Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
On July 1, 2014AnythingIT, Inc. entered into a Securities Purchase Agreement
with KBM Worldwide, Inc. pursuant to which we borrowed $42,500 under the terms
of a convertible promissory note. The note was funded on July 7, 2014. After
payment of legal fees of $2,500 to KBM Worldwide's counsel, we are using the net
proceeds for working capital.
Interest under the convertible promissory note is 8% per annum, and the
principal and all accrued but unpaid interest is due on April 3, 2015. The note
is convertible at any time following 180 days after the issuance date at the
holder's option into shares of our common stock at a variable conversion price
of 58% of the lowest average three day market price of our common stock during
the 10 trading days prior to the notice of conversion, subject to adjustment as
described in the note. The floor conversion price is $0.00009 per share. The
conversion price is also subject to adjustment under certain events, including
if we should issue or sell shares of our common stock at less than the then
conversion price, subject to certain exclusions, in which event the conversion
price of the note would be reduced to such lower price. The holder's ability to
convert the note, however, is limited in that it will not be permitted to
convert any portion of the note if the number of shares of our common stock
beneficially owned by the holder and its affiliates, together with the number of
shares of our common stock issuable upon any full or partial conversion, would
exceed 4.99% of our outstanding shares of common stock. The holder has the right
to waive this term upon 61 days' notice to us.
During the first 180 days following the date of the note we have the right to
prepay the principal and accrued but unpaid interest due under the note,
together with any other amounts we may owe the holder under the terms of the
note, at a graduating premium ranging from 110% to 135%. After this initial 180
day period, we do not have a right to prepay the note.
All amounts due under the note become immediately due and payable by us upon the
occurrence of an event of default, which includes (i) our failure to pay the
amounts due at maturity, (ii) our failure to deliver shares of our common stock
upon any conversion of the note, (iii) a breach of the covenants,
representations or warranties under the note or the Securities Purchase
Agreement, (iv) the appointment of a trustee, a judgment against us in excess of
$50,000 (subject to a cure period), a liquidation of our company or the filing
of a bankruptcy petition, (v) failure to remain current in our reporting
obligations under the Securities Exchange Act of 1934 or the removal of our
common stock from quotation on the OTC Bulletin Board, (vi) any restatement of
our financial statements, or (vii) a reverse stock split without 20 days prior
notice to the lender, as well as certain other provisions as set forth in the
Under the terms of the Securities Purchase Agreement, we granted KBM Worldwide a
right of first refusal during the six months following the closing date in the
event we seek to enter into any equity or equity linked financings in an amount
less than $100,000, subject to certain exclusions.
The foregoing descriptions of the convertible promissory note and Securities
Purchase Agreement are qualified in their entirety by reference to the documents
which are filed as Exhibits 4.10 and 10.25, respectively, to this report.
In an unrelated transaction, on July 9, 2014 we entered into a Consulting
Agreement with Revolution Investment Management, LLC pursuant to which that firm
will provide various services to us including due diligence, transaction
consulting, strategic planning consulting, corporate structure, mergers and
acquisition, divestiture and compliance regulatory consulting. Under the terms
of the agreement, which may be terminated by either party upon 15 days notice,
we agreed to pay the firm $10,000 per month. The foregoing description of the
Consulting Agreement is qualified in its entirety by reference to the agreement
which is filed as Exhibit 10.26 to this report.
Item 3.02 Unregistered Sales of Equity Securities
On May 13, 2014
we issued an aggregate of 4,100,000 shares of our common stock
to two accredited or otherwise sophisticated investors in connection with the
conversion of $ 20,500.00
principal amount of debt purchased by these two
individuals from the holder of a 12% convertible promissory note which matures
in December 2014
. At the time of these conversions, we reduced the conversion
price of the existing debt from $0.35
per share to $_0.005____ per share. The
issuances were exempt from registration under the Securities Act of 1933, as
amended, in reliance on exemptions provided by Section 3(a)(9) of that act.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
4.12 Convertible Promissory Note dated July 1, 2014 in the principal amount
of $42,500 to KBM Worldwide, Inc.
10.25 Securities Purchase Agreement dated July 1, 2014 by and between
AnythingIT, Inc. and KBM Worldwide, Inc.
10.26 Consulting Agreement dated July 9, 2014 by and between AnythingIT, Inc.
and Revolution Investment Management, LLC.