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BRAZIL MINERALS, INC. FILES (8-K) Disclosing Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities

February 27, 2014



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

On February 21, 2014, the Company entered into a Securities Purchase Agreement with St. George Investments, LLC ("St George") and issued to St. George a Convertible Promissory Note in the principal amount of $222,500 (the "Note"). The Company received gross proceeds of $200,000 for the sale of such Note. The difference between the face amount of the Note and the gross proceeds received by the Company was legal costs and origination discount. The outstanding principal of the Note bears interest at the rate of 10% per annum and the conversion price is $0.11 per share, which was 37.5% above the market price of the Common Stock when the transaction was consummated. Principal and accrued interest on the Note are due in five consecutive monthly installments of $44,500 plus accrued interest commencing on August 21, 2014. The monthly installments are payable in cash or in Common Stock, at the option of the Company, or upon the request of St. George, in diamonds that have been graded by the Gemological Institute of America. All principal and accrued interest on the Note is payable on December 21, 2014 (the "Maturity Date"). The Note contains certain provisions protecting the holder against the Company's issuance of stock, options, warrants or convertible securities at prices below the current conversion price of the Note. Upon the occurrence of an Event of Default (as defined in the Note) under the Note, among other things, the outstanding balance of the Note shall be increased by 125%, the interest rate of the Note shall be increased to 22% per annum and the holder shall become entitled to require the redemption of all or any portion of the Note. The Note also contains certain provisions imposing penalties on the Company for failure to timely deliver shares to the holder or the holder's prime brokerage account upon a conversion of the Note.

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Item 3.02 Unregistered Sales of Equity Securities

The information set forth in Item 2.03 hereof is incorporated by reference herein. The Note was issued on February 21, 2014 and is initially convertible into an aggregate of 2,022,728 shares Common Stock, par value $.001 per share, of the Company. The Note was issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Act") afforded by Section 4(2) of the Act. The Company paid a commission of $20,000 to Tigress Financial Partners LLC, a registered FINRA broker-dealer, in connection with the sale of the Note.


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Source: Edgar Glimpses


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