Item
1.01. Entry into a Material Definitive Agreement.
On
November 1, 2021, NextPlay Technologies, Inc., a Nevada corporation (the “Company”), entered into a Securities Purchase Agreement
(the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which the Company
agreed to issue and sell, in a registered direct offering (the “Offering”), an aggregate of 18,987,342 shares (the “Shares”)
of the Company’s common stock, par value $0.00001 per share (“Common Stock”), together with warrants to purchase an
aggregate of 14,240,508 shares of Common Stock (the “Warrants”), at a combined price of $1.58 per Share and accompanying
three quarters of a Warrant.
The
Offering closed on November 3, 2021. The Shares, Warrants
and shares of Common Stock issuable upon exercise of the Warrants were offered pursuant to a prospectus
supplement, filed with the Securities and Exchange Commission (the “Commission”) on November 3, 2021, to
the Company’s effective shelf registration statement on Form S-3 (File No. 333-257457) (the “Registration Statement”),
which was initially filed with the Commission on June 25, 2021, was amended on September
24, 2021 and October 27, 2021, and was declared effective on October 29, 2021.
The
Offering resulted in gross proceeds to the Company of approximately $30.0 million, before deducting the Placement Agent fees and related
offering expenses, and excluding proceeds to the Company, if any, that may result from the future exercise of Warrants issued in the
Offering.
The
net proceeds to the Company from the Offering, after deducting the Placement Agent’s fees and expenses and estimated offering expenses
(excluding proceeds to the Company, if any, from the future exercise of the Warrants) were approximately $27.85 million. The Company
currently intends to use a portion of the net proceeds to pay down certain existing indebtedness, and to use the remainder for other
working capital and general corporate purposes.
The
Purchase Agreement contains customary conditions to closing, representations and warranties of the Company, and termination rights of
the parties, as well as certain indemnification obligations of the Company and ongoing covenants for the Company. In addition, under
the Purchase Agreement, the Company has agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance
of any shares of the Company’s (or its subsidiaries’) Common Stock or common stock equivalents for a period of 90 days from
the closing of the Offering, other than certain exempt issuances including, but not limited to, securities issued pursuant to the Company’s
equity compensation plans and for strategic acquisitions (subject to certain customary requirements). Additionally, in connection with
the Offering, each of the officers and directors of the Company entered into lock-up agreements, pursuant to which they agreed not to
sell or transfer any of the Company securities they hold, subject to certain exceptions, during the 90-day period following the closing
of the Offering.
Each
whole Warrant sold in the Offering will be exercisable for one share of Common Stock at an initial exercise price of $1.97 per share
(the “Initial Exercise Price”), the closing sales price of the Company’s Common Stock on October 29, 2021 (the last
trading day prior to the date that the Purchase Agreement was entered into). The Warrants may be exercised commencing six months after
the issuance date (the “Initial Exercise Date”) and terminating on the fifth anniversary of the Initial Exercise Date. The
Warrants are exercisable for cash; provided, however that they may be exercised on a cashless exercise basis if, at the time of exercise,
there is no effective registration statement registering, or no current prospectus available for, the issuance or resale of the shares
of Common Stock issuable upon exercise of the Warrants. The exercise of the Warrants will be subject to a beneficial ownership limitation,
which will prohibit the exercise thereof, if upon such exercise the holder of the Warrants, its affiliates and any other persons or entities
acting as a group together with the holder or any of the holder’s affiliates would hold 4.99% (or, upon election of a purchaser
prior to the issuance of any shares, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock issuable upon exercise of the Warrant held by the applicable holder, provided that the holders
may increase or decrease the beneficial ownership limitation (up to a maximum of 9.99%) upon 61 days advance notice to the Company, which
61 day period cannot be waived.
The
Warrants also include certain anti-dilution rights, which provide that if at any time the Warrants are outstanding, the Company issues
or enters into any agreement to issue, or is deemed to have issued or entered into an agreement to issue (which includes the issuance
of securities convertible or exercisable for shares of Common Stock), securities for consideration less than the then current exercise
price of the Warrants, the exercise price of such Warrants will be automatically reduced to the lowest price per share of consideration
provided or deemed to have been provided for such securities; provided, however, that unless and until the Company has received stockholder
approval to reduce the exercise price of the Warrants below $1.97 per share (the “Floor Price”), no such adjustment to the
exercise price may be made. Pursuant to the Purchase Agreement, the Company has agreed to use its reasonable best efforts to obtain stockholder
approval within 90 days from the date of the prospectus supplement to remove the Floor Price of the Warrants. In the event that such
stockholder approval is not obtained within 90 days of the date of the prospectus supplement, the Company has agreed to hold a special
meeting of its stockholders every three months thereafter, for so long as the Warrants remain outstanding, to obtain such stockholder
approval.
If
the Company fails for any reason to deliver shares of Common Stock upon the valid exercise of the Warrants, subject to its receipt of
a valid exercise notice and the aggregate exercise price, by the time period set forth in the Warrants, the Company will be required
to pay the applicable holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of shares subject to such exercise
(as calculated in the Warrant), $10 per trading day (increasing to $20 per trading day on the third trading day after such liquidated
damages begin to accrue) for each trading day that such shares are not delivered. The Warrants also include customary buy-in rights in
the event the Company fails to deliver shares of Common Stock upon exercise thereof within the time periods set forth in the Warrant.
The
Purchasers are “accredited investors” as defined under the Securities Act of 1933, as amended. The Purchasers, either alone
or together with their respective representatives, have enough knowledge and experience to be considered sophisticated investors, have
access to the type of information normally provided in a prospectus for a registered securities offering and have agreed not to resell
or distribute the Warrants or the Warrant Shares to the public, except pursuant to an effective registration statement under the Securities
Act, of 1933, as amended, or an exemption thereto.
EF
Hutton, division of Benchmark Investments, LLC, agreed to act as placement agent (the “Placement Agent”) on a “reasonable
best efforts” basis, in connection with the Offering. In connection with the Offering, the Company entered into a Placement Agency Agreement, dated as of November
1, 2021, by and between the Company and the Placement Agent (the “Placement Agency Agreement”). Pursuant to the Placement
Agency Agreement, the Placement Agent received an aggregate cash fee of 6.0% of the aggregate gross proceeds of the Offering, a non-accountable
expense reimbursement of 1.0% of the aggregate gross proceeds in the Offering, and $50,000 for the reimbursement of certain of the Placement
Agent’s expenses.
The
foregoing description of the Purchase Agreement, the Placement Agency Agreement and the Warrants is not complete and is qualified in
its entirety by reference to the full text of the form of Purchase Agreement, Placement Agency Agreement and form of Common Stock Purchase
Warrant, copies of which are attached as Exhibit 10.1, Exhibit 10.2, and Exhibit 4.1, respectively, to this Current Report
on Form 8-K and are incorporated by reference herein.
This
Current Report on Form 8-K does not constitute an offer to sell any securities or a solicitation of an offer to buy any securities, nor
shall there be any sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such state or jurisdiction.
A
copy of the opinion of Procopio, Cory, Hargreaves & Savitch LLP, relating to the validity of the issuance of the Shares and the shares
of Common Stock issuable upon exercise of the Warrants, is attached as Exhibit 5.1 hereto and is incorporated herein and into
the Registration Statement and prospectus supplement filed in connection with the Offering by reference. A copy of the opinion of Carter
Ledyard & Milburn LLP, relating to the validity of the issuance of the Warrants, is attached as Exhibit 5.2 hereto and
is incorporated herein and into the Registration Statement and prospectus supplement filed in connection with the Offering by reference.