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): November 15, 2018

 

OZOP SURGICAL CORP. 

(Exact name of registrant as specified in its charter)

 

Nevada 333-212821 35-2540672
(State or Other Jurisdiction
of Incorporation)
(Commission File Number) (I.R.S. Employer Identification Number)

 

319 Clematis Street Suite 714 West Palm Beach FL 33401

(Address of principal executive offices, including zip code)

 

(760) 466-8076

(Registrant’s telephone number, including area code)

 

Not applicable.

(Former name or former address, if changed since last report)

 

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:

 

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))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
   
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).
   
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.

 

Securities Purchase Agreement, Convertible Promissory Note, Warrant, Security Agreement and Registration Rights Agreement

 

Securities Purchase Agreement

 

On November 15, 2018, the Company entered into a securities purchase agreement (the “SPA”) with Auctus Fund, LLC, a Delaware limited liability company (the “Investor”), pursuant to which the Company agreed to issue an 8% secured convertible promissory note, (the “Note”) in the aggregate principal amount of $500,000 in exchange for a purchase price of $500,000. The Note matures November 15, 2019. The proceeds will be used by the Company to pay off a $250,000 debt obligation of the Company’s wholly owned indirect subsidiary, Spinus, LLC, pursuant to a license agreement it entered into with Loubert S. Suddaby and for general corporate purposes and working capital. Pursuant to the SPA, the Company agreed not to conduct any equity (or debt with an equity component) financing (the “Future Offering”), other than certain excepted issuances as set forth in the SPA, during the period beginning on the closing date of the SPA and ending12 months following such date without first giving the Investor notice of the Future Offering and allowing the Investor the option to purchase the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering. The SPA includes customary representations, warranties and covenants by the Company and customary closing conditions.

 

Convertible Promissory Note

 

The Note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of the Note, at a conversion price equal to the lesser of (1) the lowest trading price during the previous 20 trading day period ending on the last completed trading date prior to the date of the Note and (2) 65% multiplied by the average of the 3 lowest trading prices of the Company’s common stock during the 20 day trading period ending on the latest completed trading day of the common stock prior to the date of conversion of the Note. Provided, however, that the Investor may not convert the Note to the extent that such conversion would result in the Investor’s beneficial ownership being in excess of 4.99% of the Company’s issued and outstanding common stock together with all shares owned by the Investor and its affiliates. The Note carries a pre-payment penalty if the Note is paid off in 90, 180, 211, 241, 271, 301 or 331 days following the issue date. The pre-payment penalty is based on the then outstanding principal at the time of pay off plus accrued and unpaid interest multiplied by 120%, 130%, 135%, 140%, 145%, 150%, 155% and 160% respectively. After the expiration of 364 days following the issue date, the Company shall have no right of prepayment. Pursuant to the Note, during any period where monies are owed to the Investor under the Note, if the Company seeks to loan money or give credit, such action must be approved in writing by the Investor, unless such loan or credit is already in existence, or if such action is made in the ordinary course of business or if the amount at issue does not exceed $100,000. Pursuant to the Note, the Company agreed not to consummate any capital raising transaction during the initial 60 days after the issuance date of the Note. The Company further agreed that until the Note is satisfied in full, if the Company receives cash proceeds from the issuance of equity or debt/equity securities, the Company will within 1 business day of receipt of such proceeds inform the Investor of same and the Investor has the right in its sole discretion to require the Company to use such funds to repay the amount due under the Note. Pursuant to the Note, the Company agreed to include on its next registration statement filed with the Securities and Exchange Commission, all shares issuable upon conversion of the Note.

 

Warrant

 

In connection with the Note, and pursuant to the SPA, the Company agreed to issue to the Investor, a warrant (the “Warrant”) to purchase 166,666 shares of the Company’s Common Stock as a commitment fee. The Warrant has a term of five (5) years and an exercise price of $1.50.

 

Security Agreement

 

On November 15, 2018, in connection with the Note and the SPA, and to secure the payment of the Note, the Company entered into a security agreement (the “Security Agreement”) with the Investor. Pursuant to the Security Agreement, all of the obligations under the Note are secured by a first security interest in and to all of the Company’s rights, title and interests in, to and under all assets and all personal property of the Company. The Security Agreement includes customary representations, warranties and covenants by the Company.

 

Registration Rights Agreement

 

On November 15, 2018, in connection with the Note and the SPA, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investor. Pursuant to the Registration Rights Agreement, the Company granted to the Investor certain registration rights as set forth therein for the shares of the Company’s common stock issuable upon conversion of the Note. Pursuant to the terms of the Registration Rights Agreement, and subject to the limitations contained therein, the Company has agreed to use its reasonable best efforts to prepare and file with the Securities and Exchange Commission a Registration Statement registering the offering and sale of all but not less than all of the Registrable Securities (as defined in the Registration Rights Agreement) within 30 days from the date of the Registration Rights Agreement. The Registration Rights Agreement includes customary representations, warranties and covenants by the Company.

 

The foregoing descriptions of the SPA, the Note, the Security Agreement, the Registration Rights Agreement and the Warrant, do not purport to be complete and are qualified in their entirety by reference to the full text of the transaction documents, copies of which are filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.

 

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

 

The information provided above in “Item 1.01 - Entry into a Material Definitive Agreement,” of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information provided above in “Item 1.01 - Entry into a Material Definitive Agreement,” of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

 

The issuance of the Note and the Warrant, are exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”), in reliance upon exemptions from the registration requirements of the Act in transactions not involving a public offering, including, but not limited to the exemption provided pursuant to Rule 506(b) of Regulation D, as promulgated by the Securities and Exchange Commission under the Act for offers and sales of restricted securities in a private, non-public transaction to accredited investors, as defined in Rule 501 of Regulation D.

 

Item 9.01 Financial Statements and Exhibits.

  

(d) Exhibits

  

Exhibit No.   Description
     
10.1   Securities Purchase Agreement entered into between Ozop Surgical Corp. and Auctus Fund, LLC dated November 15, 2018.*
     
10.2   Convertible Promissory Note issued to Auctus Fund, LLC by Ozop Surgical Corp. on November 15, 2018.*
     

10.3

 

Security Agreement entered into between Ozop Surgical Corp. and Auctus Fund, LLC dated November 15, 2018.*

     
10.4   Registration Rights Agreement entered into between Ozop Surgical Corp. and Auctus Fund, LLC dated November 15, 2018.*
     
10.5   Form of Warrant for Auctus Fund, LLC.*

 

*Filed herewith.

 

 
 

 

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.

 

 

  OZOP SURGICAL CORP.
   
   
Date: November 21, 2018 By: /s/ Barry Hollander
    Barry Hollander
    Chief Financial Officer