Item 1.01 Entry into a Material Agreement
On April 11, 2022, Kisses from Italy, Inc., a Florida corporation (the
"Company"), entered into a Securities Purchase Agreement, dated as of April 6,
2022, (the "Talos Purchase Agreement") with Talos Victory Fund, LLC, a Delaware
limited liability company ("Talos"), pursuant to which the Company issued to
Talos a promissory note in the principal amount of $165,000.00 (the "Talos
Note"). The Company received $148,500 gross proceeds from Talos due to the
original issue discount on the Talos Note. In connection with the execution and
delivery of the Purchase Agreement and the issuance of the Talos Note, the
Company issued to Talos 500,000 commitment shares (the "Talos Commitment
Shares") and a warrant to purchase an additional 1,650,000 shares of common
stock of the Company (the "Talos Warrant").
Pursuant to the Talos Purchase Agreement, Talos was granted a right of first
refusal on all issuances by the Company, as well as a most favored nations on
all securities to be issued by the Company until the Talos Note is paid in full.
The Company also agreed with Talos that it will not enter into any credit equity
line agreements. Pursuant to the Talos Note, the Company agreed not to incur any
additional unsecured debt which is senior or pari passu to the indebtedness
evidenced by the Talos Note, other than the issuances of notes in the principal
amount of up to $850,000 in the aggregate by the Company (including the Talos
Note and the Blue Lake Note (as defined below)). The Company and Talos made
certain customary representations and warranties, subject to specified
exceptions and qualifications.
The Talos Note bears interest at a rate of 12% per annum and is due and payable
no later than April 6, 2023. Although the Company has the right to prepay the
Talos Note without penalty, the annual interest is due if the Talos Note is paid
in full after October 6, 2022 by the Company prior to maturity. Upon default of
the Talos Note, the interest increases to 16%.
The Talos Note is convertible at a fixed conversion price of $0.05 (the
"Conversion Price"), subject to standard adjustments. If the Company issues
securities for less than the Conversion Price, the Conversion Price shall be
reduced to such amount.
The Talos Warrant issued to Talos provides for the purchase of up to 1,650,000
shares of the Company's common stock (the "Talos Warrant Shares") at an exercise
price of $0.10 per share. The Talos Warrant is exercisable on the earlier of 180
days from the date it was issued or when the registration statement covering the
Talos Warrant Shares is declared effective. The Talos Warrant may be exercised
on a cashless basis unless a registration statement covering the Talos Warrant
Shares has been declared effective at the time of exercise, and the number of
Talos Warrant Shares is subject to customary adjustments.
Pursuant to the terms of a Registration Rights Agreement dated April 6, 2022, by
and between the Company and Talos (the "Talos Registration Rights Agreement"),
the Company agreed to file a registration statement with the Securities and
Exchange Commission within 90 days with respect to the shares of common stock
issuable to Talos pursuant to the conversion of the Talos Note, the Talos
Warrant Shares and the Talos Commitment Shares. If the registration statement is
not declared effective within 180 days, the Talos Note shall be in default.
The Company's sales of shares of common stock to Talos under the agreements
described herein are limited to no more than the number of shares that would
result in the beneficial ownership by Talos and its affiliates, at any single
point in time, of more than 4.99% of the then outstanding shares of the
Company's common stock.
In addition, on April 13, 2022, the Company entered into a Securities Purchase
Agreement, dated as of April 11, 2022, (the "Blue Lake Purchase Agreement,"
together with the Talos Purchase Agreement, the "Purchase Agreements") with Blue
Lake Partners, LLC, a Delaware limited liability company ("Blue Lake," together
with Talos, the "Investors"), pursuant to which the Company issued to Blue Lake
a promissory note in the principal amount of $165,000.00 (the "Blue Lake Note,"
together with the Talos Note, the "Notes"). The Company received $148,500 gross
proceeds from Blue Lake due to the original issue discount on the Blue Lake
Note. In connection with the execution and delivery of the Blue Lake Purchase
Agreement and the issuance of the Blue Lake Note, the Company issued to Blue
Lake 500,000 commitment shares (the "Blue Lake Commitment Shares") and a warrant
to purchase an additional 1,650,000 shares of common stock of the Company (the
"Blue Lake Warrant," together with the Talos Warrant, the "Warrants").
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Pursuant to the Blue Lake Purchase Agreement, Blue Lake was granted a right of
first refusal on all issuances by the Company, as well as a most favored nations
on all securities to be issued by the Company until the Blue Lake Note is paid
in full. The Company also agreed with Blue Lake that it will not enter into any
credit equity line agreements. Pursuant to the Blue Lake Note, the Company
agreed not to incur any additional unsecured debt which is senior or pari passu
to the indebtedness evidenced by the Blue Note, other than the issuances of
notes in the principal amount of up to $850,000 in the aggregate by the Company
(including the Notes). The Company and Blue Lake made certain customary
representations and warranties, subject to specified exceptions and
qualifications.
The Blue Lake Note bears interest at a rate of 12% per annum and is due and
payable no later than April 11, 2023. Although the Company has the right to
prepay the Blue Lake Note without penalty, the annual interest is due if the
Blue Lake Note is paid in full after October 11, 2022 by the Company prior to
maturity. Upon default of the Blue Lake Note, the interest increases to 16%.
The Blue Lake Note is convertible at a fixed conversion price of $0.05 (the
"Conversion Price"), subject to standard adjustments. If the Company issues
securities for less than the Conversion Price, the Conversion Price shall be
reduced to such amount.
The Blue Lake Warrant issued to Blue Lake provides for the purchase of up to
1,650,000 shares of the Company's common stock (the "Blue Lake Warrant Shares,"
together with the Talos Warrant Shares, the "Warrant Shares") at an exercise
price of $0.10 per share. The Blue Lake Warrant is exercisable on the earlier of
180 days from the date it was issued or when the registration statement covering
the Blue Lake Warrant Shares is declared effective. The Blue Lake Warrant may be
exercised on a cashless basis unless a registration statement covering the Blue
Lake Warrant Shares has been declared effective at the time of exercise, and the
number of Blue Lake Warrant Shares is subject to customary adjustments.
Pursuant to the terms of a Registration Rights Agreement dated April 11, 2022,
by and between the Company and Blue Lake (the "Blue Lake Registration Rights
Agreement," together with the Talos Registration Rights Agreement, the
"Registration Rights Agreements"), the Company agreed to file a registration
. . .
Item 2.03. Creation of Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above is incorporated by reference into
this Item 2.03.
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Item 3.02. Unregistered Sales of Equity Securities.
The issuance and sale of the Notes, the Warrants, the Talos Commitment Shares,
and the Blue Lake Commitment Shares by the Company to the Investors was made
without registration under the Securities Act of 1933, as amended (the "Act"),
or the securities laws of the applicable state, in reliance on the exemptions
provided by Section 4(2) of the Act and Regulation D promulgated thereunder, and
in reliance on similar exemptions under applicable state law, based on the
offering of such securities to one investor, the lack of any general
solicitation or advertising in connection with such issuance, the
representations of the Investors to the Company that, among others, that the
Investors are accredited investors (as that term is defined in Rule 501(a) of
Regulation D), and that the Investors were purchasing the shares for their own
account and without a view to distribute them.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibits
Number Description
4.1 Promissory Note, dated April 6, 2022, issued by Kisses from Italy, Inc.
to Talos Victory Fund, LLC
4.2 Common Stock Purchase Warrant, dated April 6, 2022, issued by Kisses
from Italy, Inc. to Talos Victory Fund, LLC
4.3 Promissory Note, dated April 11, 2022, issued by Kisses from Italy, Inc.
to Blue Lake Partners, LLC
4.4 Common Stock Purchase Warrant, dated April 11, 2022, issued by Kisses
from Italy, Inc. to Blue Lake Partners, LLC
10.1 Securities Purchase Agreement, dated April 6, 2022, by and between
Kisses from Italy, Inc. and Talos Victory Fund, LLC
10.2 Registration Rights Agreement, dated April 6, 2022, by and between the
Kisses from Italy, Inc. and Talos Victory Fund, LLC
10.3 Securities Purchase Agreement, dated April 11, 2022, by and between
Kisses from Italy, Inc. and Blue Lake Partners, LLC
10.4 Registration Rights Agreement, dated April 11, 2022, by and between the
Kisses from Italy, Inc. and Blue Lake Partners, LLC
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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