SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01 Entry Into a Material Definitive Agreement
On June 7, 2022, we, Touchpoint Group Holdings Inc. entered into a Securities Purchase Agreement with Mast Hill Fund, L. P. (“Mast Hill”), whereby in consideration of $202,500, which was received on June 8, 2022, we issued to Mast Hill a senior secured convertible promissory note (“Note”) in the principal amount of $225,000 and common stock purchase warrants to purchase 168,750,000 shares of our common stock (the “First Warrant”) and 262,500,000 shares of our common stock (the “Second Warrant”), respectively. The principal amount of the Note and all interest accrued thereon are payable on June 7, 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 $0.0012 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 June 7, 2027, at a price of $0.0012 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 $0.0012 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.
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.
Dated: June 10, 2022
| TOUCHPOINT GROUP HOLDINGS INC. | ||
| By: | /s/ Martin Ward | |
| Mark Ward, Chief Financial Officer | ||