SEC Filing Summary: nFusz, Inc. (Form 8-K)
Business Context and Reporting Period
This Current Report on Form 8-K was filed by nFusz, Inc. on December 14, 2017, reporting events occurring between December 5, 2017, and December 14, 2017. The filing details the entry into material definitive agreements involving the issuance of unsecured convertible notes and warrants to raise capital.
Key Financial Metrics and Obligations
The company raised a total of $475,000 in new debt financing through three separate convertible notes. The filing does not provide revenue, profit, cash flow, or margin data for the period.
- Total New Debt Issued: $475,000
- Interest Rate: 8% per annum on all notes
- Warrants Issued: 2,400,000 total (1,200,000 per note to EMA and Auctus; none mentioned for PUP)
- Warrant Exercise Price: $0.11 per share
- Conversion Discount: 70% of the lowest sale price or closing bid price (10-day lookback)
Material Changes and Debt Repayment
The proceeds from the new notes were utilized to fully repay mandatory redemption payments and accrued interest on Series A Preferred Stock previously issued to RedDiamond Partners, LLC. The repayment was made in cash rather than through conversion into common shares.
- RedDiamond Obligation: Accelerated due to the effectiveness of an S-1 registration statement on November 13, 2017.
- Repayment Method: Cash payment of principal and accrued interest.
Outlook, Risks, and Unusual Items
The company has incurred significant short-term debt obligations with conversion features that could lead to substantial dilution if the stock price remains low.
- EMA Financial, LLC Note: $185,000 principal; matures December 5, 2018. Convertible after 180 days.
- Auctus Fund, LLC Note: $185,000 principal; matures December 5, 2018. Convertible after 180 days.
- Power Up Lending Group, Ltd. Note: $105,000 principal; matures September 20, 2018. Convertible after 180 days.
- Dilution Risk: All notes allow conversion at a 30% discount to the market price, creating a significant dilution risk if the company cannot repay in cash by the maturity dates.
Investor Verification Checklist
- Verify the current cash balance to assess the ability to repay the $475,000 in notes by their respective maturity dates (Sept 2018 and Dec 2018).
- Confirm the status of the S-1 registration statement mentioned as the trigger for the RedDiamond acceleration.
- Review the total outstanding share count to calculate the potential dilution impact if all notes and warrants are converted at the current market price.
- Check for any subsequent filings regarding the repayment of the RedDiamond obligation to ensure no default occurred.