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)
September
26,
2017
MEDITE CANCER DIAGNOSTICS, INC.
(Exact
Name of Registrant as Specified in Charter)
Delaware
(State
or Other Jurisdiction of Incorporation)
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333-143570
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36-4296006
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(Commission
File Number)
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(IRS
Employer Identification No.)
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4203 SW 34
th
St.
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Orlando,
FL
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32811
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(407)
996-9630
(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))
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Indicate by check mark whether the registrant is an emerging growth
company as defined in in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter). Emerging
growth company ☐
If an emerging growth company,
indicate by checkmark if the registrant has elected not to use the
extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
☐
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Item 1.01
Entry into a Material Definitive Agreement.
On September 26, 2017, MEDITE Cancer Diagnostics, Inc. (the
“Company”) entered into a Securities Purchase Agreement
(the “Purchase Agreement”) with GPB Debt Holdings II,
LLC (“Purchaser”), pursuant to which the
Company issued to the Purchaser (i) a secured convertible
promissory note in the aggregate principal amount of $5,356,400
(the “Note”) at a purchase price equal to 97.5% of the
Face Value of the of the original $5 million Note and an additional
discount of 300,000 Euro ($356,400 at September 26, 2017)
attributed to the purchase and settlement of the 750,000 Euro
($890,325 at September 26, 2017) note with VR Equity Partners GmbH
by the Purchaser and considered an additional purchase discount,
with the Company receiving net proceeds of $4.9 million and (ii) a
warrant to purchase an aggregate of 4,120,308 shares of the common
stock, par value $0.001 per share, of the Company (the
“Warrant”). The Note matures on the 36th month
anniversary date following the Closing Date, as defined in the Note
(the “Maturity Date”). The Note is secured by a senior
secured first priority security interest on all of the assets of
the Company and its subsidiaries evidenced b y a security agreement
(the “Security Agreement”). Each subsidiary also
entered into a guaranty agreement pursuant to which the
subsidiaries have guaranteed all obligations of the Company to the
Purchaser. The Note bears interest at a rate of 13.25% per annum
(which interest is increased to 18.25% upon an Event of Default).
The Note is initially convertible at a price of $0.65 (the
“Conversion Price”) into 8,240,615 shares of common
stock. The Conversion Price and Exercise price of the Warrant is
subject to a ratchet downside protection with a $0.30 per share
floor price in the event the Company issues additional equity
securities, and subject to adjustments for stock splits, dividends,
combinations, recapitalizations and the like. The Note is being
amortized quarterly at a rate of 10% of the Face Value of the Note
beginning on month 24, with the remaining 60% due at the Maturity
Date. There is a flat 3% success fee which allows for the
prepayment of the Note and applies to the payment of principal
during the Term through the Maturity Date.
The Note contains
customary Events of Default. The Notes contain certain covenants,
such as restrictions on the incurrence of indebtedness, the
existence of liens, the payment of restricted payments,
redemptions, and the payment of cash dividends and the transfer of
assets.
The Warrants have an initial exercise price of $0.60 per share (the
“Exercise Price”). The Exercise Price is subject to a
ratchet downside protection with a $0.30 per share floor price in
the event the Company issues additional equity securities, and
subject to adjustments for stock splits, dividends, combinations,
recapitalizations and the like. The Warrants is exercisable for a
period of five (5) years (the “Term”) and provides for
cashless exercise it at the time of exercise a registration
statement registering the underlying securities is not available.
The Warrant is not to be exercisable until 6 months after the
Closing Date. The Purchaser also has a Right of Participation for
any Company offering, financing, debt purchase or assignment for 36
months after the Closing Date. The Company is required to maintain
a 6 month interest reserve.
In
addition, subject to limited exceptions, the Purchaser will not
have the right to convert any portion of the Note or exercise the
Warrant if the Purchaser, together with its affiliates, would
beneficially own in excess of 4.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to its
conversion (the “Beneficial Ownership Limitation”).
The Beneficial Ownership Limitation may be adjusted upon not
less than 61 days’ prior notice to the Parent, provided that
such Beneficial Ownership Limitation in no event shall exceed
9.99%.
In
connection with the Purchase Agreement, the Company entered into a
Registration Rights Agreement (the “Registration Rights
Agreement”) pursuant to which the Company has agreed to file
a registration statement with the Securities and Exchange
Commission relating to the offer and sale by the s Purchasers of
the shares of common stock underlying the Note (the “Note
Shares”) and Warrant (the “Warrant
Shares”). Pursuant to the Registration Rights Agreement,
the Company is obligated to file the registration statement within
60 days and to use best efforts to cause the registration statement
to be declared effective within 90 days. Failure to meet those
and related obligations, or failure to maintain the effective
registration of the Note Shares and Warrant Shares will subject the
Company to payment for liquidated damages.
The
Company agreed to use the proceeds of this offering to pay (i) the
outstanding balance of various credit facilities due to
Hannoveresche Volksbank in the amount of $2.3 million, (ii) the
outstanding balance of a settlement with VR Equity in the amount of
$0.5 million and (iii) the outstanding balance on secured
promissory notes in the amount of $301,000, with the remaining
balance for working capital of $1.4 million and $125,000 of broker
fees and $171,000 of Purchasers legal fees.
Pursuant
to the above transaction, the Company converted 2 notes with a
principal balance of approximately $133,000 of secured promissory
notes into $137,000 of subordinated notes convertible into 210,388
shares of common stock and 105,194 warrants to purchases shares of
common stock in a subordinated transaction with similar terms and
conditions as the transaction with the Purchaser stated above and 3
additional investors invested an additional aggregate $425,000 and
were issued subordinated notes in the aggregate principal amount of
$436,000 convertible into 670,611 shares of common stock and
335,306 warrants to purchase shares of common stock in subordinated
transaction with similar terms and conditions as the transaction
with the Purchaser.
The foregoing summary of the transaction contemplated by the
Purchase Agreement and the documents and instruments to be executed
and/or issued in connection therewith, does not purport to be
complete and is qualified in its entirety by reference to the
definitive transaction documents, copies of which are attached as
exhibits to this Current Report on Form 8-K.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
In connection with the transaction described in Item 1.01 of this
Current Report, which is incorporated into this Item 2.03, the
Company has entered into the Purchase Agreement, dated as of
September 26, 2017, pursuant to which it agreed to issue the Note,
Warrant and Security Agreement to the Purchaser. The Note bears
interest at a rate of 13.25% per annum, is secured in accordance
with the terms and conditions of the Security Agreement, and is due
and payable on the 36th month anniversary date following the
Closing Date, as defined in the Note or upon acceleration in
accordance with its terms. The Company may prepay the Note at any
time and from time to time without penalty upon payment of a
success fee. Payment of the obligations under the Note may be
accelerated, in general, upon any of the following events: (i) an
uncured failure to pay any amount under the Note when due; (ii) an
uncured breach by the Company of its obligations under any of the
offering documents; (iii) a material breach by the Company of its
representations and warranties contained in the offering documents;
(iv) certain material judgments are rendered against the Company;
and (v) the occurrence of certain voluntary and involuntary
bankruptcy proceedings. Upon an Event of Default, as defined in the
Note, Purchaser will have the right to be redeemed at 120% of the
outstanding balance immediately due prior to such Event of Default
plus three (3%) plus accrued and unpaid interest. Following an
Event of Default, cash interest shall accrue at an additional rate
of 5% per annum.
Item 3.02
Unregistered Sales of Equity Securities.
The Company issues the Notes and Warrants and the shares of common
stock issuable upon exercise thereof to the Purchaser in reliance
upon the exemption from registration under Section 4(a)(2) of the
Securities Act of 1933, as amended, and Rule 506 of Regulation D
promulgated thereunder. The information disclosed in Items 1.01 and
2.03 is incorporated into this Item 3.02 in its
entirety.
Item 9.01
Financial Statements and
Exhibits
(d) Exhibits
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Exhibit No
.
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Description
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Securities
Purchase Agreement GPB Medite
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Convertible
Note Medite GPB
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Security
Agreement - Medite GPB
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Warrant
Medite GPB
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Registration
Rights Agreement
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Subordinated
Creditor Purchase Agreement
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Subordinated Note
Medite GPB Medite
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Subordinated
Security
Agreement
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Warrant Medite
Subdebt
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Guaranty of
Obligation - Medite-GPB
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Subordinated
Guaranty of Obligation
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Medite
Intercreditor and Subordinators
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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.
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MEDITE
CANCER DIAGNOSTICS, INC.
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Date:
October 2, 2017
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By:
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/s/ David Patterson
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David
Patterson
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Chief
Executive Officer
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EXHIBIT
10.1
Securities Purchase Agreement GPB Medite
EXHIBIT
10.2
Convertible Note Medite GPB
EXHIBIT
10.3
Security Agreement - Medite GPB
EXHIBIT
10.4
Warrant Medite GPB
EXHIBIT
10.5
Registration Rights Agreement
EXHIBIT
10.6
Subordinated Creditor Purchase
Agreement
EXHIBIT
10.7
Subordinated Note Medite GPB
Medite
EXHIBIT
10.8
Subordinated
Security Agreement
EXHIBIT
10.9
Warrant Medite
Subdebt
EXHIBIT
10.10
Guaranty of Obligation -
Medite-GPB
EXHIBIT
10.11
Subordinated Guaranty of
Obligation
EXHIBIT
10.12
Medite Intercreditor and
Subordinators
Medite Cancer Diagnostics (CE) (USOTC:MDIT)
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