false 0001499961 0001499961 2021-11-03 2021-11-03
 
 
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) November 3, 2021
 
 
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 605, 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.
 
As previously reported, on December 29, 2017, Net Element, Inc. (the “Company”), entered into, and consummated the transactions contemplated by, a Unit Purchase Agreement (the “Purchase Agreement”) with ESOUSA Holdings, LLC, a New York limited liability company (“ESOUSA”). Pursuant to the Purchase Agreement, on December 29, 2017, the Company sold to ESOUSA, among other securities, 404,676 five-year warrants to purchase shares of Company common stock (the “Purchase Warrants”) at a purchase price of $0.125 per share and exercise price of $11.12 per share.
 
On November 3, 2021, the Company and ESOUSA agreed to reduce the exercise price of the Purchase Warrants from $11.12 to $6.796 per share (the “Reduced Exercise Price”) in consideration for the exercise in full of all, but not less than all, Purchase Warrants by ESOUSA to acquire shares of the Company’s common stock.
 
The Company entered into an exercise price reduction offer letter agreement (the “Letter Agreement”) with ESOUSA to purchase a total of 404,676 shares of the Company’s common stock. Pursuant to the Letter Agreement, ESOUSA and the Company agreed that ESOUSA would exercise its Purchase Warrants with respect to all of the shares of the Company common stock underlying such Purchase Warrants for the Reduced Exercise Price.
 
The Company expects to receive aggregate gross proceeds of approximately $2,750,178 from the exercise of the Purchase Warrants by ESOUSA. After the full exercise of the Purchase Warrants by ESOUSA, no Purchase Warrants will be outstanding.
 
The foregoing description of the Letter Amendment and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the full text of the Letter Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
 
Item 3.03             Material Modifications to Rights of Security Holders.
 
The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.03.
 
Item 9.01 Financial Statements and Exhibits
 
(d) Exhibits
 
10.1 Letter Agreement, dated as of November 3, 2021 between the Company and ESOUSA Holdings, LLC
104 Cover Page Interactive Data File (formatted as Inline XBRL)
 
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: November 4, 2021
 
NET ELEMENT, INC.
By:
 /s/ Jeffrey Ginsberg
Name: Jeffrey Ginsberg
Title: Chief Financial Officer
 
3
 
 
EXHIBIT INDEX
 
Exhibit No. Description
   
10.1 Letter Agreement, dated as of November 3, 2021 between the Company and ESOUSA Holdings, LLC
104 Cover Page Interactive Data File (formatted as Inline XBRL)
 
4

Exhibit 10.1

 

November 3, 2021

 

ESOUSA Holdings, LLC

211 East 43rd Street, Suite 402

New York, NY 10017

Attention: Michael Wachs

E-mail: michael@esousallc.com   

 

 

RE:

Exercise price reduction offer of Purchase Warrants (as defined below)

 

On December 29, 2017, Net Element, Inc. (the “Company”), entered into, and consummated the transactions contemplated by, a Unit Purchase Agreement (the “Purchase Agreement”) with ESOUSA Holdings, LLC, a New York limited liability company (“ESOUSA”). Pursuant to the Purchase Agreement, on December 29, 2017, the Company sold to ESOUSA, among other securities, 404,676 five-year warrants to purchase shares of Company common stock (the “Purchase Warrants”) at a purchase price of $0.125 per share and exercise price of $11.12 per share. The resale of the shares acquired upon exercise of the Purchase Warrants (“Warrant Shares”) has been registered pursuant to a registration statement on Form S-3 (File No. 333-222466) (the “Registration Statement”).

 

The Company is pleased to offer to ESOUSA the opportunity to exercise of all, but not less than all, of the Purchase Warrants. In consideration for exercising by ESOUSA in full not later than November 4, 2021 (by paying the company in cash the exercise price and not by cashless exercise) all of the Purchase Warrants (the “Warrant Exercise”), the Company hereby offers ESOUSA a temporarily reduced exercise price of the Purchase Warrants to $6.796 per share. Such reduced exercise price of the Purchase Warrants will expire at 5:00 pm (New York City time) on November 5, 2021 and will automatically revert to the original exercise price of $11.12 per share if all of the Purchase Warrants are not exercised by ESOUSA on or before 5:00 pm (New York City time) on November 5, 2021. ESOUSA may accept this offer by signing this letter below, with such acceptance constituting ESOUSA’s exercise in full of the Purchase Warrants for an aggregate exercise price (payable by ESOUSA to the Company in cash) of $2,750,178.10 on or before 5:00 pm (New York City time) on November 4, 2021.

 

If this offer is accepted on or before on or before 5:00 pm (New York City time) on November 4, 2021, then on or before 9:00 a.m. (New York City time) on November 5, 2021, the Company shall file a Current Report on Form 8-K with the U.S. Securities and Exchange Commission disclosing all material terms of the transactions contemplated hereunder. The Company shall also file prospectus supplements to the Registration Statement disclosing the reduced exercise price of the Purchase Warrants within 2 business days after the exercise. ESOUSA agrees to comply with all applicable securities laws concerning any resale of the Warrant Shares. The terms of the Purchase Warrants, including, but not limited to, the obligations to deliver the Warrant Shares, shall otherwise remain in effect as if the acceptance of this offer were a formal notice of exercise.

 

To accept this offer, ESOUSA must counter execute this letter agreement and return the fully executed agreement to the Company on or before 5:00 pm (New York City time) on November 4, 2021.

 

 

Sincerely yours,

   
 

NET ELEMENT, INC.

   
  By:   /s/ Oleg Firer  
    Oleg Firer, CEO

 

Accepted and Agreed:

 

ESOUSA HOLDINGS, LLC

 

 

By: _/s/ Michael Wachs____

Name: Michael Wachs

Title: Managing Member