Attached files
| file | filename |
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| EX-10.3 - SECURED CONVERTIBLE ROYALTY - IOTA COMMUNICATIONS, INC. | iotc_ex103.htm |
| EX-10.2 - SECURED CONVERTIBLE REPLACEMENT - IOTA COMMUNICATIONS, INC. | iotc_ex102.htm |
| EX-10.1 - DEBT RESTRUCTURING - IOTA COMMUNICATIONS, INC. | iotc_ex101.htm |
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): August 31,
2020
IOTA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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000-27587
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22-3586087
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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600 Hamilton Street, Suite 1010
Allentown, PA 18101
(Address of principal executive offices)
Registrant’s telephone number, including area code: (855)
743-6478
N/A
(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 obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
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☐
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Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
None
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 13(a) of the Exchange
Act. ☐
On
August 31, 2020, Iota Communications, Inc. (the
“Company”) entered into a Debt Restructuring Agreement
with Forced Conversion Rights (the “Restructuring
Agreement”), by and between the Company and AIP Asset
Management Inc., in its capacity as Security Agent
(“AIP”), under a Note Purchase Agreement, dated as of
October 31, 2018 (as amended, restated, supplemented, or otherwise
modified from time to time, the “Note Purchase
Agreement”), between the Company, AIP, and AIP Convertible
Private Debt Fund L.P. f/k/a/ AIP Global Macro Fund L.P, and any
other parties that become Noteholders from time to time,
collectively (the “Noteholders”).
In
connection with the Restructuring Agreement; all outstanding notes
previously issued under the Note Purchase Agreement were cancelled.
In addition, the 14,673,800 shares of common stock and 21,350,000
warrants to purchase shares of common stock previously issued to
the Noteholders, and the Company’s obligation to issue an
additional 2,000,000 shares of common stock to the Noteholders,
were cancelled. The canceled notes, shares, and warrants were
replaced with a secured convertible replacement note (the
“Replacement Note”) and a secured convertible royalty
note (the “Royalty Note”). Upon execution of the
Restructuring Agreement, the Company borrowed an additional
$1,100,000 under the Replacement Note.
The
Replacement Note, with a principal balance of $9,000,000, and the
Royalty Note, with a principal balance of $6,000,000 (collectively,
the “Notes”), both mature on November 30, 2021, unless
earlier converted in accordance with the terms of the Restructuring
Agreement.
The
Notes bear interest at a rate of 10% per annum, provided that
during an event of default, they will bear interest at a rate of
20% per annum. The Company has prepaid interest on the Replacement
Note through December 31, 2020. Beginning January 1, 2021, interest
on the Replacement Note will be calculated monthly with 4% payable
monthly, and 6% added monthly to the outstanding principal balance
until the entire principal balance has been repaid in full.
Interest on the Royalty Note will be calculated monthly and added
to the outstanding principal balance.
In
addition, and as specified within the Royalty Note, the Company
will pay the Noteholders a royalty equal to 5% of the
Company’s revenues, with the first payment made no later than
September 20, 2021 for the Company’s fiscal year ending May
31, 2021. Thereafter, and until the Royalty Note is fully repaid or
converted, the royalty payments are due monthly, in arrears, in an
amount equal to 5% of the Company’s revenues for such
month.
The
Company may elect to convert all or part of the principal balance,
together with accrued and unpaid interest and any other amount then
payable under the Notes, into Units (defined below) at any time all
of the conditions specified within the Restructuring Agreement are
met., at a conversion price of $0.12 (subject to adjustment as
provided in the Restructuring Agreement) (the “Conversion
Price”). Each Noteholder has the right, at such
Noteholder’s option, at any time, to convert all or part of
the Notes, together with accrued and unpaid interest and any other
amount then payable under the Notes, into Units, at the Conversion
Price. A Unit consists of one share of common stock of the Company
and one warrant entitling the holder thereof to subscribe for one
share of common stock of the Company for a period of 60 months from
the date of issuance at an exercise price of $0.12 per share
(subject to adjustment as provided in the Restructuring
Agreement).
The
Restructuring Agreement waives compliance by the Company, and any
default associated with the Company’s failure to comply with
certain monthly paydown and financial covenants under the Note
Purchase Agreement provided the Company meets three specific
criteria by the specified deadlines in the Restructuring Agreement.
The Company has met one of the three criteria by the applicable
deadline. If the other two criteria are not met by their applicable
deadlines, an event of default could occur.
As part
of the debt restructuring, the Company agreed to issue 5,000,000
shares of its common stock to AIP Private Capital Inc. as a
prepayment of all monitoring fees payable until the Notes are fully
repaid or converted.
The
foregoing summary of the Restructuring Agreement, the Replacement
Note, and the Royalty Note does not purport to be complete and is
qualified in its entirety by reference to the Restructuring
Agreement and the Notes, which are filed as Exhibits 10.1, 10.2,
and 10.3, respectively, to this Current Report on Form 8-K and are
incorporated herein by reference.
ITEM
2.03
Creation
of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
See the
discussion set forth in Item 1.01, “Entry into a Material
Definitive Agreement” of this Current Report on Form 8-K,
which discussion is incorporated herein by this
reference.
ITEM
3.02
Unregistered
Sales of Equity Securities.
See the
discussion set forth in Item 1.01, “Entry into a Material
Definitive Agreement” of this Current Report on Form 8-K,
which discussion is incorporated herein by this reference. The
issuance of the shares of the Company’s common stock, the
Replacement Note, and the Royalty Note (and securities issuable
upon conversion thereof) were made in reliance on the exemption
from registration provided by Section 4(a)(2) of the Securities Act
of 1933, as amended.
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ITEM 9.01
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Financial Statements and Exhibits.
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(d) Exhibits:
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Exhibit
Number
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Description
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Debt
Restructuring Agreement between the Company and AIP
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Secured
Convertible Replacement Note Issued by the Company
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Secured
Convertible Royalty Note Issued by the Company
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SIGNATURE
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.
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IOTA
COMMUNICATIONS, INC.
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Date: September 23,
2020
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By:
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/s/ Terrence
DeFranco
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Name: Terrence
DeFranco
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Title:
Chief
Executive Officer
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