Item
1.01 Entry into a Material Definitive Agreement
On March 11, 2021, Innovative Payment Solutions, Inc. (the “Company”),
entered into Securities Purchase Agreements (the “SPAs”) with several institutional investors (collectively, the “Investors”),
pursuant to which the Company agreed to sell to the Investors in a private placement (i) 30,333,334 shares of its common stock
(the “Shares”) and (ii) warrants (the “Warrants”) to purchase up to an aggregate of 15,166,667 shares of
its common stock for gross proceeds of approximately $4,550,000. The combined purchase price for one share of common stock and
associated Warrant is $0.15.
The
Company intends to use the net proceeds primarily for development of the Company's technology, digital payment platform and marketing,
as well as for working capital and general corporate purposes. The closing is expected to occur on or about March 16, 2021, subject
to satisfaction of customary closing conditions.
The Warrants are exercisable for a period of
five years from the date of issuance and have an exercise price of $0.15 per share, subject to adjustment as set forth in the Warrants
for stock splits, stock dividends, recapitalizations and similar events. The Investors may exercise the Warrants on a cashless
basis if after the six month anniversary of date of issuance the shares of common stock underlying the Warrants (the “Warrant
Shares”) are not then registered pursuant to an effective registration statement. Each Investor has contractually agreed
to restrict its ability to exercise the Warrants such that the number of shares of the Company’s common stock held by the
Investor and its affiliates after such exercise does not exceed the beneficial ownership limitation set forth in the Warrants which
may not exceed initially 4.99% or 9.99% of the Company’s then issued and outstanding shares of common stock.
In
connection with the SPAs, the Company entered into Registration Rights Agreements (“RRAs”), dated March 11, 2021,
with each of the Investors pursuant to which the Company is obligated to file a registration statement (the “Registration
Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) to register for resale the Shares and
Warrant Shares within twenty (20) days following the date upon which the Company files its Annual Report on Form 10-K for the
fiscal year ended December 31, 2020, and use all commercially reasonable efforts to have the Registration Statement declared effective
by the SEC within sixty (60) days after the Registration Statement is filed (or, in the event of a “full review” by
the SEC, within seventy five (75) days after the Registration Statement is filed). The Company will be obligated to pay certain
liquidated damages to the investors if the Company fails to file the resale registration statement when required, fails to cause
the Registration Statement to be declared effective by the SEC when required, of if the Company fails to maintain the effectiveness
of the Registration Statement.
The
SPAs and the RRAs contain customary representations, warranties, conditions and indemnification obligations of the parties, which
were made only for purposes of such SPAs and RRAs as of specific dates and solely for the benefit of the parties. The SPAs and
RRAs may be subject to limitations agreed upon by the contracting parties.
Pursuant
to an engagement letter (the “Engagement Letter”), dated as of March 6, 2021, by and between the Company and H.C.
Wainwright & Co., LLC (“Wainwright”), the Company engaged Wainwright to act as the Company’s exclusive placement
agent in connection with the private placement. Pursuant to the engagement agreement, the Company agreed to pay Wainwright a cash
fee of 8.0% of the gross proceeds raised by the Company in the private placement. The Company also agreed to pay Wainwright (i)
a management fee equal to 1.0% of the gross proceeds raised in the private placement; (ii) $35,000 for non-accountable expenses
and (iii) up to $50,000 for fees and expenses of legal counsel and other out-of-pocket expenses. In addition, the Company agreed
to issue to Wainwright (or its designees) placement agent warrants (the “Placement Agent Warrants”) to purchase a
number of shares equal to 8.0% of the aggregate number of Shares sold under the Purchase Agreement or warrants to purchase an
aggregate of up to 2,426,667 shares of the Company’s common stock. The Placement Agent Warrants generally will have the
same terms as the Warrants, except they will have an exercise price of $0.1875.
The
shares of the Company’s common stock issued under the SPAs, the Warrants, the Placement Agent Warrants and the shares to
be issued under the Warrants and Placement Agent Warrants, were, and will be, sold pursuant to an exemption from the registration
requirements under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506
of Regulation D promulgated thereunder. The Investors are accredited investors who have purchased the securities as an investment
in the private placement, which did not involve a general solicitation. The shares of common stock have not presently been registered
under the Securities Act and may not be offered or sold in the United States in the absence of an effective registration statement
or exemption from the registration requirements. This Current Report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation
or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.
The
foregoing descriptions of the Warrants, the Placement Agent Warrants, the SPAs, the RRAs and Engagement Letter are qualified in
their entirety by reference to the Form of Warrant, the Form of Placement Agent Warrant, the Form of SPA and the Form of RRA filed
hereto as Exhibits 4.1, 4.2, 10.1, 10.2 and 10.3, respectively, each of which are incorporated herein by reference.