GMBL Esports Entertainment Group Inc (PK)

Item 1.01 Entry Into a Material Definitive Agreement.

On October 16, 2019, Esports Entertainment Group, Inc. (the “Company”) consummated the third closing (“Third Closing”) of a private placement offering (the “Offering”) whereby the Company entered into that certain securities purchase agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”). Pursuant to the Purchase Agreement, the Company issued to the Investor a convertible promissory note (the “Note”) in the aggregate principal amount of $137,500 (including a 10% original issue discount) and Warrants to purchase 229,167 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) for aggregate gross proceeds of $125,000.

The Note accrues interest at a rate of 5% per annum and is initially convertible into shares of the Company’s common stock at a conversion price of $0.60 per share, subject to adjustment (the “Conversion Price”). The Note contains a mandatory conversion mechanism whereby unpaid principal and accrued interest on the Note, upon the closing of a Qualified Offering (as defined therein) converts into shares of the Company’s Common Stock at the lower of (i) the Conversion Price and (ii) 80% of the offering price in the Qualified Offering. The Note contains customary events of default (each an “Event of Default”) and matures on August 29, 2020. If an Event of Default occurs, the outstanding principal amount of the Note, plus accrued but unpaid interest, liquidated damages and other amounts owing with respect to the Note will become, at the Investor’s election, immediately due and payable in cash at the “Mandatory Default Amount”. The Mandatory Default Amount means the sum of 130% of the outstanding principal amount of the Note plus accrued and unpaid interest, including default interest of 18% per year, and all other amounts, costs, expenses and liquidated damages due in respect of the Note.

Pursuant to the Purchase Agreement, the Investor is entitled to 100% Warrant coverage, such that the Investor received the same number of Warrants to purchase shares of Common Stock as is the number of shares of Common Stock initially issuable upon conversion of the Note as of the date of issuance. The Warrants are exercisable at a price of $0.75 per share, subject to adjustment from the date of issuance through August 29, 2022.

Joseph Gunnar & Co., LLC (the “Placement Agent”) has acted as placement agent for the Offering but did not receive compensation in connection with the Third Closing.  

The current aggregate Offering cash proceeds to the Company is approximately $600,000.

The foregoing descriptions of the Purchase Agreement, Note, and Warrants , do not purport to be complete and are qualified in their entirety by their full text, the forms of which have been previously filed and are incorporated herein by reference.