Item 1.01 Entry into a Material Definitive Agreement.
As previously reported, on May 16, 2019, Cuentas Inc. (the "Company" or
"Cuentas") entered into a term sheet with CIMA Telecom, Inc., a Florida
corporation doing business as "CIMA Group" ("CIMA") (the "Term Sheet") outlining
its License for the technology platforms (the "Platforms") owned by two of
CIMA's wholly owned subsidiaries, Knetik, Inc., a Delaware corporation
("Knetik"), and Auris, LLC, a Florida limited liability company ("Auris"),
respectively. Collectively, the Platforms would provide the back-end software
for the Cuentas General Purpose Card and compatibility via application
programming interfaces, or APIs, with third party software and the mobile apps.
Under the Term Sheet, CIMA will grant the Company a world-wide, perpetual,
non-sublicensable license (the "License") to utilize the Platforms and
intellectual properties included in the Platforms for the Financial Technology
("FINTECH") worldwide vertical markets. The License to be granted shall be
exclusive for use within the FINTECH space, which for purposes of the License
shall be defined as "connecting banking and prepaid card usage."
On December 31, 2019, the Company entered into a series of integrated
transactions to license the Platforms from CIMA, through CIMA's wholly owned
subsidiaries Knetik, and Auris (the "Transaction Closing") pursuant to that
certain Platform License Agreement, dated December 31, 2019 by and among (i) the
Company, (ii) CIMA, (iii) Knetik and (iv) Auris (the "License Agreement") and
the various other agreements listed below.
Note and Warrant Purchase Agreement
Contemporaneously with the Transaction Closing, the Company entered into a Note
and Warrant Purchase Agreement (the "Purchase Agreement") by and between the
Company and CIMA, pursuant to which the Company made and sold to (i) CIMA a 3%
convertible promissory note (the "Convertible Promissory Note") in the principal
amount of $9,000,000 and (ii) (a) CIMA a warrant (the "CIMA Warrant") , to
purchase from the Company an aggregate of duly authorized, validly issued, fully
paid and nonassessable shares (the "Shares") of common stock of the Company, par
value $0.001 per share (the "Common Stock"), equal to twenty-five percent (25%)
of shares of Common Stock upon the conversion of the Series B preferred stock.
The Purchase Agreement contained customary representations, warranties,
covenants, and conditions, including indemnification. As a condition to closing,
the Company has agreed to take all necessary steps to amend and restate its
Articles of Incorporation (the "A&R Articles") and to amend and restate its
Bylaws (the "A&R Bylaws") and properly file and effect such A&R Articles and A&R
Bylaws with the Secretary of State of the State of Florida and the U.S.
Securities and Exchange Commission, each as necessary, no later than June 30,
2020.
The above description of the Purchase Agreement does not purport to be complete
and is qualified in its entirety by reference to the Purchase Agreement, which
is filed as Exhibit 10.1 hereto.
Convertible Promissory Note
Contemporaneously with the Transaction Closing, the Company made and sold to
CIMA a convertible promissory note (the "CIMA Convertible Promissory Note") in
accordance with the Purchase Agreement. Pursuant to the Convertible Promissory
Note, at any time on or before twelve (12) months after the date of the CIMA
Convertible Promissory Note, CIMA may elect in its sole and absolute discretion
to convert all unpaid principal and accrued and unpaid interest under the CIMA
Convertible Promissory Note into 25% of the issued and outstanding Common Stock
of the Company calculated on a fully diluted basis as of December 31, 2019,
assuming the conversion, exercise, and exchange of all equity and debt
securities of the Company which are convertible into, or exercisable or
exchangeable for, Common Stock of the Company, but not including the Warrants.
On December 31, 2019, CIMA exercised its option to convert the Convertible
Promissory Note into 1,757,478 shares of Common Stock of the Company, which
constitutes 25% of the issued and outstanding shares of Common Stock of the
Company calculated on a fully diluted basis as of the same date.
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As previously reported on a Current Report on Form 8-K filed by the Company with
the SEC on August 6, 2019 (the "August 8-K"), on February 28, 2019, the Company
signed a binding term sheet (the "Binding Term Sheet") with Optima Fixed Income
LLC ("Optima"), pursuant to which, among other things, Optima may purchase a
Convertible Note in the amount of $2,000,000 which may be funded on a quarterly
basis. The term of the Convertible Note is three years and it may be converted
with a discount of 25% on the share price at date of conversion, but in any
case, not less than $3 per share. On May 10, 2019 the Company and Optima
executed the first Amendment of the Binding Term Sheet with Optima whereas
Optima will make an additional deposit of $550,000 to the Company and whereas
that additional deposit will be provided to the Company in the form of a
Convertible Note as discussed in the Binding Term Sheet.
On July 30, 2019 Optima assigned its rights under the Binding Term Sheet to
Dinar Zuz LLC. On the same date, the Company and Dinar Zuz LLC executed a
securities purchase agreement (the "Dinar SPA") with the same terms as reflected
in the Binding Term Sheet and its First Amendment. Under the Subscription
Agreement Dinar Zuz LLC made an additional deposit of $250,000 and agreed to
provide an additional amount of $1,000,000 to the Company which will be provided
in a form of a Convertible Note.
On January 3, 2020, Dinar Zuz, LLC ("Dinar") made an additional deposit of
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference to this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference to this Item 3.02.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Contemporaneously with the Transaction Closing, Natali Dadon resigned from her
position on the Board of Directors of the Company. On the same date, the Board
of Directors of the Company appointed Yochanon Bruk to the Board of Directors of
the Company in accordance with the Voting Agreement.
The information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference to this Item 5.02.
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Item 9.01. Financial Statements and Exhibits
10.1 Note and Warrant Purchase Agreement, dated as of December 31, 2019, by
and between Cuentas Inc. and CIMA Telecom, Inc.
10.2 Convertible Promissory Note issued to CIMA Telecom, Inc., dated December
31, 2019
10.3 Convertible Note issued to Dinar Zuz, LLC, dated July 20, 2019,
incorporated by reference herein to exhibit 9.2 of that certain Current
Report on Form 8-K/A filed by Cuentas, Inc., on August 6, 2019.
10.4 Warrant granted to CIMA Telecom, Inc., dated December 31, 2019
10.5 Warrant granted to Dinar Zuz, LLC, dated December 31, 2019
10.6 Platform License Agreement, dated December 31, 2019, by and among
Cuentas Inc., CIMA Telecom, Inc., Knetik, Inc. and Auris, LLC
10.7 Voting Agreement, dated December 31, 2019, by and among Cuentas Inc.,
Arik Maimon, Michael De Prado, Dinar Zuz, LLC, and CIMA Telecom, Inc.
10.8 Asset Pledge Agreement, dated December 31, 2019, by and among Cuentas
Inc. and CIMA Telecom, Inc.
10.9 Letter Agreement, dated December 31, 2019, by and among Cuentas Inc.,
Arik Maimon, Michael De Prado, Dinar Zuz, LLC, and CIMA Telecom, Inc.
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