Item 3.02 Unregistered Sales of Equity Securities.
As previously reported, on March 24, 2021, LiqTech International, Inc. (the
"Company") entered into a Securities Purchase Agreement (the "Purchase
Agreement") with an institutional investor (the "Investor") pursuant to which
the Company agreed to issue and sell a $15.0 million principal amount Senior
Convertible Note due 2023 (the "Note") and an aggregate of 80,000 shares (the
"Shares" and, together with the Note, the "Securities") of common stock, par
value $0.001 per share (the "Common Stock"), for an aggregate purchase price of
$15.0 million upon the satisfaction of the closing conditions set forth in the
Purchase Agreement (the "Closing"). The Closing occurred on April 8, 2021 and
the Company issued to the Investor the Securities in connection with the
Closing.
The Note is a senior, unsecured obligation of the Company, payable at 112% of
the principal amount at maturity on October 1, 2023, or earlier upon redemption
or repurchase as set forth in the Note. The Note is convertible into shares of
Common Stock pursuant to the terms of the Note (the "Conversion Shares"), in
part or in whole, from time to time, at the election of the Investor or other
holder of the Note (the "Holder"). The initial conversion rate is 100.6749
shares of Common Stock per $1,000 of principal amount of the Note. The
conversion rate is subject to anti-dilution adjustments including for stock
dividends, splits and combinations; issuances of options, warrants or similar
rights, spin-offs and distributions of property; cash dividends or
distributions; and tender or exchange offers, in each case as further described
in and pursuant to the terms of the Note. The Note has beneficial ownership
limitations such that the Company may not issue Conversion Shares in the event
that the Holder would own in excess of 4.99% of the Common Stock following such
issuance, or if all such issuances of Conversion Shares under the Note would
exceed 4,339,473 shares of the Company's outstanding Common Stock prior to
stockholder approval.
Beginning on March 1, 2022, and on the first day of each calendar month
thereafter, at the election of the Investor or Holder, if applicable, the
Company shall be required to redeem $840,000 of the amounts due under the Note
in cash or Common Stock at 90% of the lesser of (i) the volume-weighted average
price ("VWAP") of the Common Stock on the trading day immediately preceding the
payment date and (ii) the average of the lowest three (3) VWAPs over the 10
trading days immediately preceding the payment date, which shall in no case be
less than the floor price of $1.75 per share (the "Market Price"). The Holder or
the Company may also elect for the Company to redeem the Notes at the greater of
(i) 115% of the principal amount plus accrued and unpaid interest or (ii) 115%
of the conversion value then in effect plus accrued and unpaid interest, in cash
or in Common Stock as set forth in the Note, if the Company undergoes a
fundamental change, as described in the Note. The Note has interest payable
quarterly beginning June 1, 2021 at a rate of 5% per annum. The number of shares
issuable if the Company elects to pay interest in shares of Common Stock shall
be based on the Market Price.
In the Purchase Agreement, the Investor represented to the Company, among other
things, that it was an "accredited investor" (as such term is defined in Rule
501(a) of Regulation D under the Securities Act of 1933 (the "Act")). The
Shares, the Conversion Shares and the Note are being sold by the Company under
the Purchase Agreement in reliance upon an exemption from the registration
requirements of the Act afforded by Section 4(a)(2) of the Act and/or Rule 506
of Regulation D thereunder. No advertising or general solicitation was employed
in offering the Securities and the Investor represented that it is acquiring the
Securities for its own account and not with a view towards the public sale or
distribution thereof.
-2-
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses