UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported) April 23, 2020

 

Net Element, Inc.

 

(Exact Name of Registrant as Specified in Charter)

 

 

Delaware

 

001-34887

 

90-1025599

(State or Other Jurisdiction
of Incorporation)

 

(Commission File
Number)

 

(IRS Employer
Identification No.)

 

 

 3363 NE 163rd Street, Suite 705, North Miami Beach, FL            33160

 
 

                      (Address of Principal Executive Offices)                                      (Zip Code)

 
     
 

(305) 507-8808

 
 

(Registrant’s telephone number, including area code)

 
     
 

Not Applicable

 
 

(Former Name or Former Address, if Changed Since Last Report)

 
 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

NETE

The Nasdaq Stock Market, LLC (Nasdaq Capital Market)

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

 

 
 

 

Item 1.01  Entry into a Material Definitive Agreement.

 

On April 23, 2020, Net Element, Inc., a Delaware corporation (the “Company”), entered into an Amendment (the “Amendment”) to Master Exchange Agreement dated as of March 27, 2020 (the “Agreement”) with ESOUSA Holdings, LLC, a New York limited liability company (“ESOUSA”).

 

The Amendment increased from $2,000,000 to $5,000,000 the principal amount and unpaid interest of one or more promissory notes of the Company or its direct or indirect subsidiaries that ESOUSA either purchased in whole or has an irrevocable right to purchase in tranches from RBL Capital Group, LLC. The Company has the right pursuant to the Agreement (as amended by the Amendment) to request ESOUSA to exchange in tranches such promissory notes for shares of the Company’s common stock on the terms and conditions and subject to the limitations set forth in the Agreement (as previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 27, 2020).

 

Such shares of restricted common stock of the Company are issuable to ESOUSA under an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Section 3(a)(9) of the Securities Act.

 

The above description of the Amendment is intended as a summary only and is qualified in its entirety by the terms and conditions set forth therein. A copy of the Amendment is attached hereto as Exhibit 10.1 and is incorporated herein by this reference.

 

Item 2.03          Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The disclosure provided in Item 1.01 of this Report is hereby incorporated by reference into this Item 2.03.

 

Item 3.02          Unregistered Sales of Equity Securities.

 

The disclosure provided in Item 1.01 of this Report is hereby incorporated by reference into this Item 3.02.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

10.1

Amendment, dated as of April 23, 2020, to Master Exchange Agreement, dated as of March 27, 2020 between the Company and ESOUSA Holdings, LLC

 

2
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: April 23, 2020

 

 

NET ELEMENT, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Jeffrey Ginsberg

 

 

Name:      Jeffrey Ginsberg

 

 

Title:        Chief Financial Officer

 

 

3
 

 

EXHIBIT INDEX

 

Exhibit No.   Description
     

10.1

 

Amendment, dated as of April 23, 2020, to Master Exchange Agreement, dated as of March 27, 2020 between the Company and ESOUSA Holdings, LLC

 

4

 

Exhibit 10.1

 

AMENDMENT TO MASTER EXCHANGE AGREEMENT

 

This Amendment to the Master Exchange Agreement (this “Amendment”) is effective as of April 23, 2020.

 

WHEREAS, Net Element, Inc., a Delaware corporation (the “Company”), and ESOUSA Holdings, LLC, a New York limited liability company (the “Creditor”), are parties to that certain Master Exchange Agreement, dated as of March 27, 2020 (the “Agreement”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement.

 

WHEREAS, Section 8(c) of the Agreement permits the Agreement to be amended by amendment in writing signed by the Company and by the Creditor.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, the Company and the Creditor hereby agree that the Agreement shall be amended as follows:

 

1.     Recitals. All of the recitals contained herein are true and correct and are incorporated herein by this reference.

 

2.     Amendment. The definition of the Existing Debt and the Debt Amount in second recital of the Agreement is hereby amended and restated by deleting “up to $2,000,000 in principal amount and unpaid interest of a promissory note of the Company or its direct or indirect subsidiaries” in the first sentence thereof and inserting in its place “up to $5,000,000 in principal amount and unpaid interest of one or more promissory notes of the Company or its direct or indirect subsidiaries.”

 

3.     Limited Effect. Except as expressly amended and modified by this Amendment, the Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.

 

4.     Governing Law. This Amendment and the rights and obligations of the parties hereto shall be construed in accordance with and governed by the internal laws of the State of New York.

 

5.     Counterparts. This Amendment may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be as effective as delivery of a manually executed original counterpart of this Amendment.

 

IN WITNESS WHEREOF, the parties to this Amendment have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first set forth above.

 

 

 

NET ELEMENT, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Oleg Firer

 

 

Name:  Oleg Firer

 

 

Title:    Chief Executive Officer

 

 

 

ESOUSA HOLDINGS, LLC 

 

 

 

 

 

 

By:

/s/ Michael Wach

 

 

Name:  Michael Wachs

 

 

Title:    Managing Member