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Subsequent Events:
6 Months Ended
Jun. 30, 2019
Subsequent Events [Abstract]  
Subsequent Events:

Note 11

Subsequent Events:

 

Amendments to Articles of Incorporation or Bylaws;

 

On August 19, 2019, FC Global filed an Amendment to its Amended and Restated Articles of Incorporation (the “Amendment”) with the Nevada Secretary of State to, among other things (i) change the name of the Company to “Gadsden Properties, Inc.”; (ii) increase the number of authorized shares of the Company’s Common Stock from 500,000,000 shares to 5,000,000,000 shares; and (iii) add certain provisions restricting ownership and transfer of shares to comply with requirements under the Internal Revenue Code for a real estate investment trust (“REIT”). At this time, the Company will continue to trade its stock under the symbol “FCRE” on the OTC Pink Sheets. The Company anticipates changing that symbol in the near future.

 

Private Placement

 

Purchase Agreement

 

On August 2, 2019, the Company and Gadsden, entered into a Purchase Agreement (the “Purchase Agreement”) with the several lenders named therein (collectively, the “Initial Lenders”), pursuant to which the Initial Lenders agreed to purchase for an aggregate purchase price of $400: (i) Notes, in the principal amount of $400; and (ii) 421,053 warrants to purchase shares of the Company’s common stock, at an exercise price of $0.50 per share with a fair value of $143 based on the Black Scholes model. The sale by the Company to the Initial Lenders was completed on August 2, 2019 (the “Initial Closing”).

 

On August 30, 2019, the Company and the Gadsden entered into a Purchase Agreement with the lender named therein (the “Second Lender”), pursuant to which the Second Lender agreed to purchase for an aggregate purchase price of $100: (i) a Note, in the principal amount of $100; and (ii) 125,000 warrants to purchase shares of the Company’s common stock, at an exercise price of $0.50 per share with a fair value of $19 based on the Black Scholes model. The sale by the Company to the Second Lender was completed on August 30, 2019 (the “Second Closing”).

 

On October 23, 2019, the Company and Gadsden entered into the Purchase Agreement with the lenders named therein (the “Third Lenders” and together with the Initial Lenders and Second Lender, the “Lenders”), pursuant to which the Third Lenders agreed to purchase for an aggregate purchase price of $425: (i) Notes, in the total principal amount of $425; and (ii) Warrants to be issued per the purchase agreement terms. The sale by the Company to the Lenders was completed on October 23, 2019 (the “Third Closing”).

  

Pursuant to the terms of the Purchase Agreement, the Company may hold one or more additional closings for the sale of up to an additional $14,075 of Securities (collectively with the Initial Closing, the Second Closing and the Third Closing, the “Private Placement”) through December 31, 2019, which date may be extended for up to 180 additional days at the joint election of the Company and National Securities Corporation, the placement agent for the Private Placement.

  

Loan and Security Agreement

 

In connection with the Purchase Agreement, the Company, as Guarantor, entered into a Loan and Security Agreement (the “Loan Agreement”) with Gadsden Growth Properties, L.P. (“OPCO”), as Borrower, and the Lenders. Pursuant to the Loan Agreement, the loans made and evidenced by the Notes purchased by the Lenders (the “Loans”) will bear interest at a non-compounded per annum rate of interest equal to ten percent (10%), or, if lower, the maximum amount permitted by applicable law, with interest on the Loans accruing from the date the Loans are made. Accrued and unpaid interest on the unpaid principal balance of all Loans outstanding under the Private Placement from time to time shall be due and payable quarterly on the first day of each January, April, July and October while the Loans remain outstanding with the final payment of accrued, but unpaid, interest being due and payable on the maturity date, which is the earlier of (i) June 30, 2021 or (ii) two (2) business days following a Liquidity Event (as described below), unless extended pursuant to any modification, extension or renewal note executed by OPCO and accepted by the Lenders in their sole and absolute discretion. A Liquidity Event is defined in the Loan Agreement as (i) any sale, lease or other disposition of any asset of OPCO or any subsidiary thereof (other than a sale, lease or other disposition to a wholly-owned subsidiary or affiliate of OPCO), whether alone or in the aggregate with other sales, leases or other dispositions, resulting in net cash proceeds payable to OPCO or the Company of at least $25,000 in the aggregate or (ii) one or more debt or equity financings by OPCO or the Company, resulting in net cash proceeds of at least $25,000 in the aggregate.

 

Any amount of interest on the principal amount of any Loan made under the Private Placement which is not paid when due shall be added to the principal balance of such Loan and shall bear interest payable on demand at a default per annum interest rate equal to fifteen percent (15%). Gadsden may prepay the Loans in cash, in whole or in part, without penalty, provided that any prepayment of principal shall include all accrued and unpaid interest thereon to the date of such prepayment.

 

Pursuant to the terms of the Loan Agreement, the Company has absolutely and unconditionally guaranteed prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all of the Loans or other obligations of OPCO to the Lenders arising under the Loan Agreement or under any other document entered into in connection with the Private Placement (the “Guaranty”). In connection with the Guaranty, the Lenders having Loans representing a majority in principal amount of the aggregate amount of Loans outstanding at the time of determination, may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness of the Loan Agreement: (i) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Loans or any part thereof; (ii) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment owing under the Guaranty; (iii) apply such security and direct the order or manner of sale thereof as such Lenders may determine; and (iv) release or substitute one or more of any endorsers or other guarantor of any of such obligations. All intercompany debt of Gadsden owing to the Company is subordinated until such time as the obligations under the Loan Agreement are paid in full in cash.

 

As security for the payment and performance of the obligations under the Loan Agreement, OPCO pledged to the Lenders a continuing and unconditional security interest in and to any and all assets and property of OPCO, subject to the terms of the Loan Agreement.

 

Issuance of Warrants

 

As part of the Private Placement, the Company issued Warrants to the Lenders pursuant to the Purchase Agreement. The Warrants have an exercise price of $0.50 and are exercisable in whole or in part for three (3) years from the date of issuance, subject to the terms and conditions therein, and includes a provision by which the Lenders may exercise the Warrants by means of a cashless exercise. The number of shares of common stock for which each Warrant may be exercised is equal to the Loan amount of such Lender divided by the “Closing VWAP,” which is defined in the Warrant as the volume weighted average closing price of the Company’s common stock for the 20 trading days after the date of issuance of the Warrant.

 

The exercise price and number of shares of common stock issuable upon exercise of the Warrants are subject to adjustment from time to time for stock splits, combinations, stock dividends, consolidation or merger, the sale or other disposition of all or substantially all of the Company’s assets, or reclassification, change or conversion of the outstanding securities of the Company or any reorganization of the Company or any similar corporate reorganization.

 

Pursuant to the terms of the Warrant, the Company will reserve and keep available from its authorized but unissued common stock the number of shares of common stock that are then issuable and deliverable upon the exercise of the entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Investor.

 

Placement Agent Warrants

 

As part of the Private Placement, the Company entered into a placement agent agreement in which the Company agreed to issue to the placement agent warrants to purchase a number of shares of the Company’s common stock equal to 2% of the consideration raised as payment for financing fees. The number of placement agent warrants to be issued shall be determined based upon the value of the placement agent warrants utilizing the Black Scholes model on the day a of the closing under the Private Placement. The placement agent warrants shall have an exercise price per share equal to 100% of the price per share of common stock on the day of a closing under the Private Placement and a duration of seven years from the date of the warrants’ issuance.

 

 

On August 2, 2019, in connection with the Initial Closing the Company issued 80,718 warrants to purchase shares of the Company’s common stock, at an exercise price of $0.3399 per share with a fair value of $27 based on the Black Scholes model.

 

On August 30, 2019, the Company issued 44,663 warrants to purchase shares of the Company’s common stock, at an exercise price of $0.15 per share with a fair value of $7 based on the Black Scholes model.

 

On October 23, 2019, the Company issued 436,761 warrants to purchase shares of the Company’s common stock, at an exercise price of $0.0507 per share with a fair value of $22 based on the Black Scholes model.

 

As part of the placement agent agreement, the Company agreed to issue to the placement agent warrants to purchase 250,000 shares of the Company’s common stock as payment for advisory fees. Such warrants have an exercise price of $.35 per share with a fair value of $85 based on the Black Scholes model and a duration of seven years from the date of such warrants’ issuance.

 

Stock Issuance to Directors

 

On July 18, 2019, three directors were each issued 818,171 shares of the Company’s stock for their service on the Company’s Board. The shares were issued to equalize these Board members to the new members of the Board who had previously served on the board of directors of Gadsden Growth Properties, Inc. (“Gadsden”). Gadsden’s board members hold incentive shares from Gadsden that are convertible into a comparable amount of shares of the Company as those issued to the three new directors. The shares are unregistered and restricted and vest ratably over a three-year period.