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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):
September 28, 2022
Edgemode, Inc.
(Exact name of registrant as specified in its charter)
|
Nevada |
|
000-55647 |
|
47-4046237 |
| (State
of Incorporation) |
|
(Commission File Number) |
|
(I.R.S. Employer No.) |
110 E. Broward Blvd.,
Suite 1700,
Ft. Lauderdale,
FL
33301
(Address of Principal Executive Offices, and Zip Code)
(707)
687-9093
(Registrant’s Telephone Number, Including Area Code)
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:
|
☐ |
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 |
| None |
Not
Applicable |
Not
Applicable |
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. |
Effective September 28, 2022, Edgemode, Inc. (the “Company”)
entered into a Series B Preferred Stock Purchase Agreement (the
“Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia
limited liability company (the “Investor”) pursuant to which the
Company issued and sold to the Investor an additional 55,000 shares
of Series B Preferred Stock for a purchase price of $55,000.00.
Following the issuance date the Investor beneficially owns an
aggregate of 212,500 shares of Series B Preferred Stock.
The terms of the Series B Preferred Stock, including the terms of
conversion, pursuant to the Company’s Certificate of Designation,
Preference and Rights of Series B Preferred Stock of the Company
(the “Certificate of Designation”), are provided below.
Pursuant to the Purchase Agreement, the Investor may convert all or
a portion of the outstanding Series B Preferred Stock into shares
of the Company’s Common Stock beginning on the date which is 180
days after the issuance date of the Series B Preferred Stock into
Common Stock; provided, however, that the Investor may not convert
the Series B Preferred Stock to the extent that such conversion
would result in beneficial ownership by the Investor and its
affiliates of more than 4.99% of the Company’s issued and
outstanding Common Stock.
The Company will have the right, at the Company’s sole option,
provided that an event of default has not occurred, to redeem all
or any portion of the shares of Series B Preferred Stock,
exercisable on not more than 3 Trading Days prior written notice to
the holders of the Series B Preferred Stock, in full. If the
Company redeems the shares of Series B Preferred Stock within 90
days of its issuance, the Company must pay all of the principal at
a cash redemption premium of 120%; if such prepayment is made
between the 91st day and the 180th day after the issuance of the
Series B Preferred Stock, then such redemption premium is 125%.
After the 180th day following the issuance date, there shall be no
further right of optional redemption. On the date which is the
earlier of: (i) twelve (12) months following the issuance date; or
(ii) at the option of the Investor, upon the occurrence of an Event
of Default as defined under the Certificate of Designation (the
“Mandatory Redemption Date”), the Company shall redeem all of the
shares of Series B Preferred Stock of the Investor (which have not
been previously redeemed or converted). With five (5) days of the
Mandatory Redemption Date, the Company shall make payment to the
Investor of an amount in cash equal to the total number of shares
of Series B Preferred Stock held by such Investor multiplied by the
then current Stated Value as adjusted pursuant to the terms hereof
(including but not limited to the addition of any accrued unpaid
dividends and any default adjustments. An Event of Default includes
the Company’s failure to pay a mandatory redemption amount, comply
with its SEC reporting obligations and any bankruptcy or
liquidation.
Effective July 20, 2022 the Company established a series of
redeemable convertible preferred stock (the “Series B Preferred
Stock”), stated value $1.00 per share (the “Stated Value”),
pursuant to a Certificate of Designation, Preference and Rights of
Series B Preferred Stock of the Company (the “Certificate of
Designation”). The Stated Value shall increase to $2.00 upon an
Event of Default.
Pursuant to the Certificate of Designation, the Company authorized
1,000,000 shares of the Series B Preferred Stock, which may be
convertible into shares of common stock, par value $0.001 per
share, of the Company (the “Common Stock”) at the option of the
holders thereof at any time after the issuance of the Series B
Preferred Stock, at a conversion price equal a Variable Conversion
Price (the “Conversion Price”). The “Variable Conversion Price”
means 65% multiplied by the Market Price (representing a discount
rate of 35%). The “Market Price” means the average of the lowest
two (2) Trading Prices (as defined below) for the Common Stock
during the twenty (20) Trading Day period ending on the latest
complete trading day prior to the conversion date. The “Trading
Price” means, for any security as of any date, the actual closing
price on the OTCQB, OTCQX, Pink Sheets electronic quotation system
or applicable trading market.
The Series B Preferred Stock will, with respect to dividend rights
and rights upon liquidation, winding-up or dissolution, rank: (a)
senior with respect to dividends and right of liquidation with the
Company’s Common Stock and (b) junior with respect to dividends and
right of liquidation to all existing and future indebtedness of the
Company and existing and outstanding preferred stock of the
Company.
The Series B Preferred Stock shall have no right to vote on any
matters requiring shareholder approval or any matters on which the
shareholders are permitted to vote. So long as any shares of Series
B Preferred Stock are outstanding, the Company will not, without
the affirmative approval of the Investor (i) alter or change
adversely the powers, preferences or rights given to the Series B
Preferred Stock or alter or amend this Certificate of Designations,
(ii) authorize or create any class of stock ranking as to
distribution of dividends or a liquidation preference senior to the
Series B Preferred Stock, (iii) amend its Articles of
Incorporation, as amended in breach of any of the provisions the
Certificate of Designation, (iv) increase the authorized number of
shares of Series B Preferred Stock, (v) liquidate, dissolve or
wind-up the business and affairs of the Company, or effect any
Deemed Liquidation Event (as defined below), (vi) breach any of the
provisions set forth herein; or (vii) enter into any binding
agreement with respect to any of the foregoing. A “Deemed
Liquidation Event” means: (a) a merger or consolidation in which
the Company is a constituent party or a subsidiary of the Company
is a constituent party and the Company issues shares of its capital
stock pursuant to such merger or consolidation, except any such
merger or consolidation involving the Company or a subsidiary in
which the shares of capital stock of the Company outstanding
immediately prior to such merger or consolidation continue to
represent, or are converted into or exchanged for shares of capital
stock that represent, immediately following such merger or
consolidation, at least a majority, by voting power, of the capital
stock of the surviving or resulting corporation or, if the
surviving or resulting corporation is a wholly owned subsidiary of
another corporation immediately following such merger or
consolidation, the parent corporation of such surviving or
resulting corporation; or (b) the sale, lease, transfer, exclusive
license or other disposition, in a single transaction or series of
related transactions, by the Company or any subsidiary of the
Company of all or substantially all the assets of the Company and
its subsidiaries taken as a whole, or the sale or disposition
(whether by merger or otherwise) of one or more subsidiaries of the
Company if substantially all of the assets of the Company and its
subsidiaries taken as a whole are held by such subsidiary or
subsidiaries, except where such sale, lease, transfer, exclusive
license or other disposition is to a wholly owned subsidiary of the
Company.
Each share of Series B Preferred Stock will carry an annual
dividend in the amount of eight percent (8%) of the price per share
of Series B Preferred Stock of $1.00 (the “Dividend Rate”), which
shall be cumulative, payable solely upon redemption, liquidation or
conversion. Upon the occurrence of an Event of Default, the
Dividend Rate shall automatically increase to twenty two percent
(22%).
In connection with the Certificate of Designation, the Company
agreed to cause its transfer agent to reserve six times the number
of shares of Common Stock that would be issuable upon full
conversion of the Series B Preferred Stock (assuming that the 4.99%
limitation set forth in herein is not in effect) (based on the
respective Conversion Price of the Series B Preferred Stock as
defined below in effect from time to time).
The proceeds from the sale of the Series B Preferred Stock shall be
used for working capital. In addition, the Company paid $3,750 to
the Investor and its counsel for legal and due diligence fees.
The foregoing summaries of the terms of the Certificate of
Designation and the Purchase Agreement are subject to, and
qualified in their entirety by, the agreements and instruments
attached hereto as Exhibits 3.1 and 10.1, respectively, which are
incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information set forth under Item 1.01 above with respect to the
Purchase Agreement and the related agreements are incorporated
herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 above with respect to the
issuance of the shares of Series B Preferred Stock is incorporated
herein by reference. The issuance of the shares of Series B
Preferred Stock was made in reliance upon the exemption from the
registration requirements of the Securities Act of 1933, as amended
(the “Act”), pursuant to Section 4(a)(2) of the Act. No commissions
or fees were paid in connection with the sale of the Series B
Preferred Stock.
|
Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits
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 hereunto duly authorized.
| |
Edgemode, Inc. |
| |
|
|
| Dated: September 28, 2022 |
By: |
/s/ Charles
Faulkner |
| |
Name: |
Charles Faulkner |
| |
Title: |
Chief
Executive Officer |
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