Item 1.01 Entry into a Material Definitive Agreement.
On
March 15, 2017, Friendable, Inc. (the “
Company
”) entered into a
Securities Purchase Agreement, (the “
EMA SPA
”) with EMA Financial, LLC
(“
EMA
”), to
issue and sell a 8% Convertible Note in the principal amount of
$96,000 (the “
EMA
Note
”) with a maturity date of March 15, 2018 (the
“
EMA Maturity
Date
”). The EMA Note was funded on March 15,
2017.
On
March 16, 2017, the Company entered into a Securities Purchase
Agreement, dated March 13, 2017 (the
“Coventry SPA”
) with
Coventry Enterprises, LLC (
“Coventry”
), to issue and
sell a 8% Convertible Redeemable Note in the principal amount of
$32,000 (the “
Coventry
Note
”) with a maturity date of March 13, 2018 (the
“
Coventry Maturity
Date
”). The Coventry Note was funded on March 16,
2017. In this Report, the following are referred to respectively,
as, the “
SPAs
”,
the “
Notes
”, and
the “
Maturity
Dates
”: (i) the EMA SPA and Coventry SPA; (ii) the EMA
Note and Coventry Note; and (iii) the EMA Maturity Date and the
Coventry Maturity Date.
Interest
accrues daily on the outstanding principal amount of each of the
Notes at a rate per annum equal to 8% on the basis of a 365-day
year. The principal amount of the Notes and interest are payable on
the Maturity Dates. The Notes are convertible into common stock,
subject to Rule 144, at any time after the issue date: (A) for the
EMA Note, at the lower of (i) the closing sale price of the common
stock on the on the trading day immediately preceding the closing
date, and (ii) 50% of the lowest sale price for the common stock
during the twenty-five (25) consecutive trading days immediately
preceding the conversion date; and (B) for the Coventry Note at 50%
of the lowest sale price for the common stock during the twenty
(20) consecutive trading days immediately preceding the conversion
date. If the shares due to EMA are not delivered to EMA within
three business days of the Company’s receipt of the
conversion notice, the Company will pay EMA a penalty of $1,000 per
day for each day that the Company fails to deliver such common
stock through willful acts designed to hinder the delivery of
common stock to EMA. EMA does not have the right to convert the
note, to the extent that it would beneficially own in excess of
4.9% of our outstanding common stock (the ownership limitation of
Coventry is 9.9%). The Company shall have the right, exercisable on
not less than five (5) trading days’ prior written notice to
EMA, to prepay the outstanding balance on the EMA Note for (i) 135%
of all unpaid principal and interest if paid within 90 days of the
issue date and (ii) 150% of all unpaid principal and interest
starting on the 91st day following the issue date. The Coventry
Note cannot be prepaid. In the event of default, the amount of
principal and interest not paid when due bear default interest at
the rate of 24% per annum and the Notes becomes immediately due and
payable. In connection with the Notes, the Company paid EMA $6,500
and paid Coventry $2,000 for each of their legal fees and
expenses.
The
Notes are long-term debt obligations that are material to the
Company. The Notes also contains certain representations,
warranties, covenants and events of default including if the
Company is delinquent in its periodic report filings with the SEC,
and increases in the amount of the principal and interest rates
under the Notes in the event of such defaults. In the event of
default, at the option of the lenders and at their sole discretion,
the lenders may consider the Notes immediately due and
payable.
The
foregoing description of the terms of the SPAs and Notes, do not
purport to be complete and is qualified in its entirety by the
complete text of the documents attached as, respectively, Exhibits
4.1, 4.2, 10.1, and 10.2 to this Current Report on Form
8-K.