Exercise Price, as applicable, and (y) 90% of the average of the five daily volume weighted average prices of the Common Stock immediately prior to such dates. In the event of a reduction in the
Exercise Price, the aggregate number of Warrant Shares shall be increased such that the aggregate Exercise Price of the Warrants on the day immediately following such reduction in the Exercise Price is equal to the aggregate Exercise Price
immediately prior to such adjustment. In addition, from the date of issuance of the Preferred Stock and Warrants until such time that the Companys Common Stock is listed or quoted on a national exchange, the Conversion Price and the Exercise
Price are subject to price-based anti-dilution protections.
The Company expects to receive gross proceeds from the Private Placement of approximately
$9.5 million, before deducting cash fees in the amount of $738,285 payable to Roth Capital Partners, LLC (Roth) for serving as placement agent for the Private Placement, and other transaction costs, fees and expenses payable by the
Company. The Company intends to use the net proceeds of the Private Placement to support the Companys general working capital requirements.
The
sale and issuance of the Series
E-1
Preferred Stock and Warrants to the Investors have been determined to be exempt from registration under the United States Securities Act of 1933, as amended (the
Act), in reliance on Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder.
As required by the Securities Purchase
Agreement, each director and officer of the Company has previously entered into a
lock-up
agreement with the Company whereby each director and officer has agreed that during the period commencing from
July 11, 2019 until 120 days after the Effective Date (as defined in the July Securities Purchase Agreement (as defined in paragraph (b) below), such director or officer will not offer, sell, contract to sell, hypothecate, pledge or
otherwise dispose of or enter into any transaction to dispose of, or establish or increase a put position or liquidate or decrease a call position, with respect to any share of Common Stock or securities convertible, exchangeable or exercisable
into, shares of Common Stock. In addition, as required by the Securities Purchase Agreement, each Investor and each officer, director and stockholder holding more than 10% of the issued and outstanding shares of Common Stock has agreed to vote all
shares of Common Stock over which it has voting control in favor of any resolution presented to the shareholders of the Company to approve the reverse stock split of the Common Stock as contemplated by the Securities Purchase Agreement.
Closing of the transactions contemplated by the Securities Purchase Agreement is expected to occur on or before August 19, subject to the satisfaction or
waiver of various closing conditions. The Securities Purchase Agreement contains customary representations, warranties and covenants for transactions of this type.
The foregoing description of the Securities Purchase Agreement and the Warrants does not purport to be complete and is qualified in its entirety by reference
to the complete text of the Securities Purchase Agreement and the form of the Warrant, which is attached hereto as Exhibits 10.1 and 4.1 to this Current Report on Form
8-K
and is hereby incorporated by
reference into this Item 1.01.