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): August 24, 2016
HIGH PERFORMANCE BEVERAGES COMPANY
(Exact name of registrant as specified in its charter)
| Nevada | | 000-55973 | | 27-3566307 |
| (State of Incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
5137 E. Armor St., Cave Creek, AZ 85331
(Address of principal executive offices) (Zip code)
602.326.8290
(Registrant's telephone number, including area code)
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 (see General Instruction A.2. below):
☐ 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))
Item 1.01. Entry into a Material Definitive Agreement.
Convertible Promissory Note
On August 24, 2016 (the “Effective Date”), High Performance Beverages Company, a Nevada corporation (the “Company”), sold an Original a 12% Convertible Promissory Note in the principal amount of $50,000 (the “Note”) for cash consideration of $40,227 with $9,773 being retained by the purchase of the Note through an original issue discount for due diligence and legal fees related to the Note purchase.
The Note may be converted into common stock of the Company at any time after the Maturity Date at a price equal to 60% of the lowest trading price of the Company’s common stock during the 10 consecutive trading days prior to the date on which Holder elects to convert all or part of the Note. However, If the Company is placed on “chilled” status with the Depository Trust Company (“DTC”), the discount shall be increased by 10%,i.e., from 40% to 50%, until such chill is remedied. If the Company is not Deposits and Withdrawal at Custodian (“DWAC”) eligible through their Transfer Agent and DTC’s Fast Automated Securities Transfer (“FAST”) system, the discount will be increased by 5%,i.e., from 40% to 45%. In the case of both, the discount shall be a cumulative increase of 15%,i.e., from 40% to 55%.
Any default of the Note (as set forth in the Note) not remedied within the applicable cure period will result in a permanent additional 10% increase,i.e., from 40% to 50%, in addition to any other discount, to the Conversion Price discount. Additionally, if an event of default occurs (as defined in the Note), the outstanding principal amount of the Note shall become at the holder’s electing immediately due an amount equal to 150% of the outstanding principal amount of the Note. Commencing 5 days after the occurrence of any event of default that results in the eventual acceleration of the Note, the Note will accrue an additional interest, in addition to the Note’s guaranteed interest at a rate equal to the lesser of 22% per annum or the maximum rate permitted by applicable law.
The Note matures on August 16, 2017 (“Maturity Date”). The Company may prepay the Note as follows:
| Days Since Effective Date | | Prepayment Amount |
| Under 30 | | 100% of Principal Amount |
| 31-60 | | 110% of Principal Amount |
| 61-90 | | 120% of Principal Amount |
| 91-120 | | 130% of Principal Amount |
| 121-150 | | 140% of Principal Amount |
| 151-180 | | 150% of Principal Amount |
After 180 days from the Effective Date the Note may not be prepaid without written consent from holder.
The Note shall not be converted to the extent that such conversion would result in beneficial ownership by the holder and its affiliates to own more than 9.99% of the issued and outstanding shares of the Company’s common stock.
Exchange Agreement and Exchange Note
Effective as of August 24, 2016 the Company entered into an exchange agreement (“Exchange Agreement”) with Iconic Holdings, LLC (“Holder’). On or before November 20, 2015, the Company had previously issued to an investor (the “Original Investor”) a promissory note in the amount of $250,000 (“Note A”) and on or before February 5, 2016, the Company had issued a promissory note to the Original Investor in the principal amount of $82,500 (“Note B” and collectively with Note A, the “Original Notes”). The Original Notes were purchased by the Holder on February 5, 2016 and exchanged into a new note in the principal amount of $108,897.55 (the “Exchange Note”).
In connection with the Exchange Agreement, the Holder entered into a Debt Assignment wherein the Holder acquired $110,000 of the Original Notes ($110,000 in principal and $0 in accrued but unpaid interest, together the “Note Portion”) from the Original Investor. Pursuant to the Exchange Agreement the Company issued the Exchange Note to the Holder in the aggregate original principal amount of $108,897.55 in exchange for the surrender and cancellation of the Note Portion. The Exchange Note is being issued in substitution and not in satisfaction of the Note Portion, however, upon the issuance of the Exchange Note the Note Portion will be deemed cancelled.
The Exchange Note matures on August 16, 2017 and has an interest rate of 12% per annum.
The Conversion Price of the Exchange Note is be equal to 60% of the lowest trading price of the Company’s common stock during the 10 consecutive trading days prior to the date on which holder elects to convert all or part of the Note. If the Company is placed on “chilled” status with the Depository Trust Company (“DTC”), the discount shall be increased by 10%,i.e., from 40% to 50%, until such chill is remedied. If the Company is not Deposits and Withdrawal at Custodian (“DWAC”) eligible through their Transfer Agent and DTC’s Fast Automated Securities Transfer (“FAST”) system, the discount will be increased by 5%,i.e., from 40% to 45%,. In the case of both, the discount shall be a cumulative increase of 15%,i.e., from 40% to 55%. Any default of the Exchange Note not remedied within the applicable cure period will result in a permanent additional 10% increase,i.e., from 40% to 50%, in addition to any other discount to the Conversion Price discount.
Commencing 5 days after the occurrence of any event of default (as defined in the Exchange Note), in addition to the Exchange Note’s guaranteed interest at a rate equal to the lesser of 20% per annum or the maximum rate permitted under applicable law.
The foregoing descriptions of the Note and the Exchange Agreement, and Exchange Note referred to above do not purport to be complete and are qualified in its entirety by reference to the Note and Exchange Note, copies of which are attached to this Current Report on Form 8-K and incorporated into this Item by reference.
The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act’), for the private placement of the securities referenced herein pursuant to Section 4(2) of the Act since, among other things, the transaction did not involve a public offering. The Exchange Note was also issue in reliance on 3(a)(9) under the Act.
License Agreement
On August 1, 2016 the Company entered into a license Agreement (the “License Agreement”) with SC Company/ProProm Mexico (“Licensee”) . Pursuant to the License Agreement the Company granted Licensee the exclusive, non-sublicenseable and non-assignable right within Mexico, Central America and South America and any other areas granted in the future to use the Trademarks and Other IP solely in connection with the development, manufacture, distribution, marketing and sale of one or more “Sports Performance Drinks.
The initial term of the License Agreement is three years and provided Licensee is not in default under the Agreement the term of the Agreement shall be automatically extended for one additional three period upon mutually agreeable terms, unless either party notifies the other party in writing at least ninety (90) days prior to the then-scheduled expiration of the Term that such party elects not to extend the Term.
The term the Licensee shall pay the Company royalties in the amount of $10 a case by all sales and other transfers of licensed products and payments of $18,750 per quarter.
The foregoing descriptions of the License Agreement referred to above do not purport to be complete and are qualified in its entirety by reference to the Note, a copy of which are attached to this Current Report on Form 8-K and incorporated into this Item by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information contained in Item 1.01 with respect to the Note, the Exchange Agreement and the Exchange Note is hereby incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained in Item 1.01 with respect to the Note and the Exchange Agreement and the Exchange Note is hereby incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | | Description |
| 4.1 | | Original Issue 12% Convertible Promissory Note |
| 4.2 | | 12% Convertible Exchange Note |
99.1 | | License Agreement between High Performance Beverages Co. and SC Company/ProProm Mexico |
| 99.2 | | Exchange Agreement |
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.
| | HIGH PERFORMANCE BEVERAGES COMPANY |
| | | |
| Dated: August 26, 2016 | By: | /s/ Toby McBride |
| | | Name: Toby McBride |
| | | Title: Chief Executive Officer |
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