Item
1.01 Entry Into a Material Definitive Agreement
Secured
Note and warrants Purchase
On
September 26, 2022, we, Touchpoint Group Holdings Inc. entered into a Securities Purchase Agreement (dated September 23, 2022)
with Mast Hill Fund, L. P. (“Mast Hill”), whereby in consideration of $63,900, we issued to Mast Hill a senior secured
convertible promissory note (“Note”) in the principal amount of $71,000 and common stock purchase warrants to purchase
100,000,000 shares of our common stock (the “First Warrant”) and 100,000,000 shares of our common stock (the “Second
Warrant”), respectively. The principal amount of the Note and all interest accrued thereon are payable on September 23,
2023. The Note provides for interest at the rate of 12% per annum, payable at maturity, and is convertible into shares of our
common stock at a price of $0.0003 per share, subject to anti-dilution adjustments in the event of certain corporate events as
set forth in the Note. In addition, subject to certain limited exceptions, if at any time while the Note remains outstanding,
we grant any option to purchase, sell or grant any right to reprice, or otherwise dispose of, issue or sell any shares of our
common stock or securities or rights convertible into or exercisable for shares of our common stock, at a price below the then
conversion price of the Note, the holder of the Note shall have the right to reduce the conversion price to such lower price.
Further, if we or one of our subsidiaries issues any security or amends any security outstanding upon issuance of the Note and
Mast Hill reasonably believes that such security contains a term in favor of the holder thereof which is more favorable than the
terms contained in the Note, such as provisions relating to prepayment, original issue discounts and interest rates, then upon
request of Mast Hill, such term shall become part of the transaction documents exchanged with Mast Hill in connection with the
sale of the Note.
In
addition to the obligation to repay the Note at maturity, the Note provides that if at any time prior to repayment or full conversion
of the Note we receive cash proceeds from various sources, including payments from customers, Mast Hill has the right to demand
that up to 50% of the amount received be applied to the payment of amounts due under the Note. The
Note also grants to Mast Hill a right of first refusal to provide financing to us on such terms as might be offered by a third
party.
Payment
of all amounts due under the Note is secured by a lien on substantially all of our assets and those of our subsidiaries in accordance
with the terms of the Security Agreement entered into concurrently with the Note.
Pursuant
to the Securities Purchase Agreement we granted Mast Hill “piggy back” registration rights with respect to the securities
issuable upon conversion of the Note and exercise of the First and Second Warrant.
The
First Warrant is exercisable until September 23, 2027, at a price of $0.0006 per share, subject to customary anti-dilution adjustments. In
addition, subject to certain limited exceptions, if at any time while the First Warrant remains outstanding, we grant any option
to purchase, sell or grant any right to reprice, or otherwise dispose of, issue or sell any shares of our common stock or securities
or rights convertible into or exercisable for shares of our common stock, at a price below the then exercise price of the First
Warrant, the holder of the First Warrant shall have the right to reduce the exercise price to such lower price. The First Warrant
may also be exercised by means of a “cashless exercise” in accordance with the formula provided in the Warrant.
The
Second Warrant only becomes exercisable upon the occurrence of an Event of Default (as defined in the Note) and, upon such occurrence,
remains exercisable for a period of five years and will be cancelled if the Note is satisfied by its maturity date and prior to
an Event of Default. The price payable upon exercise of the Second Warrant is $0.0006 per share, subject to customary anti-dilution
adjustments. In addition, subject to certain limited exceptions, if at any time while the Second
Warrant remains outstanding, we grant any option to purchase, sell or grant any right to reprice, or otherwise dispose of, issue
or sell any shares of our common stock or securities or rights convertible into or exercisable for shares of our common stock,
at a price below the then exercise price of the Warrant, the holder of the Second Warrant shall have the right to reduce the exercise
price to such lower price. The Second Warrant may also be exercised by means of a “cashless exercise” in accordance
with the formula provided in the Warrant.
Each
of the Note, the First Warrant and the Second Warrant contains a “blocker” limiting the number of shares which may
be acquired at any time to such amount as would not cause the holder of the Note and Warrants, and its affiliates as defined in
the Note, to be deemed to hold more than 4.99% of the number of shares of common stock outstanding as of the date of the proposed
acquisition.
Termination
of “Leak Out” Provisions
On
September 21, 2022, we entered into a Global Amendment with Mast Hill whereby the “leak out” provisions with respect
to the shares issuable upon conversion or exercise of the promissory notes and warrants previously issued to Mast Hill as more
fully described below, were deleted from the Securities Purchase Agreements pursuant to which such promissory notes and warrants
were issued and therefore, are of no further force and effect.
We
had previously entered into (i) a Securities
Purchase Agreement dated October 29, 2021 (the “First Agreement”), whereby we issued to Mast Hill a promissory note
in the principal amount of $810,000 and a Warrant (as defined in the First Agreement), which First Agreement, Note and Warrant
were amended pursuant to the Amendment #1 dated March 25, 2022; (ii) a Securities Purchase
Agreement dated March 28, 2022 (the “Second Agreement”), whereby we issued to Mast Hill a promissory note in the principal
amount of $625,000 and Warrants (as defined in the Second Agreement), which Second Note was amended pursuant to the Amendment
#1 dated April 4, 2022; (iii) a Securities Purchase Agreement dated April 11, 2022 (the “Third
Agreement”), whereby we issued to Mast Hill a promissory note in the principal amount of $275,000 and Warrants (as defined
in the Third Agreement); (iv) a Securities Purchase Agreement dated June 7, 2022 (the “Fourth
Agreement”), whereby we issued to Mast Hill a promissory note in the principal amount of $225,000 and Warrants (as defined
in the Fourth Agreement); and (v) a Securities Purchase Agreement dated July 18, 2022 (the
“Fifth Agreement”), whereby we issued to Mast Hill a promissory note in the principal amount of $115,000 and Warrants
(as defined in the Fifth Agreement).
The
Global Amendment eliminates the leak out provisions applicable to the shares issuable upon exercise of each of the Notes and Warrants
referenced in the immediately preceding paragraph by deleting (i) Section 2 from the Amendment #1 dated March 25, 2022 and (ii)
Section 8(q) from each of the Second, Third, Fourth and Fifth Agreements referred to above.