Item 1.01. Entry into a Material Definitive Agreement.
On July 31, 2020, Ideal Power Inc. (the "Company") entered into letter
agreements (the "Letter Agreements") with certain of the Company's Series A
warrant holders (the "Series A Warrant Holders"), who were previously issued
warrants (the "Original Warrants") to purchase shares of common stock of the
Company, par value $0.001 per share (the "Common Stock") pursuant to that
certain Securities Purchase Agreement between the Company, the Series A Warrant
Holders and the other parties thereto, dated as of November 7, 2019. The
Series A Warrant Holders agreed to the early exercise of their Original Warrants
pursuant to the Letter Agreements (the "Transaction"). The Company raised
approximately $2.7 million in gross proceeds in the Transaction.
Pursuant to the Letter Agreements, in consideration of the Series A Warrant
Holders exercising Original Warrants to purchase an aggregate of 1,176,137
shares of Common Stock, the Company issued to the Series A Warrant Holders new
Series C warrants (the "New Warrants") to purchase up to an aggregate of 705,688
shares of Common Stock (the "New Warrant Shares"), which is equal to 60% of the
shares underlying the Original Warrants included in the Transaction. The New
Warrants have an exercise price of $8.90 per share, with an expiration date of
August 4, 2025. Except as described herein, the New Warrants are substantially
similar to the Original Warrants.
To the extent that a Series A Warrant Holder's exercise of Original Warrants
would result in such holder exceeding the Beneficial Ownership Limitation (as
defined in the Original Warrants), such excess warrant shares shall be held in
abeyance for the benefit of such Series A Warrant Holder until such time as its
right thereto would not result in the holder exceeding the Beneficial Ownership
Pursuant to the Letter Agreements, the Company agreed to file a registration
statement with the Securities and Exchange Commission relating to the offer and
resale by the holders of the New Warrant Shares. The Company is obligated to
file the registration statement within 30 days of closing of the Transaction.
Craig-Hallum Capital Group LLC acted as the exclusive placement agent for the
Transaction. The New Warrants have not been registered under the Securities Act
of 1933, as amended (the "Act"), or state securities laws. The issuance of the
New Warrants was exempt from the registration requirements of the Act pursuant
to Section 4(a)(2) of the Act and Rule 506 of Regulation D promulgated
thereunder ("Regulation D"), made only to and with an "accredited investor" as
defined in Regulation D. This Current Report on Form 8-K shall not constitute an
offer to sell, nor the solicitation of an offer to buy, the securities described
herein, nor shall there be any offer, solicitation or sale of the securities in
any state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of such state.
The foregoing description of the Letter Agreements and the New Warrants is a
summary and is qualified in its entirety by reference to the form of Letter
Agreement and the form of New Warrants, which are filed hereto as Exhibit 10.1
and Exhibit 4.1, respectively, and are incorporated herein by reference.
Item 8.01. Other Events.
On August 3, 2020, the Company issued a press release announcing the
Transaction. A copy of the press release is filed as Exhibit 99.1 to this
Current Report on Form 8-K and is incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
4.1 Form of Series C Common Stock Purchase Warrant.
10.1 Form of Letter Agreement.
99.1 Press Release, dated August 3, 2020.
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