Item
1.01 Entry into a Material Definitive Agreement
Effective
October 16, 2022, NextPlay Technologies, Inc., a Nevada corporation (the “Company”) and its wholly-owned subsidiaries,
Next Fintech Holdings, Inc. (“NextFintech”), a Delaware corporation and NextBank International, Inc., a Puerto Rico corporation
licensed as an Act 273-2012 international financial entity (“NextBank”), entered into a stock purchase agreement (the “Purchase
Agreement”) with an institutional investor (the “Investor”) pursuant to which NextFintech agreed to sell 80 shares
of its common stock at a price of $187,500.00 (“NextFintech Common Stock”) per share for an aggregate purchase price of $15,000,000,
or a $150,000,000 pre-money valuation.
In
addition, in connection with the above, NextBank (i) agreed to issue warrants (the “Warrant”) to purchase 1,000,000 shares
of the Company’s common stock it beneficially holds to Investor at $0.50 per share and (ii) agreed to issue an exchange option
(the “Exchange Option”) to the Investor pursuant to which, for a period commencing six (6) months following the closing and
ending on the date that is twenty-four (24) months following the closing, at the election of the Investor, the Investor may exchange
its 80 shares of NextFintech Common Stock for equity of NextBank equal to 18.8% of NextBank, subject to compliance with necessary regulatory
approvals that are required of NextBank prior to a change in ownership, if any (collectively, the “Offering”).
The
Offering is expected to close in the coming weeks.
The
Warrant is issued by NextBank and has a term of three (3) years and is exercisable for cash. The shares of Company common stock issuable
upon exercise of the Warrant are currently outstanding shares held by NextBank and do not represent a new issuance of securities by the
Company.
In
connection with the Offering, NextFintech, the Company and the Investor entered into an investor rights agreement (the “Investor
Rights Agreement”) pursuant to which, among other things, (i) grants a right of first refusal to NextFintech and, secondarily,
to the Company, to purchase any NextFintech Common Stock proposed to be transferred by the Investor, (ii) a drag-along right in favor
of the Investor in the event NextFintech agrees to sell 50% or more of the outstanding voting power of NextFintech, and (iii) grant board
seats to Investor or its representative on the NextFintech and NextBank board of directors or, in the event of the exercise of the Exchange
Option, such NextFintech board seat is transferred such that the Investor shall have two (2) NextBank board seats.
In
the Purchase Agreement, the Investor represented to the parties, among other things, that it is an "accredited investor" (as
such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the "Securities Act"). The
securities referred to in this Current Report on Form 8-K are being issued and sold by NextFintech and NextBank to the Investor in reliance
upon the exemptions from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act, Rule
506(b) of Regulation D and/or Regulation S promulgated thereunder.
The
foregoing descriptions of the material terms of the Purchase Agreement, the Warrant and the Investor Rights Agreement are qualified in
their entirety by the full text of such documents, copies of which are attached as Exhibits 10.1, 10.2 and 10.3, respectively, to this
Report, and are incorporated herein by reference.
This
current report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall
there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state or jurisdiction.
The
Purchase Agreement has been included to provide Investor with information regarding its terms. It is not intended to provide any other
factual information about the Company. The Purchase
Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing and other obligations
of the parties. The representations, warranties and covenants contained in the Purchase Agreement
were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to such agreement,
and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged
between the parties in connection with the execution of the Purchase Agreement. The representations and warranties may have been made
for the purposes of allocating contractual risk between the parties to the agreement instead of establishing these matters as facts and
may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors
are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants or
any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or
affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the
Purchase Agreement, and this subsequent information may or may not be fully reflected in the Company’s public disclosures.
