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PSMH > SEC Filings for PSMH > Form 8-K on 19-Feb-2014All Recent SEC Filings

Show all filings for PSM HOLDINGS INC



Entry into a Material Definitive Agreement, Creation of a Direct Financial Oblig

Item 1.01 Entry into a Material Definitive Agreement.

Effective February 12, 2014, PSM Holdings, Inc. (the "Company") entered into a short-term Loan Agreement dated February 10, 2014 (the "Loan Agreement") with James Miller and Michael Margolies, directors of the Company, Kevin Gadawski, a director, CEO and CFO of the Company, and Richard Carrington, a shareholder (collectively the "Lenders" and each a "Lender"). Under the terms of the Loan Agreement, the Lenders agreed to loan an aggregate of $385,000 for operating expenses of the Company and its operating subsidiary, as well as to fund growth of the Company. The funds were received by the Company beginning on February 13, 2014, through February 18, 2014. The loans are evidenced by one-year 10% Convertible Promissory Notes (the "Notes") which bear interest at 10% per annum. The Notes are convertible at the lowest per share rate of common stock or common stock equivalents sold in a Qualified Offering by the Company. For purposes of this transaction, the term "Qualified Offering" means one or more offerings of debt or equity securities by the Company to non-affiliates in the aggregate amount of at least $1,000,000. In addition, each Lender received one common stock purchase warrant (the "Warrants") for each $2.50 loaned to the Company. Each five-year warrant is exercisable at $0.40 per share, subject to adjustment in the event of the issuance of additional common shares or common stock equivalents at less than the exercise price. The Warrants also provide for cashless exercise. The Warrants are not transferable or assignable without the prior consent of the Company.

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

The Loan Agreement and the issuance of the Notes create direct financial obligations of the Company as described in Item 1.01 above. The information in response to Item 1.01 above in regard to the Loan Agreement and the Notes is incorporated into this item.

Item 3.02 Unregistered Sales of Equity Securities.

In connection with the Company's debt financing through the sale of the Notes and Warrants (collectively the "Securities") under the Loan Agreement disclosed in Item 1.01 above, the Company issued four Notes in the aggregate principal amount of $385,000 and issued 154,000 Warrants to the four investors in return for loaned funds in an aggregate of $385,000 received by the Company. The Securities were sold without registration under the Securities Act by reason of the exemption from registration afforded by the provisions of Section 4(a)(5) and Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. Each of the investors was an "accredited investor" as defined in Rule 501(a) of Regulation D promulgated by the Commission. Each person delivered appropriate investment representations with respect to the transaction and consented to the imposition of restrictive legends upon the share and Warrant certificates and the Note.
Each person was afforded the opportunity to ask questions of the Company's management and to receive answers concerning the terms and conditions of the transaction. No selling commissions or other remuneration was paid in connection with the sale of the Securities.

Item 9.01 Financial Statements and Exhibits

Exhibit No. Description
99.1 Loan Agreement dated February 10, 2014
99.2 Form of 10% Convertible Promissory Note
99.3 Form of Warrants

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