Section 1 - Registrant’s Business and Operations.
Item 1.01 Entry into a Material Agreement.
On July 11, 2023 (the “Issue Date”), Kisses from Italy, Inc., a Florida corporation (the “Company”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with GS Capital Partners, LLC, (the “Buyer”), pursuant to which the Company issued to the Buyer a 10% promissory note in the principal amount of $115,000.00 (the “Note”). The Company received $105,000.00 gross proceeds from the Buyer due to the original issue discount on the Note of $10,000. In connection with the execution and delivery of the Purchase Agreement and the issuance of the Note, the Company issued to the Buyer 500,000 commitment shares (the “Commitment Shares”) and a warrant to purchase an additional 862,500 shares of common stock of the Company (the “Warrant”) at an exercise price of $0.10 per share (the “Exercise Price”). In addition to the Commitment Shares, the Company issued 1,500,000 returnable shares to the Buyer (the “Returnable Shares”), which are held in book-entry and returnable to the Company by the Buyer unless there is an uncured default during the 12-month term of the Note.
The Note bears interest at a rate of 10% per annum, at a fixed conversion price of $0.01 (the “Conversion Price”) and is due and payable no later than July 11, 2024. Interest on the Note is payable in shares of the Company’s common stock (the “Common Stock”) commencing on the Issue Date. The Note may be prepaid at an amount equal to 110% of the principal plus accrued interest within 180 days.
The Note can be accelerated upon the occurrence of an event of default, which shall occur, among other events, (i) if the Company defaults in the payment of principal or interest on the Note or any other note issued to the Buyer by the Company, (ii) if a majority of the members of the board of directors of the Company on the Issue Date are no longer serving as members of the board, (iii) the Company is not current in its filings with the Securities and Exchange Commission, (iv) if the Common Stock are delisted from an exchange (including the OTC Market exchange), or if the Common Stock trades on an exchange, and trading in the Common Stock is suspended for more than 10 consecutive days, or (v) the Company ceases to file its reports under the Securities Act of 1933, as amended (the “Act”). Upon an event of default, interest on the Note shall accrue at a default interest rate of 24% per annum, and the Conversion Price shall decrease from $.01 per share to $0.005 per share.
The parties agree that while any principal amount, interest or fees, or expenses are still outstanding under the Note, the Company will not enter into any public or private offering of its securities in which the Company receives cash proceeds in the aggregate of more than $450,000 with another investor or investor that establishes rights or benefiting such other investor or investors in any manner more favorable in any material respect than the rights and benefits established in favor of the Buyer.
The Warrant provides for the purchase of up to 862,500 shares of the Common Stock (the “Warrant Shares”) at the Exercise Price and is exercisable at any time on or after the Issue Date and terminating on the five-year anniversary of the Issue Date. The Warrant may be exercised, in whole or part, on a cashless basis unless a registration statement covering the Warrant Shares is effective at the time of exercise, entitling the Buyer to receive the number of shares calculated based on the closing price of the Common Stock immediately preceding the date on which the Buyer elects to a cashless exercise of the Warrant at the Exercise Price, as adjusted.
The Company’s sales of shares of Common Stock to the Buyer under the Purchase Agreement is limited to no more than the number of shares that would result in the beneficial ownership by the Buyer and its affiliates, at any single point in time, of more than 4.99% of the then outstanding shares of the Common Stock.
The Company and the Buyer made certain representations and warranties to each other that are customary for transactions similar to this one, subject to specified exceptions and qualifications.
The foregoing descriptions of the Purchase Agreement, the Note, and the Warrant are qualified in their entirety by reference to the full text of the Purchase Agreement, the Note, and the Warrant, copies of which are attached hereto as Exhibits 10.25, 4.14, and 4.15, respectively, each of which is incorporated herein in its entirety by reference.
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