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): December 12, 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
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(Former name or former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17CFR
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-14c))
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (ss.203.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 (ss.204.12b-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.
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 December 12, 2018 the Company sold senior secured convertible promissory
notes in the principal amount of $286,000 to two private investors. The Company
received gross proceeds of $260,000 from the sale of the Notes, after original
issue discounts of $26,000. The Notes bear interest at 5% per year and are
secured by all of the Company's assets. The Notes mature on December 12, 2019
and 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 holders' election,
immediately due and payable in cash at the Mandatory Default Amount. The
Mandatory Default Amount is 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 allow the Note holders to
purchase up to 476,666 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 on December 12, 2021.
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The Placement Agent for the offering received cash compensation of $20,800
and warrants to purchase 95,333 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 on December 12, 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 notes and warrants. 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 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 a Current Report on Form 8-K, filed with the
Securities and Exchange Commission on November 15, 2018 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
No. Exhibit
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10.1 Form of Securities Purchase Agreement (1)
10.2 Form of Senior Secured Convertible Note (1)
10.3 Form of Warrant (1)
10.4 Form of Security Agreement (1)
10.5 Form of Pledge Agreement (1)
10.6 Form of Subsidiary Guarantee (1)
(1) Incorporated by reference to the same exhibit filed with the Company's 8-K
report filed with the Securities and Exchange Commission on November 15,
2018.
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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: December 13, 2018 ESPORTS ENTERTAINMENT GROUP, INC.
By: /s/ Grant Johnson
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Grant Johnson
Principal Executive Officer
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