Item 1.01Entry into a Material Definitive Agreement.
Convertible Note Amendments
On October 25, 29 and 30, 2019, Cool Holdings, Inc. (the “Company”) entered into amendment agreements (the “Amendments”) with two debt holders (the “Holders”) to convert the outstanding aggregate principal amount of the convertible notes held by the Holders, and interest accrued thereon, into shares of common stock (the “Equity Securities”) of the Company at a conversion price of $0.51 per Equity Security (the “Conversion Price”).
The Holders that entered into Amendments with the Company consist of holders of: (i) a principal amount of $663,000 pursuant to 12.0% unsecured convertible notes (the “Convertible Notes”) issued on October 30, 2018; and (ii) a principal amount of $400,000 pursuant to Convertible Notes issued on May 16, 2019. Altogether, such Amendments have resulted in the conversion of $1,083,778.08 of indebtedness, including interest accrued, into 2,125,056 Equity Securities of the Company.
The Amendments also amended the exercise price of certain existing warrants (the “Existing Warrants”) held by Holders to $0.51 per share, and further adjusted the number of such Existing Warrants outstanding to be equal to the outstanding principal amount of the debt held by each Holder, divided by the Conversion Price.
Convertible Note Maturity Date Extension
On October 24, 2019, the Company also entered into amendments with the holders of a principal amount of $1,237,000 of debt pursuant to Convertible Notes issued in October 2018 to extend the maturity date thereof until either November 15, 2019, or December 31, 2019 (the “Maturity Date Extension”).
Sponsorship Agreement
Furthermore, on October 28, 2019, the Company and Simply Mac, Inc. (“Simply Mac”), a subsidiary of the Company, entered into an agreement (the “Sponsorship Agreement”) with Torque Esports Corp. (“Torque”) and Ideas & Cars Ltd. (“Ideas & Cars”), a subsidiary of Torque. Pursuant to the terms of the Sponsorship Agreement, Simply Mac is the sole and exclusive supplier of Apple products to Ideas & Cars until December 31, 2022, and is also now a sponsor for the “America’s Fastest Gamer” event produced by Ideas & Cars. Ideas & Cars is committed to purchasing a minimum of $600,000 in Apple products from Simply Mac as follows: $150,000 worth of Apple product during the 2020 calendar year, less any amount of products purchased during the 2019 calendar year; $200,000 worth of Apple product during the 2021 calendar year; and $250,000 worth of Apple product during the 2022 calendar year (collectively, the “Apple Purchases”). In consideration for the Apple Purchases and featuring Simply Mac in its multimedia content, including a television show, either Simply Mac or its parent company, the Company, shall pay to Torque an amount of $2,550,000 in cash or Equity Securities of the Company, in the Company’s sole discretion, as follows: $150,000 within 60 days of entering into the Sponsorship Agreement; $600,000 in four equal installments during the 2020 calendar year; $800,000 in four equal installments during the 2021 calendar year; and $1,000,000 in four equal installments during the 2022 calendar year. The Sponsorship Agreement is terminable for convenience by either the Company or Torque upon written notice to the other party at least 10 days prior to the end of each calendar quarter, with such termination effective as of the last day of such calendar quarter in which the notice is delivered.
The foregoing is a summary of certain material terms and conditions of the Amendments, Maturity Date Extension and Sponsorship Agreement, and is not a complete description thereof. Accordingly, the foregoing is qualified in its entirety by reference to the full text of the form of Amendments, Maturity Date Extension and Sponsorship Agreement attached to this Current Report on Form 8-K as Exhibits 4.1 to 4.4, and incorporated herein by reference.