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Item
1.01
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Entry
into a Material Definitive Agreement.
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Placement
Agency Agreement
On
March 13, 2019, Sigma Labs, Inc. (the “Company”) entered into a placement agency agreement (the “Agency Agreement”)
with Dawson James Securities, Inc., as exclusive placement agent (the “Placement Agent”) in connection with a public
offering (the “Offering”) of the Company’s securities. Pursuant to the Agency Agreement, the Company has agreed
to sell up to 1,400,800 units, with each unit consisting of one share of the Company’s common stock, par value $0.001 per
share, and 30% of a warrant to purchase a share of the Company common stock at an exercise price of $1.61 per whole share. The
units will be sold at a price of $1.40 per unit. The shares of common stock and warrants will be mandatorily separable immediately
upon issuance.
The
Company has agreed to pay to the Placement Agent a placement agent fee equal to 8% of the aggregate gross proceeds to the Company
from the sale of the securities in the Offering. In addition, the Company has agreed to reimburse the Placement Agent for diligence
expenses and legal fees in the sum of $45,000 and the reimbursement of “blue sky” fees and expenses not to exceed
$10,000. Because there is no minimum offering amount required as a condition to closing in this offering, the actual public offering
amount, placement agent fees, and proceeds to us, if any, are not presently determinable and may be substantially less than the
total maximum offering amounts set forth above. The closing of the Offering is expected to occur on March 15, 2019.
Pursuant
to the Agency Agreement, the Company also agreed to issue to the Placement Agent a five-year unit purchase option (the “Unit
Purchase Option”) to purchase 8% of the number of units sold in this offering at an exercise price equal to $1.75 per unit
(125% of the public offering price per share). The unit purchase option will be exercisable at any time and from time to time,
in whole or in part, during the period commencing six months following the commencement date of this offering and ending five
years from the commencement date of this offering.
The
anticipated gross proceeds to us from the offering, before deducting the placement agent’s fees and expenses and other estimated
offering expenses payable by us are expected to be approximately $1,961,120.
Pursuant
to the Agency Agreement, the Company has agreed to indemnify the Placement Agent against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, and liabilities arising from breaches of representations and warranties contained
in the Agency Agreement, or to contribute to payments that the Placement Agent may be required to make in respect of those liabilities.
The Agency Agreement also contains customary representations, warranties, and conditions precedent to closing.
The
securities were offered and will be sold pursuant to a final prospectus supplement that was filed with the Securities and
Exchange Commission, or SEC, in connection with a takedown from our effective shelf registration statement on Form S-3 (File No.
333-225377) and the base prospectus dated as of June 14, 2018 contained in such registration statement. In connection with the
offering, we also filed with the SEC a preliminary prospectus supplement relating to the Offering.
The
Agency Agreement, the form of the warrants and the Unit Purchase Option are filed as exhibits hereto and are incorporated into
this Item 1.01 by reference. The foregoing description of the Agency Agreement, the warrants and the Unit Purchase Option are
qualified in its entirety by reference to the full text of the same. The representations, warranties and covenants contained in
the Agency Agreement were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the
parties to such agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified
by confidential disclosures exchanged between the parties in connection with the execution of the Agency Agreement. The representations
and warranties may have been made for the purposes of allocating contractual risk between the parties to the agreement instead
of establishing these matters as facts and may be subject to standards of materiality applicable to the contracting parties that
differ from those applicable to investors. Investors are not third-party beneficiaries under the Agency Agreement and should not
rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of
facts or condition of the Company. Moreover, information concerning the subject matter of the representations and warranties may
change after the date of the Agency Agreement.