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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): November 13, 2018
ESPORTS ENTERTAINMENT GROUP, INC.
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(Name of Small Business Issuer in its charter)
Nevada 000-55954 26-3062752
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(State of incorporation) (Commission File No.) (IRS Employer
Identification No.)
Commercial Centre, Jolly Harbour
St. Mary's, Antigua and Barbuda
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(Address of principal executive offices)
Registrant's telephone number, including area code: (905) 580-2978
(Former name or former address if changed since last report)
Check 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 (see General Instruction A.2. below)
[ ] 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-14(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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 13a of the
Exchange Act. [ ]
1
Item 1.01. Entry Into a Material Definitive Agreement.
See Item 2.03 of this report.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
On November 13 and 14, 2018 the Company sold senior secured convertible
promissory notes in the principal amount of $1,914,000 to a group of private
investors. The Company received for gross proceeds of $1,740,000 from the sale
of the notes, after original issue discount of $174,000. The notes bear interest
at 5% per year and are secured by all of the Company's assets. Notes in the
principal amount of 1,650,000 mature on November 13, 2019. A note in the
principal amount of $264,000 matures on November 14, 2019. The notes are
convertible into shares of the Company's common stock, initially at a conversion
price of $0.60 per share, subject to adjustment.
Events of Default under the Notes include, but are not limited to, the
following:
o any default in the payment of the principal amount of the Notes or
interest, late fees, liquidated damages and other amounts owing to the
Note Holders;
o any representation or warranty made in the Notes or any other
documents relating to the Notes (the "Transaction Documents") becomes
untrue or incorrect in any material aspect;
o the Company fails to observe or perform any covenant or agreement
contained in the Notes or the Transaction Documents;
o the Company's common stock is not eligible for listing or quotation
for trading on a trading market and will not be eligible to resume
listing or quotation for trading within 10 trading days;
o the Company fails for any reason, except if caused by the action or
inaction of a Note Holder, to deliver certificates to a Note Holder
prior to the second trading day after a conversion notice is delivered
to the Company.
If an Event of Default occurs, the outstanding principal amount of the
Notes, plus accrued but unpaid interest, liquidated damages and other amounts
owing with respect to the Notes will become, at the Note Holder's election,
immediately due and payable in cash at the Mandatory Default Amount. The
Mandatory Default Amount means the sum of 130% of the outstanding principal
amount of the Notes plus accrued and unpaid interest, including default interest
of 18% per year, and all other amounts, costs, expenses and liquidated damages
due in respect of the Notes.
The note holders also received warrants which collectively allow the note
holders to purchase up to 3,190,000 shares of the Company's common stock. The
warrants are initially exercisable at a price of $0.75 per share, subject to
adjustment, and expire in November, 2021.
2
The Placement Agent for the offering received cash compensation of $159,200
and warrants to purchase 638,000 shares of the Company's common stock, at an
initial exercise price of $0.75 per share, subject to adjustment ("Agent
Warrants"). The Agent Warrants may be exercised on a "cashless" basis and will
expire in November 2023.
The Company relied upon the exemption provided by Section 4(a)(2) of the
Securities Act of 1933 and Rule 506(b) of the Securities and Exchange Commission
in connection with sale of the securities. The persons who acquired these
securities were accredited and sophisticated investors and were provided full
information regarding the Company's operations. There was no general
solicitation in connection with the offer or sale of these securities. The
persons who acquired the securities acquired them for their own accounts. The
certificates representing the securities will bear a restricted legend providing
that they cannot be sold except pursuant to an effective registration statement
or an exemption from registration.
The foregoing description is qualified in its entirety by reference to the
full text of the Securities Purchase Agreement, the Senior Secured Convertible
Note, the Warrant, the Security Agreement, the Pledge Agreement and the
Subsidiary Guarantee, which have been filed as Exhibits 10.1, 10.2, 10.3, 10.4,
10.5 and 10.6, respectively, to this Current Report on Form 8-K and are
incorporated in this Form 8-K by reference.
Item 3.02. Unregistered Sales of Equity Securities.
See Item 2.03 of this report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit xhibit
No. E
10.1 Form of Securities Purchase Agreement
10.2 Form of Senior Secured Convertible Note
10.3 Form of Warrant
10.4 Form of Security Agreement
10.5 Form of Pledge Agreement
10.6 Form of Subsidiary Guarantee
3
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.
Date: November 14, 2018 ESPORTS ENTERTAINMENT GROUP, INC.
By: /s/ Grant Johnson
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Grant Johnson
Principal Executive Office
