HELIX TCS, INC. (OTCMKTS:HLIX) Files An 8-K Entry into a Material Definitive Agreement

ME Staff 8-k

8 years ago

HELIX TCS, INC. (OTCMKTS:HLIX) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement

This amendment to the Form 8-K filed on February 22, 2017 is to
add additional exhibits and summaries in connection with the Note
originally summarized in the Form 8-K.

On February 13, 2017, Helix TCS, Inc. (the Company or we) and
RedDiamond Partners LLC (Holder) entered into two secured
convertible promissory notes totaling $208,333.33, an Investment
Agreement (Exhibit 10.6), a Registration Rights Agreement
(Exhibit 10.4), a Securities Purchase Agreement (Exhibit 10.10),
a Subsidiary Guarantee (Exhibit 10.7), and a Security Agreement
(Exhibit 10.9) (altogether, the Transaction Documents).

The Companyexecuted a secured 10% convertible promissory note of
the Company with Holder, in the principal amount of US$183,333.33
(Note 1), along with a secured 10% convertible promissory note in
the principal amount of US$25,000 (Note 2) (together with any
note(s) issued in replacement thereof or as a dividend thereon or
otherwise with respect thereto in accordance with the terms
thereof, the Notes), upon the terms and subject to the
limitations and conditions set forth in such Notes. The Notes are
attached as Exhibits 10.1 and 10.3.

The Notes, together in the aggregate principal amount of
$208,333.33, are secured in accordance with the Security
Agreement attached as Exhibit 10.9. The Company, along with its
subsidiaries, acted as Guarantors in the Security Agreement. The
subsidiaries, including Helix TCS LLC, Security Consultants
Group, and Boss Security Solutions, Inc., entered into a
Subsidiary Guarantee, attached as Exhibit 10.7.

In consideration for the Holder acting as financing agent, the
Company and the Holder entered into a Securities Purchase
Agreement, whereby the Company agreed to issue 25,000 warrants to
purchase one share of Common Stock each, exercisable at $1.00 per
share, subject to adjustment. The warrants will expire after 5
years. The Common Stock Purchase Warrant is attached as Exhibit
10.8 and the Securities Purchase Agreement is attached as Exhibit
10.10.

The Notes, bearing a guaranteed interest rate of 10%, were
entered into on February 13, 2017 for $183,333.33 and $25,000,
and mature on September 12, 2017 and September 13, 2017,
respectively. The Notes were funded and the Company received
$166,666.66 of Note 1 on February 17, 2017 (the Effective Date),
with the remaining $16,666.67 being retained by the Holder, and
$25,000 of Note 2 on February 17, 2017. The Notes additionally
bear the lower of a 20% per annum, or the highest rate permitted
by law, in the Event of Default.

The following is a summary of each of the agreements in the
Transaction Documents. All capitalized terms not defined herein
shall have the meaning ascribed to them in each of the specific
Transaction Documents, incorporated by reference herein.

Note 1:

Note 1, bearing a guaranteed interest rate of 10%, was entered
into on February 13, 2017 for $183,333.33, and matures on
September 12, 2017. Note 1 was funded and the Company received
$166,666.66 on February 17, 2017 (the Effective Date), with the
remaining $16,666.67 being retained by the Holder. Note 1
additionally bears the lower of a 20% per annum, or the highest
rate permitted by law, in the Event of Default.

The Company may prepay Note 1 in whole or in part at any time, up
to 180 days after the Effective Date, by paying the principal
amount to be prepaid together with premium interest thereon to
the date of prepayment. After 180 days from the Effective Date,
the consent of Holder is required to prepay any amount.

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The Holder has the right, at the Holders sole option, at any time
to convert in whole or in part the outstanding and unpaid
Principal Amount under this Note 1 into shares of Common Stock of
the Company at $1.50 per share. The Company agreed to reserve
2,000,000 shares of Common Stock of the Company for conversions
to the Notes, as evidenced by the Transfer Agent Letter attached
as Exhibit 10.5.

Note 2:

Note 2, bearing a guaranteed interest rate of 10%, was entered
into on February 13, 2017 for $183,333.33, and matures on
September 13, 2017. Note 2 was funded and the Company received
$25,000 on February 17, 2017 (the Effective Date). Note 2
additionally bears the lower of a 20% per annum, or the highest
rate permitted by law, in the Event of Default.

The Company may not prepay Note 2 at any time.

The Holder has the right, at the Holders sole option, at any time
to convert in whole or in part the outstanding and unpaid
Principal Amount under this Note 2 into shares of Common Stock of
the Company at $6.10 per share. The Company agreed to reserve
2,000,000 shares of Common Stock of the Company for conversions
to the Notes, as evidenced by the Transfer Agent Letter attached
as Exhibit 10.5.

Investment Agreement:

to the Investment Agreement, the Holder shall invest up to Three
Million Dollars ($3,000,000) (the Commitment Amount) to purchase
the Companys Common Stock, par value of $.001 per share. Such
investments will be made in reliance upon the exemption from
securities registration afforded by Section 4(a)(2) of the
Securities Act of 1933, as amended (the 1933 Act), Rule 506 of
Regulation D promulgated by the SEC under the 1933 Act, and/or
upon such other exemption from the registration requirements of
the 1933 Act as may be available with respect to any or all of
the investments in Common Stock. The Company has agreed to
provide certain registration rights under the 1933 Act, and the
rules and regulations promulgated thereunder, and applicable
state securities laws (see Registration Rights Agreement attached
hereto as Exhibit 10.4).

The Purchase Price of the Common Stock shall be 85% of the lowest
trading price of the Common Stock during the Pricing Period
applicable to the Put Notice, provided, however, an additional
10% will be added to the discount of each Put if (i) the Company
is not DWAC eligible and (ii) an additional 15% will be added to
the discount of each Put if the Company is under DTC chill status
on the applicable Put Notice Date. All capitalized terms are as
defined in the Investment Agreement (Exhibit 10.6) incorporated
herein by reference. The maximum amount that the Company shall be
entitled to Put to the Investor per any applicable Put Notice an
amount of shares of Common Stock up to or equal to two hundred
percent (200%) of the average of the daily trading volume (U.S.
market only) of the Common Stock for the ten (10) consecutive
Trading Days immediately prior to the applicable Put Notice Date
(the Put Amount) so long as such amount is at least $5,000 and
does not exceed $100,000, as calculated by multiplying the Put
Amount by the average daily VWAP for the ten (10) consecutive
Trading Days immediately prior to the applicable Put Notice Date.
During the Open Period, the Company shall not be entitled to
submit a Put Notice until after the previous Closing has been
completed. Notwithstanding the foregoing, the Company may not
deliver a Put Notice on or earlier of the tenth (10th) Trading
Day immediately following the preceding Put Notice Date (the
Waiting Period).

The Company shall not be entitled to deliver a Put Notice unless
each of the following conditions are met:

a Registration Statement shall have been declared effective
and shall remain effective and available for the resale of
all the Put Shares Due at all times until the Closing with
respect to the applicable Put Notice;

ii.

at all times during the period beginning on the related Put
Notice Date and ending on and including the related Closing
Date, the Common Stock shall have been listed or quoted for
trading on the Principal Market and shall not have been
suspended from trading thereon during the Pricing Period;

iii.

the Company has complied with its obligations and is
otherwise not in material breach of or in material default
under, this Agreement, the Registration Rights Agreement or
any other agreement executed in connection herewith which has
not been cured prior to delivery to the Investor of the
applicable Put Notice;

iv.

no injunction shall have been issued and remain in force, or
action commenced by a governmental authority which has not
been stayed or abandoned, prohibiting the purchase or the
issuance of the Securities; and

the issuance of the Securities will not violate any
shareholder approval requirements of the Principal Market.

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In no event shall the Holder be entitled to purchase that number
of Shares, which when added to the sum of the number of shares of
Common Stock beneficially owned (as such term is defined under
Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor,
would exceed 9.99% of the number of shares of Common Stock
outstanding on the Closing Date, as determined in accordance with
Rule 13d-1(j) of the 1934 Act.

Registration Rights Agreement:

to the Investment Agreement entered into by and between the
Company and the Holder, the Company has agreed to issue and sell
to the Holder an indeterminate number of shares of the Companys
common stock, par value of $.001 per share, up to an aggregate
purchase price of Three Million Dollars ($3,000,000). As an
inducement to the Holder to execute and deliver the Investment
Agreement, the Company has agreed to provide certain registration
rights under the 1933 Act, and applicable state securities laws,
with respect to the shares of Common Stock issuable to the
Investment Agreement.

The Company shall use its best efforts to, within forty five (45)
days of the Execution Date, file with the SEC a Registration
Statement or Registration Statements (as is necessary) on Form
S-1 (or, if such form is unavailable for such a registration, on
such other form as is available for such registration), covering
the resale of 2,000,000 shares of the Registrable Securities,
which Registration Statement(s) shall state that, in accordance
with Rule 416 promulgated under the 1933 Act, such Registration
Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon stock splits,
stock dividends or similar transactions. The Company shall
initially register for resale 2,000,000 shares of Registrable
Securities except to the extent that the SEC requires the share
amount to be reduced as a condition of effectiveness. The Company
shall use commercially reasonable efforts to have the
Registration Statement(s) declared effective by the SEC within
seventy-five (75) days but no more than one hundred twenty (120)
days after the Company has filed the Registration Statement(s).

Upon the effectiveness of such Registration Statement relating to
the Registrable Securities, the Company shall keep such
Registration Statement effective until the earlier to occur of
the date on which (A) the Holder shall have sold all the
Registrable Securities actually issued or that the Company has an
obligation to issue under the Investment Agreement; or (B) the
Holder has no right to acquire any additional shares of Common
Stock under the Investment Agreement; or (C) the Holder may sell
the Registrable Securities without volume limitations under Rule
144 (the Registration Period).

Subsidiary Guarantee:

As a material inducement to the Holder to purchase the Notes and
to enter into all of the Transaction Documents, the Companys
subsidiaries, Helix TCS LLC, Security Consultants Group, and Boss
Security Solutions, Inc., (altogether Guarantors) and the Company
entered into a Subsidiary Guarantee. The Guarantors jointly and
severally, unconditionally and irrevocably, guaranteed to the
Holder and their respective successors, endorsees, transferees
and assigns, the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.

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Security Agreement:

In order to induce the Holder to extend the loans evidenced by
the Notes and to enter into the Transaction Documents, the
Company and its subsidiaries entered into the Security Agreement
and granted the Holder a security interest in certain property of
the Company and its subsidiaries (altogether Debtors) to secure
the prompt payment, performance and discharge in full of all of
the Companys obligations under the Notes and the other
Transaction Documents and the Guarantors obligations under the
Guarantee. The Collateral in which the Holder is granted a
security interest by the Security Agreement shall include the
following personal property of the Debtor:

all assets

ii.

all revenue

iii.

all chattel paper

iv.

all deposit accounts

all equipment

vi.

all fixtures

vii.

all general intangibles

viii.

all goods

ix.

all intellectual property

all inventory

xi.

all other tangible and intangible personal property
whatsoever of the Debtors related to the Assets

xii.

account receivables, together with all instruments, all
documents of title representing any of the foregoing, and all
right, title, and security with respect to each account;

xiii.

all supporting obligations;

xiv.

the products and proceeds of all of the foregoing Collateral
set forth in clauses (i)-(xiii), above.

Subject to the Permitted Liens, as an inducement for the Holder
to extend the loan as evidenced by the Notes and to secure the
complete and timely payment, performance and discharge in full,
as the case may be, of all of the Obligations, the Debtor
unconditionally and irrevocably pledges, grants and hypothecates
to the Secured Party a security interest in and to, a lien upon
and a right of set-off against all of their respective right,
title and interest of whatsoever kind and nature in and to, the
Collateral (a Security Interest and, collectively, the Security
Interests). The Security Interests shall terminate when the Notes
and all other Obligations have been paid in full or discharged.

Common Stock Purchase Warrant:

The Common Stock Purchase Warrant certifies that, for value
received, Holder is entitled, upon the terms and subject to the
limitations on exercise and the conditions set forth in the
Warrant, at any time on or after the Initial Exercise Date and on
or prior to 5 PM New York City Time on February 12, 2022 but not
thereafter, to subscribe for and purchase from the Company, up to
25,000 shares (as subject to adjustment hereunder, the Warrant
Shares) of Common Stock. The purchase price of one share of
Common Stock under the Warrant shall be equal to $1.00, subject
to the following adjustment condition:

If at any time after the six month anniversary of the Initial
Exercise Date, there is no effective Registration Statement
registering, or no current prospectus available for, the resale
of the Warrant Shares by the Holder, then the Warrant may only be
exercised, in whole or in part, at such time by means of a
cashless exercise in which the Holder shall be entitled to
receive a number of Warrant Shares equal to the quotient obtained
by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the Trading Day immediately preceding the date
on which Holder elects to exercise the Warrant by means of a
cashless exercise, as set forth in the applicable Notice of
Exercise;

(B) = the Exercise Price of the Warrant, as adjusted hereunder;
and

(X) = the number of Warrant Shares that would be issuable upon
exercise of the Warrant in accordance with the terms of the
Warrant if such exercise were by means of a cash exercise rather
than a cashless exercise.

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Securities Purchase Agreement:

The Company and the Holder executed the Securities Purchase
Agreement (SPA) in accordance with and in reliance upon the
exemption from securities registration for offers and sales to
accredited investors afforded, inter alia, by Rule 506 under
Regulation D as promulgated by the United States Securities and
Exchange Commission (the SEC) under the 1933 Act, and/or Section
4(a)(2) of the 1933 Act. The SPA outlines the purchase of the
Notes as well as the Warrants (together, the Securities), and the
Holder understands that the Securities are being offered and sold
to it in reliance on specific exemptions from the registration
requirements of the 1933 Act and state securities laws and that
the Company is relying upon the truth and accuracy of, and the
Holders compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Holder set
forth in the SPA in order to determine the availability of such
exemptions and the eligibility of the Holder to acquire the
Securities.

Transfer Agent Instruction Letter:

Until the Companys obligations under the Note are paid and
performed in full, (a) the Transfer Agent of the Company is
authorized to establish a reserve of shares of authorized but
unissued Common Stock of the Company in an amount not less than
2,000,000 shares (the Transfer Agent Reserve) for issuance upon
partial or full conversion of the Notes in accordance with the
terms thereof, (b) the Transfer Agent shall maintain and hold the
Transfer Agent Reserve for the exclusive benefit of Holder, (c)
the Transfer Agent shall issue the shares of Common Stock held in
the Transfer Agent Reserve to Holder or its broker only (subject
to the immediately following clause (d)), (d) when the Transfer
Agent issue shares of Common Stock to Holder or its broker under
the Note to the other instructions in the Letter, the Transfer
Agent shall issue such shares from Companys authorized and
unissued shares of Common Stock to the extent the same are
available and not from the Transfer Agent Reserve unless and
until there are no authorized shares of Common Stock available
for issuance other than those held in the Transfer Agent Reserve,
at which point, and upon receipt of written authorization from
Holder, the Transfer Agent shall then issue any shares of Common
Stock deliverable to Holder under the Note from the Transfer
Agent Reserve, (e) the Transfer Agent shall not otherwise reduce
the Transfer Agent Reserve under any circumstances, unless Holder
delivers written pre-approval of such reduction, and (f) the
Transfer Agent shall immediately add shares of Common Stock to
the Transfer Agent Reserve as and when requested by Company or
Holder in writing from time to time, provided that such
incremental increases do not cause the Transfer Agent Reserve to
exceed the Companys authorized shares of Common Stock.

SECTION 2 FINANCIAL INFORMATION

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

See the disclosures under Item 1.01 of this Current Report on
Form 8-K, incorporated herein by this reference.

SECTION 3 SECURITIES AND TRADING MARKETS

Item 3.02 Unregistered Sales of Equity
Securities

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Warrants (together, the Securities), and the Holder understands
that the Securities are being offered and sold to it in reliance
on specific exemptions from the registration requirements of the
1933 Act and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Holder’s
compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Holder set forth in the
SPA in order to determine the availability of such exemptions and
the eligibility of the Holder to acquire the Securities.

See the disclosures under Item 1.01 of this Current Report on
Form 8-K, incorporated herein by this reference.

SECTION 9 FINANCIAL STATEMENTS AND EXHIBITS

Item9.01 Exhibits.

The following exhibits are filed with this report on Form 8-K.

Exhibit Number		Exhibit
10.1		Form of Secured Convertible Promissory Note
10.2		Annexes III and IV to the Securities Purchase Agreement
10.3		Fixed Secured Convertible Promissory Note – $25,000
10.4		Registration Rights Agreement
10.5		Transfer Agent Instruction Letter
10.6		Investment Agreement
10.7		Subsidiary Guarantee
10.8		Common Stock Purchase Warrant
10.9		Security Agreement
10.10		Securities Purchase Agreement

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About HELIX TCS, INC. (OTCMKTS:HLIX)
Helix TCS, Inc. is a provider of integrated operating environment solutions for the legal cannabis industry. The Company provides security, compliance, and technology services to the legal cannabis industry. Its technology service offers clients a technology platform, allowing clients to manage inventory and supply costs through Cannabase, as well as bespoke monitoring and transport solutions. It focuses on utilizing technology as an operations multiplier, bringing in and managing a range of partnerships across the technology spectrum to give desired outcomes for its clients. The Company develops a range of compliance services to firms in the cannabis industry. It safeguards the clients’ ability to operate while increasing their access to services. The Company delivers a range of security operations, such as transport, armed and unarmed guarding, training, investigation and special services. Its include Cannabase, BOSS Security Solutions, Helix TCS LLC and Security Consultants LLC. HELIX TCS, INC. (OTCMKTS:HLIX) Recent Trading Information
HELIX TCS, INC. (OTCMKTS:HLIX) closed its last trading session up +0.05 at 4.55 with 2,487 shares trading hands.