UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported): October 31, 2007
PAY88,
INC.
(Exact
Name of Registrant as Specified in Its Charter)
Nevada
(State
or
Other Jurisdiction of Incorporation)
|
000-51793
(Commission
File Number)
|
20-3136572
(IRS
Employer Identification No.)
|
1053
North Barnstead Road
Barnstead,
NH 03225
(Address
of Principal Executive Offices, Zip Code)
(603)
776-6044
(Registrant's
Telephone Number, Including Area Code)
__________________________________________________
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
|_|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
|_|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Section
1 - Registrant’s Business and Operations
Item
1.01 Entry into a Material Definitive Agreement.
On
October 31, 2007, Pay88, Inc., a Nevada corporation (the “Company” or “we”)
consummated the second closing (the “Second Closing”) contemplated by the
Subscription Agreements dated September 12, 2007 (the “Financing”) (see the
Current Report on Form 8-K, filed with the Securities and Exchange Commission
on
September 18, 2007). We issued to 3 accredited investors (“Purchasers”), secured
convertible promissory notes, in the aggregate principal amount of $1,155,000
(the "Second Closing Notes"). In consideration therefor, the Purchasers agreed
to pay to the Company an aggregate of $750,000. The Company received net
proceeds from the issuance of the Notes of $707,487.50.
The
Second Closing Notes bear interest at the rate of prime plus 4% per annum,
payable in either (a) cash equal to 110% of 8.33% of the initial principal
amount of the Second Closing Note or (b) absent any event of default, in shares
of our common stock at the lesser of (i) $1.00 per share or (ii) 80% of the
average of the closing bid prices of our common stock for the 20 trading days
preceding the payment date. Said payments commence on March 12, 2008 and all
accrued but unpaid interest and any other amounts due thereon are due and
payable on March 12, 2009, or earlier upon acceleration following an event
of
default, as defined in the Second Closing Notes.
All
principal and accrued interest on the Second Closing Notes is convertible into
shares of our common stock at the election of the Purchasers at any time at
the
conversion price of $1.00 per share, subject to adjustment for certain
issuances, transactions or events that would result in “full ratchet” dilution
to the holders.
The
notes
contain default events which, if triggered and not timely cured (if curable),
will result in a default interest rate of an additional 5% per annum. The Second
Closing Notes also contain antidilution provisions with respect to certain
securities issuances, including the issuances of stock for less than $1.00
per
share. In addition, we have to pay the Purchasers 120% plus accrued interest
of
the outstanding principal amount if we are no longer listed on the Bulletin
Board, sell substantially all of our assets or Guo Fan is no longer our Chief
Executive Officer.
The
Warrants
As
part
of the Financing, we also issued to the Purchasers an aggregate of 1,155,000
Class A Common Stock Purchase Warrants (the “Class A Warrants”) and 1,155,000
Class B Common Stock Purchase Warrants (the “Class B Warrants”) (collectively,
the Class A Warrants and the Class B Warrants are herein referred to as the
“Second Closing Warrants”). The Class A Warrants are exercisable at a price of
$0.81 per share at any time until September 12, 2012 and the Class B Warrants
are exercisable at a price of $1.13 per share at any time until September 12,
2012. The Second Closing Warrants include a cashless exercise provision which
is
triggered after March 12, 2008 as well as “full ratchet” antidilution provisions
with respect to certain securities issuances.
The
option of each Purchaser, conversion of the Second Closing Notes, or exercise
the Second Closing Warrants, is subject to the restriction that such conversion
or exercise, does not result in the Purchaser beneficially owning at any one
time more that 4.99% of our outstanding shares of common stock.
The
foregoing description of the Second Closing Notes and the Second Closing
Warrants, does not purport to be complete and is qualified in its entirety
by
reference to the Second Closing Notes and the Second Closing Warrants, which
are
attached as Exhibits 4.1 and 4.2, respectively, to the Current Report on Form
8-K, filed with the Securities and Exchange Commission on September 18, 2007.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The
information contained in Item 1.01 of this Current Report is incorporated by
reference in this Section 2.03.
Item
3.02 Unregistered Sales of Equity Securities
The
information contained in Item 1.01 of this Current Report is incorporated by
reference into this Item 3.02. The securities described in Item 1.01 above
were
offered and sold in reliance upon exemptions from registration pursuant to
Section 4(2) under the Securities Act and Rule 506 promulgated thereunder.
The
Subscription Agreements executed in connection therewith contain representations
to support the Company's reasonable belief that each of the Purchasers had
access to information concerning its operations and financial condition, is
acquiring the securities for its own account and not with a view to the
distribution thereof, and is an "accredited investor" as such term is defined
in
Rule 501 (a) of Regulation D promulgated under the Securities Act. At the time
of their issuance, the securities described in Item 1.01 above will be deemed
to
be restricted securities for purposes of the Securities Act and the certificates
representing the securities shall bear legends to that effect.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
PAY88,
INC.
By:
/s/
Guo Fan
Name:
Guo
Fan
Title:
President
and Chief Executive Officer
Date:
November 1, 2007