Item 3.02 Unregistered Sales of Equity Securities
KBM Worldwide, Inc.
On May 29, 2014, Hangover Joe's Holding Corporation (the "Company")
entered into a Securities Purchase Agreement with KBM Worldwide, Inc. ("KBM"),
for the sale of an 8% convertible note in the principal amount of $32,500 (the
"KBM Note"). The financing closed on May 29, 2014.
The KBM Note bears interest at the rate of 8% per annum. All interest and
principal must be repaid on February 29, 2015. The KBM Note is convertible into
common stock, at KBM's option, at a 45% discount to the average of the three
lowest closing bid prices of the common stock during the 10 trading day period
prior to conversion. In the event the Company prepays the KBM Note in full, the
Company is required to pay off all principal, interest and any other amounts
owing multiplied by (i) 115% if prepaid during the period commencing on the
closing date through 30 days thereafter, (ii) 120% if prepaid 31 days following
the closing through 60 days following the closing and (iii) 125% if prepaid 61
days following the closing through 90 days following the closing and (iv) 130%
if prepaid 91 days following the closing through 120 days following the closing
and (v) 135% if prepaid 121 days following the closing through 150 days
following the closing and (vi) 140% if prepaid 151 days following the closing
through 180 days following the closing. After the expiration of 180 days
following the date of the KBM Note, the Company has no right of prepayment.
KBM has agreed to restrict its ability to convert the KBM Note and receive
shares of common stock such that the number of shares of common stock held by
them in the aggregate and their affiliates after such conversion or exercise
does not exceed 4.99% of the then issued and outstanding shares of common
stock. The total net proceeds the Company received from this Offering was
$32,500, less attorneys fees.
JSJ Investments Inc.
On May 21, 2014, in consideration of $50,000 (the "Principal"), the Company
issued a 12% Convertible Note (the "JSJ Note") to JSJ Investments Inc. ("JSJ").
The JSJ Note bears interest at the rate of 12% per annum and the maturity date
is November 21, 2014 but JSJ may require that the JSJ Note be repaid on
demand. The JSJ Note has a redemption premium of 150% of the Principal (the
"Repayment Amount"), which such Repayment Amount may be paid by the Company only
upon approval and acceptance of JSJ. The JSJ Note is convertible into common
stock, at JSJ's option, at a 50% discount to the average of the three lowest
trades of the common stock during the 20 trading day period prior
Black Mountain Equities, Inc.
On June 4, 2014, in consideration of $225,000 (the "Consideration"), the Company
issued a Convertible Note (the "BLE Note") in the original principal amount of
$250,000 (the "Original Principal Amount") to Black Mountain Equities, Inc.
("BLE"). The Original Principal Amount carries an original issue discount of
$25,000. The BLE Note bears a one-time interest charge of 12% which was applied
to the Original Principal Amount upon issuance of the BLE Note. The maturity
date is one year from each payment of Consideration. At any time within the 90
day period immediately following the issuance of the BLE Note, the Company may
prepay the remaining outstanding balance of the BLE Note upon providing BLE with
10 business days notice, provided that (i) the Company pays BLE 150% of the
remaining outstanding balance of the BLE Note, (ii) such amount is paid in cash
on the next day following the 10 business day notice period, and (iii) BLE may
still convert the BLE Note until such prepayment amount is paid in full. The
shares issuable upon conversion of the BLE Note carry piggy-back registration
As of the date hereof, the Company is obligated on the above notes in connection
with the offerings. The notes are a debt obligation arising other than in the
ordinary course of business, which constitutes a direct financial obligation of
The Company claims an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Act") for the private placement of
these securities pursuant to Section 4(2) of the Act and/or Regulation D
promulgated there under since, among other things, the transactions did
not involve a public offering, Each of the investors are accredited investor,
had access to information about the Company and their investment, took
the securities for investment and not resale, and the Company took appropriate
measures to restrict the transfer of the securities.
The foregoing information is a summary of each of the agreements involved in the
transactions described above, is not complete, and is qualified in its entirety
by reference to the full text of those agreements, each of which is attached an
exhibit to this Current Report on Form 8-K. Readers should review those
agreements for a complete understanding of the terms and conditions associated
with this transaction.
Item 9.01 Financial Statements and Exhibits
4.1 Securities Purchase Agreement by and among the Company and the KBM
Worldwide, Inc., dated May 29, 2014
4.2 Convertible Promissory Note issued to KBM Worldwide, Inc. dated
May 29, 2014
4.3 12% Convertible Note issued to JSJ Investments Inc dated May 21,
4.4 Convertible Note issued to Black Mountain Equities, Inc.