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2022-06-28 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 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):
June 28, 2022
NextPlay Technologies, Inc.
(Exact
name of Registrant as specified in its charter)
|
Nevada |
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001-38402 |
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26-3509845 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
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(IRS
Employer
Identification No.) |
|
1560 Sawgrass Corporate Parkway,
Suite 130, Sunrise,
Florida
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33323 |
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(Address
of principal executive offices) |
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(Zip
Code) |
Registrant’s
telephone number, including area code: (954)
888-9779
Former
name or former address, if changed since last report:
N/A
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 (see General
Instruction A.2. below):
|
☐ |
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)) |
| |
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|
☐ |
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:
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Title
of each class |
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Trading
Symbol(s) |
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Name
of each exchange on which registered |
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Common Stock, par value $0.00001 per share
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NXTP |
|
The
Nasdaq Stock Market LLC |
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
June 28, 2022, NextPlay Technologies, Inc., a Nevada
corporation (the “Company”), entered into a series of agreements
whereby it agreed to sell its travel and media businesses to TGS
Esports Inc. (“TGS”), a British Columbia corporation listed for
trading on the Canadian TSX Venture Exchange (the “TSXV”), in
exchange for securities of TGS (the “Transaction”). The Transaction
has not yet been consummated and is subject to various closing
conditions including, without limitation, TSXV’s consent and
approval of the Transaction, approval of the Transaction and
certain related matters by TGS’ shareholders and consummation of a
financing by TGS. Following the closing of the Transaction, the
Company will continue to operate its remaining business units,
including its HotPlay, NextFintech and NextBank lines of
business.
Securities Exchange Agreement
Pursuant
to that certain securities exchange agreement (the “Securities
Exchange Agreement”) by and among TGS on the one hand and the
Company, William Kerby and Donald P. Monaco, on the other hand, TGS
agreed to acquire (i) all of the outstanding equity interests (the
“NextTrip Interests”) the Company, Mr. Kerby and Mr. Monaco hold in
NextTrip Group, LLC (“NextTrip”), a Florida limited liability
company and direct subsidiary of the Company, pursuant to which
NextTrip would become a wholly-owned subsidiary of TGS (the
“NextTrip Sale”); and (ii) all of the equity interests (the
“Reinhart Interests,” and, together with the NextTrip Interests,
the “Interests”) the Company holds in Reinhart Interactive TV AG, a
Switzerland Aktiengesellschaft which operates the Zappware business
(“Reinhart” and, together with NextTrip, the “Divested Entities”),
pursuant to which Reinhart would become a partially-owned
subsidiary of TGS (the “Reinhart Sale”). In exchange for the
Interests, and pursuant to the terms of the Securities Exchange
Agreement, TGS has agreed to issue (i) $12.2 million in newly
created nonvoting preferred shares (the “Preferred Shares”) to the
Company, or 232,380,952 Preferred Shares and (ii) an aggregate of
$3.66 million in TGS common shares to Kerby and Monaco, or
69,714,286 TGS common shares, of which 11,619,048 TGS common shares
will be held in escrow pursuant to that certain Stock Escrow
Agreement to be executed at closing as described below.
Prior to the execution of the Securities Exchange Agreement,
NextTrip issued an aggregate of 915,000 units in NextTrip to
Messrs. Kerby and Monaco to resolve certain management unit
issuances provided for in NextTrip’s Operating Agreement as
consideration for services rendered. Kerby is the current Co-Chief
Executive Officer and a director of the Company and Mr. Monaco is a
director of the Company.
As a
condition of closing the Transaction, TGS shall hold a shareholder
meeting as soon as reasonably practicable to approve the
Transaction, the form of Amendment to Articles of TGS (as described
below), a 40:1 share consolidation (reverse stock split) and
related matters (collectively, the “Transaction Proposals”). In
connection with the shareholder meeting, TGS is also obligated to
file a circular with the Canadian securities authorities in
accordance with Canadian law and the policies of the
TSXV.
In
addition, in order to induce the Company to enter into the
Securities Exchange Agreement, certain TGS shareholders agreed to
enter into a voting support agreement pursuant to which they agreed
to vote their TGS common shares in favor of the Transaction
Proposals.
The
Securities Exchange Agreement contains certain termination rights
for both the Company and TGS.
At
the closing of the Transaction, the board of directors of TGS will
consist of seven members, five of whom will be designated by
Messrs. Kerby and Monaco and two of which will be designated by Mr.
Spiro Khouri of TGS.
The
Securities Exchange Agreement has been attached as an exhibit to
this Current Report on Form 8-K to provide investors and
securityholders with information regarding its terms. It is not
intended to provide any other factual information about the
Company, TGS or the Divested Entities or to modify or supplement
any factual disclosures about the Company in its public reports
filed with the Securities and Exchange Commission (the “SEC”). The
Securities Exchange Agreement includes representations, warranties
and covenants of the Company, TGS and/or the Divested Entities made
solely for the purpose of the Securities Exchange Agreement and
solely for the benefit of the parties thereto in connection with
the negotiated terms of the Securities Exchange Agreement.
Investors should not rely on the representations, warranties and
covenants in the Securities Exchange Agreement or any descriptions
thereof as characterizations of the actual state of facts or
conditions of the Company, TGS, the Divested Entities or any of
their respective affiliates. Moreover, certain of those
representations and warranties may not be accurate or complete as
of any specified date, may be subject to a contractual standard of
materiality different from those generally applicable to SEC
filings or may have been used for purposes of allocating risk among
the parties to the Securities Exchange Agreement, rather than
establishing matters of fact.
TGS Amendment to Articles
As a
condition to closing, TGS shall amend its Articles of Incorporation
to designate and establish the rights, obligations and privileges
of the Preferred Shares, as more particularly described below,
which Preferred Shares shall be issued by TGS to the Company at
closing of the Transaction. The Amendment to Articles is subject to
the approval of the TSXV and the shareholders of TGS.
Voting
The
Preferred Shares are non-voting and no holder of Preferred Shares,
unless otherwise provided by law, is entitled to receive notice of
and to attend meetings of shareholders of TGS.
Dividends
No
dividend or other distribution will be paid, declared or set apart
for payment in respect of any TGS common shares or shares of any
other class ranking junior to the Preferred Shares in respect of
dividends unless a dividend is paid or declared and set apart for
payment in respect of each outstanding Preferred Share in an amount
at least equal to the product of (i) the amount of dividends paid,
declared or set apart for each share of such other class
(calculated on an as-converted to common shares basis) and (ii) the
number of shares into which each Preferred Share is then
convertible, prior to any such dividend being paid to common
holders.
Liquidation
Upon the occurrence of a TGS liquidation event (dissolution,
merger/acquisition or sale or related transactions), the holders of
Preferred Shares are entitled, in preference to the rights of
holders of the common shares, for Preferred Share, an amount equal
to the initial price of CDN$ 0.068 per share, plus any declared but
unpaid dividends on such Preferred Shares.
Redemption
The Preferred Shares: (i) may be redeemed by TGS upon the mutual
consent of TGS and the Company, (ii) up to 50% of the Preferred
Shares may be redeemed at any time after the date of TGS becoming
listed on a U.S. senior exchange (a “Qualified Listing”) but prior
to a Distribution (as defined below) upon TGS’ election (with a
redemption of more than 50% of the Preferred Shares subject to the
Company’s consent), or (iii) at the end of four (4) years from the
closing date at the election of the Company. The redemption price
per share is equal to the initial price of CDN$ 0.068.
Conversion and Mandatory Distribution
The
Preferred Shares are only convertible into TGS common shares by the
Company if immediately distributed as a stock dividend to the
Company’s stockholders.
The
Preferred Shares are convertible at a rate of one TGS common share
for each Preferred Share: (i) upon the mutual consent of the
Preferred Shares holder (initially, the Company) and TGS or (ii)
if, after 12 months from the initial issuance of the Preferred
Shares, the Company is required to convert any Preferred Shares in
order to be compliant under the US Investment Company Act of
1940.
The
Preferred Shares are automatically convertible and distributable
(i) upon the completion of a Qualified Listing or (ii) forty-eight
(48) months from the closing date; provided, however, that the
Company has the option to first require redemption of such
Preferred Shares as described above.
The
mandatory distribution by a holder of Preferred Shares (initially,
the Company) shall be governed by Section 2.2 of that certain Right
of First Refusal and Distribution Agreement which will be effective
at the closing of the Transaction, the form of which is attached as
an exhibit hereto and incorporated by reference herein.
Restrictions on Transfer
The Company may sell the Preferred Shares at any time, provided (i)
TGS has a right of first refusal and (ii) TGS must consent to the
sale, provided, however, that, in the event that holding the
Preferred Shares presents U.S. Investment Company Act of 1940
issues for the Company at any time after the 1-year anniversary of
the closing of the Transaction, the Company can (i) sell the
Preferred Shares subject to TGS’ right of first refusal, or (ii) if
the buyer and/or affiliates of said buyer is greater than a 10%
owner of TGS, then TGS must also consent to the sale. An additional
description of the right of first refusal is set forth in “Right
of First Refusal and Distribution Agreement” described
below.
Separation Agreement
Concurrently with the execution of the Securities Exchange
Agreement, the Company, NextTrip, Reinhart and TGS entered into a
separation agreement (the “Separation Agreement”) to further
document the separation of NextTrip and Reinhart from the Company
and to assign, transfer and convey certain assets and liabilities
held in NextTrip or the Company’s name, respectively, to NextTrip
or the Company, respectively, to allow for the separation of the
businesses in the Securities Exchange Agreement at closing of the
Transaction.
Further, the Separation Agreement terminates certain intercompany
agreements and accounts by and between the parties at closing of
the Transaction, sets rights related to confidentiality,
non-disclosure and maintenance of attorney-client privilege matters
and also provides for a mutual release by and among the Company,
NextTrip and Reinhart for all pre-closing claims between themselves
and their officers, directors, affiliates, successors and
assigns.
In
addition, the Separation Agreement provides for the contribution of
(i) $1.5 million to NextTrip and (ii) an additional $1.5 million in
ten (10) equal monthly installments beginning July 1, 2022, in
exchange for NextTrip, as of May 1, agreeing to assume the ongoing
operating expenses of NextTrip and Reinhart. NextTrip has also
agreed to assume payments under that certain payment obligation of
the Company pursuant an Amendment to Intellectual Property Purchase
Agreement effective May 18, 2021 by and between the Company, IDS
Inc., TD Assets Holding LLC, and Ari Daniels in the approximate
amount of $2,500,000, provided, however, that, if the Company fails
to make any of the above installment payments within five (5)
business days of being due, that such IDS payment obligation
reverts back to the Company.
Right of First Refusal and Distribution
Agreement
At
closing of the Transaction, the Company shall enter into a right of
first refusal and distribution agreement (the “Right of First
Refusal Agreement”), the final form of which is attached hereto and
incorporated by reference herein, that governs certain rights
between the parties with respect to the subsequent disposition of
the TGS Preferred Shares. Specifically, as provided in the form of
Amendment to Articles of TGS, (i) TGS has a right of first refusal
to purchase the TGS Preferred Shares prior to a proposed sale of
the TGS Preferred Shares by the Company in the situations described
in “Form of Amendment to Articles of TGS - Restrictions on
Transfer” set forth above and (ii) in the event of a conversion
of TGS Preferred Shares by the Company into TGS common shares, the
Company is obligated to distributed such TGS common shares in a
stock dividend to its stockholders as described in “Form of
Amendment to Articles of TGS – Conversion and Distribution”.
Both the right of first refusal and distribution rights and
obligations are set forth in this agreement.
Stock Escrow Agreement
At
closing of the Transaction, in connection with the issuance of
common shares of TGS to Messrs. Kerby and Monaco, the parties shall
enter into a stock escrow agreement (the “Stock Escrow Agreement”),
a form of which is attached hereto and incorporated by reference
herein, whereby 11,619,048 TGS common shares, or 16.67% of the TGS
common shares received by Kerby and Monaco in the Securities
Exchange Agreement, will be held in escrow (the “Escrow Shares”).
The Escrow Shares will be held by the escrow agent for a period of
up to four (4) years (the “Escrow Period”) at which point, if the
following conditions have not been met, such Escrow Shares will be
canceled and returned to TGS’ treasury: (i) the TGS common share
trading price at the time of a conversion of Preferred Shares by
the Company occurs is at or above $0.06375 (a 115% premium on the
closing price), or (ii) the Preferred Shares are sold or redeemed
by the Company at or above a price of $14,030,000 (a 115% premium).
The Escrow Shares will have voting rights during the Escrow Period
following consummation of the Transaction.
***
The
preceding summaries do not purport to be complete and are qualified
in their entirety by reference to the Securities Exchange
Agreement, form of Amendment to Articles of TGS, Separation
Agreement, form of Right of First Refusal and Distribution
Agreement and form of Stock Escrow Agreement are subject to, and
qualified in their entirety by, the terms of said documents
attached as Exhibits 2.1, 10.1, 10.2, 10.3 and 10.4 hereto,
respectively, which are incorporated by reference
herein.
Item
7.01 Regulation FD Disclosure
On
June 29, 2022, the Company issued a press release announcing the
Transaction. The press release is furnished as Exhibit 99.1 to this
Current Report on Form 8-K.
Exhibit
99.1 contains forward-looking statements. These forward-looking
statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that are difficult to predict.
Forward-looking statements are based upon assumptions as to future
events that may not prove to be accurate. Actual outcomes and
results may differ materially from what is expressed in these
forward-looking statements.
The
information set forth under Item 7.01 of this Current Report on
Form 8-K (“Current Report”), including Exhibit 99.1
attached hereto, is being furnished and shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or otherwise subject to the
liabilities of such section. The information in Item 7.01 of this
Current Report, including Exhibit 99.1, shall not be incorporated
by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, regardless of any incorporation by
reference language in any such filing, except as expressly set
forth by specific reference in such a filing. This Current Report
will not be deemed an admission as to the materiality of any
information in this Current Report that is required to be disclosed
solely by Regulation FD.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
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* |
Exhibits
and/or schedules have been omitted pursuant to Item 601(a)(5) of
Regulation S-K. The registrant hereby undertakes to furnish
supplemental copies of any of the omitted exhibits and schedules
upon request by the SEC; provided, however, that the registrant may
request confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
for any exhibits or schedules so furnished. A list identifying the
contents of all omitted exhibits and schedules can be found on page
iv of Exhibit 2.1. |
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.
|
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NEXTPLAY
TECHNOLOGIES, INC. |
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Date:
June 29, 2022 |
By: |
/s/
Nithinan Boonyawattanapisut |
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|
Name:
Nithinan Boonyawattanapisut
Title: Co-Chief Executive Officer |
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