Entry into a Material Definitive Agreement.
Multi-Tranche Private Placement
On May 15, 2023, Venus Concept Inc. (the “Company”) entered into a stock purchase agreement (the “Stock Purchase Agreement”) with EW Healthcare Partners, L.P. and EW Healthcare Partners-A, L.P. (collectively, the “Investors”). Under the
Stock Purchase Agreement, the Company may issue and sell to the Investors up to $9,000,000 in shares of newly-created senior convertible preferred stock, par value $0.0001 per share (the “Senior
Preferred Stock”), in multiple tranches from time to time until December 31, 2025, subject to a minimum aggregate purchase amount of $500,000 in each tranche (the “Private Placement”).
Other than the Initial Placement (as defined below), sales of Senior Preferred Stock in the Private Placement are purely discretionary and must be approved by both the Company and the Investors.
The purchase price for each share of Senior Preferred Stock floats at a price equal to the product of (a) the lower of (i) the closing price of the Company’s common
stock, par value $0.0001 per share (“Common Stock”), on the trading day immediately preceding the applicable closing date and (ii) the average closing price of the Common Stock for the five
trading days immediately preceding the applicable closing date, multiplied by (b) two (the “Purchase Price”). The Senior Preferred Stock is
convertible into shares of Common Stock on a 1-for-2.6667 basis at the option of (x) the Investors at any time or (y) the Company within 30 days following the occurrence of specified trigger events. The terms of the Senior Preferred Stock are
further described below under Item 5.03 of this Current Report on Form 8‑K.
The initial sale in the Private Placement occurred on May 15, 2023, under which the Company sold the Investors 280,899 shares of Senior Preferred Stock for an
aggregate purchase price of $2,000,000 (the “Initial Placement”). The Company expects to use the proceeds of the Initial Placement, after the payment of transaction expenses, for general
working capital purposes.
Subject to the terms and conditions of the Stock Purchase Agreement, the Company is required, upon the request of the Purchasers, to call one or more shareholder
meetings for the purpose of eliminating any limitations on the convertibility of the Senior Preferred Stock imposed by the rules and regulations of the Nasdaq Capital Market. On May 15, 2023, the Company secured agreements from certain of its
investors, currently holding an aggregate of 59.2% of the Company’s voting securities, to vote their shares in favor of eliminating any such limitations at any shareholder meeting called for such purpose.
Contemporaneously with the execution of the Stock Purchase Agreement, the Company and the Investors entered into a Registration Rights Agreement, dated May 15, 2023
(the “Registration Rights Agreement”), under which the Company is required to file one or more demand shelf registration statements with respect to the shares of Common Stock issuable upon
conversion of Senior Preferred Stock that has been sold under the Stock Purchase Agreement. Pursuant to the Registration Rights Agreement, the Company must file a registration statement for the offer and resale of the Common Stock underlying the
Senior Preferred Stock then issued no later than July 15, 2023, and cause to be declared by the U.S. Securities and Exchange Commission (the “SEC”) as promptly as possible thereafter, but in
no event later than 90 days thereafter.
The shares of Senior Preferred Stock issued or issuable by the Company under the Stock Purchase Agreement, as well as the shares of Common Stock issuable upon
conversion of the Senior Preferred Stock, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company relied on,
and will rely on, the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Registration D, promulgated by the SEC, and on similar exemptions under applicable state laws.
The Stock Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties and agreements by the Company, indemnification
obligations of the Company, including for liabilities under the Securities Act of 1933, as amended (the “Securities Act”), and other obligations of the parties. The representations,
warranties, and covenants contained in such agreements were made only for purposes of such agreements and are made as of specific dates; are solely for the benefit of the parties (except as specifically set forth therein); may be subject to
qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the such agreements; and may be subject to standards of materiality and knowledge applicable to the contracting parties that differ from those
applicable to the investors generally. Investors should not rely on such representations, warranties, and covenants, or any description thereof, as characterizations of the actual state of facts or condition of the Company.
The foregoing descriptions of the Stock Purchase Agreement and the Registration Rights Agreement do not purport to be complete and are qualified in their entirety by
reference to the full text of the Stock Purchase Agreement and the Registration Rights Agreement, copies of which are filed herewith as Exhibits 10.1 and 10.2, respectively.