Item 3.02 Unregistered Sales of Equity Securities.
From June 21, 2014 through July 2, 2014, we sold 4,000 units ("Units") to 22
accredited investors at a price of $1,000 per Unit for total gross proceeds of
$4,000,000 (of which 3,450 Units were purchased on or after June 27, 2014). We
are offering up to 4,000 Units with each Unit consisting of (i) 1 share of our
Series A Convertible Preferred Stock ("Series A Preferred") convertible into
shares of our common stock, $0.001 par value per share ("Common Stock") at a
rate of $0.70 per share (the "Conversion Shares"), and (ii) common stock
purchase warrants ("Warrants") to purchase five-hundred fifty (500) shares of
Common Stock with an exercise price of $1.00 per whole share exercisable for 3
years after issuance (the "Warrant Shares").
The Conversion Shares and the Warrant Shares contain standard piggy back
registration rights. The terms of the Series A Preferred are subject to the
terms and conditions of the Certificate of Designations, Preferences and Rights
of Series A Convertible Preferred Stock attached hereto as Exhibit 3.1 to our
Current Report on Form 8-K dated June 10, 2014 and filed with the SEC on June
17, 2014 and are incorporated herein by reference. The Warrants are subject to
the terms and conditions of the form of Warrant attached hereto as Exhibit 4.1
and incorporated by reference herein. The terms of the private placement are
more fully set forth in the form of Subscription Agreement attached hereto as
Exhibit 10.1 and incorporated by reference herein.
We used $124,250 of these proceeds as payment for non-exclusive placement agent
fees to FINRA registered broker-dealers. In addition, approximately $500,000
was used to repay outstanding indebtedness under 10% promissory notes. The
remaining proceeds will used for working capital and general corporate purposes
and to fund growth opportunities. These issuances were exempt under Rule 506 of
the Securities Act of 1933, as amended.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
In conjunction with the offering disclosed in Item 3.02 above, on June 27, 2014,
we filed a Certificate of Increase (the "Certificate of Increase") to the
Certificate of Designation concerning our Series A Convertible Preferred Stock
with the Secretary of State of the State of Delaware increasing the number of
authorized shares of our Series A Convertible Preferred Stock from 3,000 to
4,000 shares. The Certificate of Increase is attached hereto as Exhibit 3.2 and
incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
Certificate of Designation-Series A Preferred Stock*
Certificate of Increase-Series A Preferred Stock
Form of Warrant
10.1 Form of Subscription Agreement
*Filed as an exhibit to our Current Report on Form 8-K filed with the SEC
June 17, 2014
and incorporated herein by reference.