Medifirst Solutions Inc (OTCMKTS:MFST) issued to an accredited investor (the “Investor”) a 9% convertible promissory note in the principal amount of $157,895.00 (the “Note”), which Note included an original issue discount of $7,895, resulting in proceeds of $150,000 to the Company. The Company intends to use the proceeds from the sale of the Note towards (i) additional inventory; (ii) U.S. Food and Drug Administration compliance expenses; (iii) developing a sales and marketing team; and (iv) general administrative expenses.
The Note bears interest at the rate of 9% per annum and has a maturity date of March 27, 2016 (the “Maturity Date”). At any time prior to the Maturity Date, the Company has the right to prepay the Note in an amount equal to 120% of the principal amount due plus any accrued but unpaid interest. Beginning on the six month anniversary of the issuance of the Note and subject to a beneficial ownership limitation equal to 4.99%, principal and interest on the Note is convertible into shares of the Company’s common stock (“Common Stock”) at a conversion price equal to 57.5% of the lowest trading price of Common Stock during the 20 trading day period prior to conversion. The Note sets forth various events that would trigger default and corresponding remedies.
On October 11, 2016, the Company issued to the Investor a convertible redeemable replacement note in principal amount of $50,000.00 (the “Replacement Note”). The issuance of the Replacement Note was made in connection with the Investor’s partial purchase of $45,000.00 in principal and accrued interest thereon (valued at $5,000) of a $100,000.00 convertible promissory note that was originally issued by the Company on June 12, 2015 (the “Original Note”). The $50,000.00 principal amount of the Replacement Note reflected the principal and accrued interest under the Original Note. Subject to a beneficial ownership limitation equal to 4.99%, principal and interest on the Replacement Note is convertible into shares of Common Stock at a conversion price equal to 50% of the lowest trading price of Common Stock during the 20 trading day period prior to conversion, representing the same conversion terms as those included in the Original Note. The Replacement Note otherwise contains substantially identical provisions to that of the Note.
The offer and sale of the securities were made in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
