial ownership limitation of 9.99%, which may be waived by GS Capital on 61 days’ notice to the Company. The conversion price is subject to customary adjustments for any stock splits, etc. which occur following the determination of the conversion price.

 

The April 2021 GS Capital Note #2 contains customary events of default, including, but not limited to:

 

  if the Company fails to pay the then-outstanding principal amount and accrued interest on the April 2021 GS Capital Note #2 on any date any such amounts become due and payable, and any such failure is not cured within three business days of written notice thereof by GS Capital; or
  the Company fails to remain compliant with the Depository Trust Company (“DTC”), thus incurring a “chilled” status with DTC; or
  any trading suspension is imposed by the SEC under Section 12(j) of the Exchange Act or Section 12(k) of the Exchange Act; or
  the occurrence of any delisting of the Company Common Stock from any securities exchange on which the Company Common Stock is listed or suspension of trading of the Company Common Stock on the OTC Markets.

 

If an event of default has occurred and is continuing, GS Capital may declare all or any portion of the then-outstanding principal amount of the April 2021 GS Capital Note #2, together with all accrued and unpaid interest thereon, due and payable, and the April 2021 GS Capital Note #2 shall thereupon become immediately due and payable in cash and GS Capital will also have the right to pursue any other remedies that GS Capital may have under applicable law. In the event that any amount due under the April 2021 GS Capital Note #2 is not paid as and when due, such amounts shall accrue interest at the rate of 18% per year, simple interest, non-compounding, until paid.

 

The foregoing description of the Securities Purchase Agreement and April 2021 GS Capital Note #2 does not purport to be complete and is qualified in its entirety by reference to the full texts of the Securities Purchase Agreement and the April 2021 GS Capital Note #2, copies of which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

As disclosed in Item 1.01 of this Current Report on Form 8-K, the Company issued he April 2021 GS Capital Note #2. The disclosure in Item 1.01 hereof concerning each of these notes is incorporated by reference into this Item 2.03.

 

Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

 

As disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 15, 2021, on March 11, 2021, the Company entered into a securities purchase agreement (the “Labrys SPA”) with Labrys Fund, LP (“Labrys”), pursuant to which the Company issued a 10% promissory note (the “Labrys Note”) with a maturity date of March 11, 2022 (the “Labrys Maturity Date”), in the principal sum of $1,000,000. Pursuant to the terms of the Labrys Note, the Company agreed to pay to $1,000,000 (the “Principal Sum”) to Labrys and to pay interest on the principal balance at the rate of 10% per annum.

 

In addition, the Labrys Note provides that, if (i) the Labrys Note is still outstanding; and (ii) since the issuance of the Labrys Note, the Company has received cash proceeds from any source of series of sources of $1,500,000, then Labrys shall have the right to require the Company to apply up to 50% of any future proceeds received by the Company to repay the outstanding balance of the Labrys Note.

 

Upon the receipt of the $500,000 in proceeds from the issuance April 2021 GS Capital Note #2, the Company has now raised over $1,500,000 since the issuance of the Labrys Note on March 11, 2021, and therefore, Labrys has the right to demand up to 50% of the proceeds received by the Company from the issuance of the April 2021 GS Capital Note #2 – or a maximum of $250,000.

 

As of the date of this report, Labrys has made a demand for $250,000, which the Company will pay from the proceeds of the April 2021 GS Capital Note #2.

 

The foregoing description of the Labrys Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Labrys Note, a copy of which is filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on March 15, 2021.

 

Item 9.01 Financial Statement and Exhibits.

 

(d) Exhibits

 

The following exhibits are filed or furnished with this Current Report on Form 8-K:

 

Exhibit No.   Description
     
10.1   Securities Purchase Agreement between the Company and GS Capital Partners, LLC dated April 29, 2021.
10.2   Convertible Promissory Note issued by the Company to GS Capital Partners, LLC dated April 29, 2021.

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: May 5, 2021 CLUBHOUSE MEDIA GROUP, INC.
     
  By: /s/ Amir Ben-Yohanan
    Amir Ben-Yohanan
    Chief Executive Officer

 

 

 

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