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Item 1.01.
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Entry into a Material
Definitive Agreement.
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Securities Purchase Agreement
On February 5, 2019, Ozop Surgical
Corp. a Nevada corporation (the “Company”) entered into a securities purchase agreement (the “SPA”) with
Crown Bridge Partners, LLC, a New York limited liability company (the “Investor”), pursuant to which the Company agreed
to issue to the Investor an 8% secured convertible promissory note (the “Note”) in the aggregate principal amount
of up to $165,000 in exchange for an aggregate purchase price of up to $148,500 with an original issue discount of $16,500 to
cover the Investor’s accounting fees, due diligence fees, monitoring and other transactional costs incurred in connection
with the purchase and sale of the Note, which is included in the principal balance of the Note.
On February 8, 2019, the Investor
funded the first tranche under the Note, and the Company received $49,500 ($47,500 after payment of $2,000 of
the Investor’s legal fees) for this first tranche of $55,000 under the Note and on the same date, the Company issued
the Note to the Investor. Pursuant to the SPA, the Company agreed that upon the funding of each tranche under the Note, the
Company will issue to the Investor, a warrant to purchase an amount of shares of its common stock, equal to the face value
of each respective tranche divided by $1.50. Pursuant to the SPA, the proceeds will be used by the Company for working
capital and other general corporate purposes.
Pursuant to the SPA, the Company agreed,
during the time the Note is outstanding, not to change the nature of its business, sell, divest, acquire change the structure of
any material assets other than in the ordinary course of business or solicit any offers for, respond to any unsolicited offers
for, or conduct any negotiations with any other person or entity in respect of any transaction in which the Company (i) issues
or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive,
additional shares of the Company’s common stock either at a conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or quotations for the shares of the Company’s common stock
at any time after the initial issuance of such debt or equity securities or with a conversion, exercise or exchange price that
is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence
of specified or contingent events directly or indirectly related to the business of the Company or the market for the Company’s
common stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may
issue securities at a future determined price, without first obtaining the Investor’s written consent.
The SPA includes customary representations,
warranties and covenants by the Company and customary closing conditions.
Convertible Promissory Note
Each tranche of funds under the Note
matures 12 months from the effective date of each payment. The default interest for any tranche of funds under the Note not made
by the respective maturity date, shall be 15%.
The Note is convertible into shares
of the Company’s common stock, beginning on the date which is 180 days from the issuance date of the Note, at a conversion
price equal to the lesser of (1) the lowest trading price during the previous 20 trading day period ending on the last completed
trading date prior to the date of conversion of the Note and (2) 65% multiplied by the average of the 3 lowest trading prices of
the Company’s common stock during the 20 day trading period ending on the latest completed trading day of the common stock
prior to the date of conversion of the Note.
Further in accordance with the terms
of the Note, while the Note is outstanding, if any third party has the right to convert any funds into shares of the Company’s
common stock at a discount to market greater than the conversion price under the Note in effect at that time, then the Investor
in its sole discretion, may utilize such greater discount percentage until the Note is no longer outstanding. Additionally, pursuant
to the Note, if at any time while the Note is outstanding, the Company either sells shares of its common stock at a price lower
than the conversion price then in effect under the Note, or if the Company sells any securities exercisable, exchangeable or convertible
into shares of the Company’s common stock at a price lower than the conversion price then in effect under the Note, then
the conversion price under the Note shall be adjusted to equal such lower price. Provided, however, that the Investor may not convert
the Note to the extent that such conversion would result in the Investor’s beneficial ownership being in excess of 4.99%
of the Company’s issued and outstanding common stock together with all shares owned by the Investor and its affiliates. Additionally,
under the Note, the Investor is entitled to deduct $500.00 from the conversion amount in each notice of conversion to cover the
Investor’s deposit fees associated with each notice of conversion.
Pursuant to the Note, at any time when
the Note is outstanding, if the Company enters into a transaction pursuant to either Section 3(a)(9) or Section 3(a)(10) of the
Securities Act of 1933, as amended, in which any 3rd party has the right to convert monies owed to that 3rd party (or receive shares
pursuant to a settlement or otherwise) at a discount to market greater than the variable conversion price under the Note in effect
at that time, then the variable conversion price under the Note shall be automatically adjusted to such greater discount percentage.
Additionally, pursuant to the Note,
at any time when the Note is outstanding the Company agreed not to declare any dividend or other distribution (whether in cash,
property or other securities) on shares of the Company’s common stock, other than solely in the form of additional shares
of the Company’s common stock without first obtaining the written consent of the Investor. Further, pursuant to the Note,
at any time when the Note is outstanding the Company agreed not to redeem, repurchase or otherwise acquire (whether for cash or
in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares
of the Company’s common stock or any warrants, rights or options to purchase or acquire any such shares, without first obtaining
the Investor’s written consent.
The Note carries a pre-payment penalty
if the Note is paid off in 60 or 180 days following the issue date. The pre-payment penalty is based on the then outstanding principal
at the time of pay off plus accrued and unpaid interest multiplied by 125%, or 140% respectively. After the expiration of 181 days
following the issue date, the Company shall have no right of prepayment.
Pursuant to the Note, during any period
where monies are owed to the Investor under the Note, if the Company seeks to issue any securities with any term that the Investor
believes to be more favorable than the Investor’s terms under the Note, then the Company shall notify the Investor of this
and at the Investor’s option, the Investor can opt to become a part of the transaction with the more favorable terms.
Warrant
In connection with the Note, and pursuant
to the SPA, on February 5, 2019, the Company issued to the Investor, a warrant (the “Warrant”) to purchase 36,666 shares
of the Company’s common stock as a commitment fee for the first tranche of funding under the Note. The Warrant has a term
of three (3) years and an exercise price of $1.50.
The foregoing descriptions
of the SPA, the Note, and the Warrant, do not purport to be complete and are qualified in their entirety by reference to the full
text of the transaction documents, copies of which are filed as Exhibits 10.1, 10.2 and 10.3. respectively, to this Current Report
on Form 8-K and are incorporated by reference herein.