Item 1.01. Entry into a Material Definitive
Agreement.
On
August 18, 2017, Youngevity International, Inc. (the
“
Company
”), closed
the final tranche of its private placement offering (the
“
Offering
”) pursuant to
which the Company offered for sale a minimum of $100,000 of
units up to a maximum of $10,000,000 of units, with each unit (a
“
Unit
”)
consisting of: (i) a three (3) year convertible note in the
principal amount of $25,000 (the “
Note
or
Notes
”) initially
convertible into shares of the Company’s common stock, par
value $0.001 per share (the “
Common Stock
”), at $4.60
per share (subject to adjustment); and (ii) Series D Warrant (the
“
Class D
Warrant
” or “
Warrant(s)
”), exercisable
to purchase 50% of the number of shares issuable upon conversion of
the Note at an exercise price equal to $5.56. On August 18, 2017,
the Company entered into a Note Purchase Agreement with fifteen
(15) accredited investors pursuant to which the Company raised
gross cash proceeds of $954,000 in the Offering and sold Notes in
the aggregate principal amount of $954,000, convertible into
207,391 shares of the Company’s Common Stock, at a conversion
price of $4.60 per share, subject to adjustment as provided
therein; and Warrants to purchase 103,696 shares of Common Stock at
an exercise price of $5.56. The Company intends to use the proceeds
for working capital purposes. For twelve (12) months following the
Closing, the investors have the right to participate in any future
equity financings by the Company up to their pro rata share of the
maximum offering amount in the aggregate.
Prior
to this closing, the Company raised gross proceeds of $2,100,000 in
the initial closing of the Offering and sold units consisting
of Notes in the aggregate principal amount of $2,100,000
convertible into 456,522 shares of the Company’s Common
Stock, at a conversion price of $4.60 per share, subject to
adjustment as provided therein; and Warrants to purchase 228,261
shares of Common Stock at an exercise price of $5.56. In addition,
as part of the Offering, three (3) investors in the Company’s
2015 private placement (the “
Prior Investors
”),
converted their 8% Series C Convertible Notes in the aggregate
principal amount of $4,200,349 together with accrued interest
thereon into new convertible notes for an equal principal amount,
convertible into 913,119 shares of Common Stock and Series D
warrants to purchase an aggregate of 456,560 shares of Common
Stock. The new note will carry the same interest rate as the prior
note. The Prior Investors also agreed to exchange their Series A
Warrants dated October 26, 2015 to purchase an aggregate of 279,166
shares of Common Stock for a new Series D warrant to purchase an
aggregate of 182,065 shares of Common Stock.
The
Notes bear interest at a rate of eight percent (8%) per annum. The
Company has the right to prepay the Notes at any time after the one
year anniversary date of the issuance of the Notes at a rate equal
to 110% of the then outstanding principal balance and accrued
interest. The Notes automatically convert to Common Stock if prior
to the maturity date the Company sells Common Stock, preferred
stock or other equity-linked securities with aggregate gross
proceeds of no less than $3,000,000 for the purpose of raising
capital. The Notes provide for full ratchet price protection for a
period of nine months after their issuance and thereafter weighted
average price adjustment.
The
Warrants contain cashless exercise provisions in the event a
registration statement registering the Common Stock underlying the
Warrants has not been declared effective by the Securities and
Exchange Commission (the “
SEC
”) by specified dates
and customary anti-dilution protection and registration rights. The
Warrants expire thirty-six (36) months from the date of the closing
and have an initial exercise price of $5.56 per share.
In
connection with the Offering, the Company also entered into a
registration rights agreement with the investors in the Offering
(the “
Registration
Rights Agreement
”). The Registration Rights Agreement
requires that the Company file a registration statement (the
“
Initial
Registration Statement
”) with the SEC within ninety
(90) days of the final closing date of the Offering (the
“
Filing
Date
”) for the resale by the investors of all of the
Common Shares underlying the Notes and the Warrants and all shares
of Common Stock issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect
thereto (the “
Registrable
Securities
”). The Initial Registration
Statement must be declared effective by the SEC on the later of 180
days of the final closing date of the Offering or, if the
registration statement receives a full review by the SEC, 210 days
of the final closing date (the “
Effectiveness Date
”)
subject to certain adjustments. Upon the occurrence of certain
events (each an “
Event
”), including, but
not limited to, that the Initial Registration Statement is not
filed prior to the Filing Date or declared effective by the
Effectiveness Date, the Company will be required to pay to the
investors liquidated damages of 1.0% of their respective aggregate
purchase price upon the date of the Event and then monthly
thereafter until the Event is cured. In no event may the aggregate
amount of liquidated damages payable to each of the Purchasers
exceed in the aggregate 10% of the aggregate purchase price paid by
such Purchaser for the Registrable Securities.
The
Company paid TriPoint Global Equities, LLC an additional placement
fee in connection with the second closing of $59,240, excluding
legal expenses. The Company also has agreed to issue to the
Placement Agent three-year warrants to purchase 19,314 shares of
Common Stock at an exercise price of $5.56 per share as a placement
agent fee in connection with the second closing.
The
foregoing descriptions of the Note Purchase Agreement, the Notes,
the Warrants, and the Registration Rights Agreement are qualified
in their entirety by reference to the full text of the Note
Purchase Agreement, Notes, the Warrants, and the Registration
Rights Agreement (herein, the “
Transaction Documents
”),
copies of each of which were filed as Exhibit Items 4.1, 4.2, 4.3,
and 4.4, respectively, to the Company’s Current Report on
Form 8-K, dated August 3, 2017.