RAPID THERAPEUTIC SCIENCE LABORATORIES, INC. Item 1.01 Entry into a Material Definitive Agreement.
Private Offering
On
The closing of the transactions contemplated by the Purchase Agreement,
including the sale of the Debenture and Warrants, occurred on
Securities Purchase Agreement
The Purchase Agreement included standard and customary representations of the parties; covenants of the Company (including obligations to indemnify the Purchaser in certain cases); and penalties for the Company's failure to comply with the terms of the Offering documents.
We agreed to reserve a number of shares of common stock for future issuance under the Debenture and Warrant equal to (a) the amount of the Debenture divided by 75% of the Conversion Price (defined below)(6,470,587 shares); and (b) the number of shares of common stock issuable upon exercise of the Warrants (4,852,940 shares).
The Purchase Agreement provides the Investor a right of first refusal, for 12 months following the closing of the Offering, to purchase up to 40% of the common stock, stock equivalents, cash and/or indebtedness, we may sell or propose to sell in a subsequent offering.
The Purchase Agreement included certain positive and negative covenants restricting the Company's ability to undertake various actions while the Debenture remains outstanding, including prohibiting the Company from incurring additional indebtedness, repurchasing its securities or repaying certain of its indebtedness, paying cash dividends or other distributions on equity securities, other than pursuant to certain limited exceptions set forth in the Purchase Agreement.
We agreed to use the net proceeds from the Offering for working capital purposes and not use such proceeds: (a) for the satisfaction of any portion of the Company's debt (other than payment of trade payables in the ordinary course of the Company's business and prior practices), (b) for the redemption of any common stock or common stock equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of applicable laws.
Debenture
The amount owed under the Debenture is due upon the earlier of (a)
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The Debenture may not be prepaid without the prior written consent of the holder. The Debenture does not accrue interest, except upon the occurrence of an event of default, at which time the amount owed accrues interest at the rate of 18% per annum, until paid in full. Upon the occurrence of an event of default, the holder of the Debenture can require that the Company pay a default amount equal to the sum of (a) the greater of (i) the outstanding principal amount of the Debenture, plus all accrued and unpaid interest thereon, divided by the Conversion Price on the date such amount is either (A) demanded (if demand or notice is required to create an event of default) or otherwise due or (B) paid in full, whichever has a lower Conversion Price, multiplied by the volume weighted average price of the Company's common stock ("VWAP") on the date such . . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K relating to the Debenture, and the form of Debenture attached hereto as Exhibit 4.1, are incorporated by reference into this Item 2.03 in their entirety.
Item 3.02 Unregistered Sales of
The information in Item 1.01 relating to the Offering, the Debenture, Warrants,
and Placement Warrants, are incorporated by reference into this Item 3.02. We
claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506
of Regulation D of the Securities Act, for such issuances and grants, since the
foregoing issuances and grants did not involve a public offering, the recipients
were (a) "accredited investors"; and/or (b) had access to similar documentation
and information as would be required in a Registration Statement under the
Securities Act, the recipients acquired the securities for investment only and
not with a view towards, or for resale in connection with, the public sale or
distribution thereof. The securities were offered without any general
solicitation by us or our representatives. The securities are subject to
transfer restrictions, and the certificates evidencing the securities
contain/will contain an appropriate legend stating that such securities have not
been registered under the Securities Act and may not be offered or sold absent
registration or pursuant to an exemption therefrom. The securities were not
registered under the Securities Act and such securities may not be offered or
sold in
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In the event the Debenture is converted in full, and without taking into account any interest or penalties which may accrue thereunder, or reduction in conversion price in connection with a Qualified Offering, a maximum of 4,852,940 shares of common stock would be issuable to the holder thereof upon conversion thereof.
In the event the Warrants are exercised in full (and without taking into account any anti-dilutive rights associated therewith), a maximum of a total of 4,852,940 shares of common stock would be issuable to the holder thereof upon exercise thereof.
In the event the Placement Warrants are exercised in full (and without taking into account any anti-dilutive rights associated therewith), a maximum of a total of 242,647 shares of common stock would be issuable to the holders thereof upon exercise thereof.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in Item 1.01 of this Current Report on Form 8-K relating to the Purchase Agreement and Debenture, and the form of Purchase Agreement and Debenture attached hereto as Exhibits 10.1 and 4.1, including, but not limited to, the restrictions on the Company's use of working capital and other limitations upon the payment of dividends thereunder are incorporated by reference into this Item 3.03 in their entirety.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(d)
Effective on
The Board of Directors determined that
The Board of Directors also appointed him, effective upon his appointment of the
Board of Directors as Chairperson (and sole member) of the Company's Audit
Committee, Compensation Committee and
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In addition,
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following Exhibits are filed herewith:
Exhibit
Number Description of Exhibit
4 .1 * Form of Common Stock Purchase Warrant of Rapid Therapeutic Science
Laboratories, Inc., for August 2021 Private Offering (to purchase
4,852,940 shares of common stock)
4 .2 * Form of Common Stock Purchase Warrant of Rapid Therapeutic Science
Laboratories, Inc., granted to Maxim Group LLC and assigns
10.1 * Form of Securities Purchase Agreement dated August 1, 2021, by and
between Rapid Therapeutic Science Laboratories, Inc., and the
Purchaser party thereto
10.2 * Form of Original Issue Discount Convertible Debenture Due May 1,
2022, dated August 4, 2021, in the amount of $1,941,176
10.3 * Form of Leak-Out Agreement (August 2021 Offering)
*Filed herewith.
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