|
Item
1.01
|
Entry
into a Material Definitive Agreement.
|
On
April 6, 2021 (the “Effective Date”), mPhase Technologies, Inc. (the “Company”), entered into a
Securities Purchase Agreement (the “SPA”) with Evergreen Capital Management LLC (the “Investor”), pursuant
to which the Company sold to the Investor a 15% OID convertible promissory note with a principal amount of $1,771,000 (the “Note”)
and a warrant (the “Warrant”) to purchase up to 8,855,000 shares of the Company’s common stock, par value $0.01
per share (the “Common Stock”) for proceeds of $1,540,000.
The
Note matures on April 6, 2022, bears interest at the rate of 5% per annum and is convertible at any time upon the option
of the Investor into shares of Common Stock at a conversion price equal to $0.20 per share or, upon the occurrence and during
the continuance of an Event of Default (as defined in the Note), if lower, at a conversion price equal to 75% of the lowest daily
VWAP of the Common Stock during the 20 consecutive trading days immediately preceding the applicable conversion date. The Company
has the right to prepay all or any portion of the outstanding balance of the Note in an amount equal to 115% or 120%, depending
on whether such repayment is made before November 5, 2021 or after November 5, 2021, respectively, multiplied by the portion of
the outstanding balance to be prepaid. The Company is required to prepay all or any portion of the outstanding balance of the
Note upon the occurrence of a Qualified Financing (as defined in the Note). If at any time while the Note is outstanding, the
Company completes any single Future Transaction (as defined in the Note), the Investor may, in its sole discretion, elect to apply
all, or any portion, of the then outstanding principal amount of this Note and any accrued but unpaid interest, as purchase consideration
for such Future Transaction.
The
Warrant is exercisable at a purchase price of $0.20 per share at any time on or prior to April 6, 2025, and may be exercised
on a cashless basis, beginning on the six-month anniversary of the Effective Date, if the shares of Common Stock underlying the
Warrant are not then registered under the Securities Act of 1933, as amended (the “Securities Act”). The Investor
will not have the right to exercise the Warrant if the Investor, together with its affiliates, would beneficially own in excess
of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to its conversion and under no
circumstances may exercise the Warrant if the Investor, together with its affiliates, would beneficially own in excess of 9.99%
of the number of shares of the Common Stock outstanding immediately after giving effect to its exercise.
The
SPA contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations
of the Company, other obligations of the parties thereto, and termination provisions.
Item
1.01 of this Current Report on Form 8-K contains only a brief description of the material terms of the SPA, the Note and the Warrant,
and does not purport to be a complete description of the rights and obligations of the parties thereunder, and such descriptions are
qualified in their entirety by reference to the full text of the SPA, the Note and the Warrant,, the forms of which are attached as Exhibits
4.1, 4.2 and 10.1, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.