COATES INTERNATIONAL, LTD. (OTCMKTS:COTE) Files An 8-K Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN
OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A
REGISTRANT.
On June 7, 2017, the Registrant entered into a 9.75% convertible
note facility agreement (the Agreement) with an investor. The
Agreement provides that the investor will fund up to $369,000,
including an initial tranche of $55,000, which was funded at the
closing of the Agreement and twelve additional tranches of
$26,250 each. All tranches mature 17 months after the date of the
Agreement. The Agreement provides that the entire outstanding
balance under the Agreement, along with a required 25% prepayment
penalty, may be paid to the investor at the option of the
Registrant, in whole, at any time. The investor may convert the
remaining outstanding balance of convertible notes in whole, or
in part, at any time beginning six months after funding, into
shares of the Registrants common stock. The Registrant may, at
its option, pay all or any portion of a note conversion in cash,
or a combination of cash and conversion shares, without penalty,
provided it makes a timely election to do so. The number of
shares of common stock to be initially delivered upon conversion
shall be equal to the dollar amount being converted divided by
the variable conversion price. The variable conversion price is
the lesser of $0.01 per share, or 70% of the average of the three
lowest daily volume weighted average prices (VWAP) over the 15
trading day period prior to the date of conversion. The number of
shares of the Registrants common stock required to be issued to
the investor upon any conversion may be subsequently adjusted
upward in the event that the recalculated variable conversion
price on the 23rd trading day following the date of conversion is
lower than the calculated variable conversion price on the date
of conversion. In such case, the Registrant would be required to
deliver the incremental number of shares to the investor,
determined based on the recalculated variable conversion price.
The Registrant has reserved 50 million shares of its unissued
common stock for potential conversion of the convertible notes
under this convertible note facility.
The investor anticipates that upon any conversion, the shares of
stock it receives from the Registrant will be freely tradable in
compliance with Rule 144 of the U.S. Securities and Exchange
Commission.
The convertible promissory note was privately offered and sold to
the Holder in reliance on specific exemptions from the
registration requirements of the United States federal and state
securities laws which the Registrant believes are available to
cover this transaction based on representations, warranties,
agreements, acknowledgements and understandings provided to the
Registrant by the investor.
ITEM 9.01 FINANCIAL STATEMENT AND EXHIBITS.
(a) Financial Statements of Business Acquired.
N/A
(b) Pro Forma Financial Information.
N/A
(c) Exhibits.
| Exhibit No. | Description | |
| 10.1 |
Securities Purchase Agreement between the Registrant and Typenex Co-Investment, LLC, dated June 7, 2017. |
|
| 10.2 |
Secured Convertible Promissory Note issued to Typenex Co-Investment, LLC, dated June 7, 2017. |
About COATES INTERNATIONAL, LTD. (OTCMKTS:COTE)
Coates International, Ltd. is engaged in developing the Coates Spherical Rotary Valve (CSRV) system technology, which is adaptable for use in piston-driven internal combustion engines of various types. The Company’s CSRV Engines produce only ultra-low levels of harmful emissions while in operation. Engines operating on the CSRV system technology can be powered by a selection of fuels. The CSRV system is designed to replace the intake and exhaust conventional poppet valves used in almost all piston-driven stationary, automotive, motorcycle and marine engines. Unlike conventional valves, which protrude into the engine combustion chamber, the Coates rotary valve system utilizes spherical valves that rotate in a cavity formed between an over two-piece cylinder head. The Coates rotary valve system uses approximately 1/10th the moving parts of conventional poppet valve assemblies. The Company has adapted its technology to industrial engines to power electric generators.
