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 RegistrantITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On May 29, 2018, the Registrant received the net proceeds of a Securities Purchase Agreement and related convertible promissory note, dated May 25, 2018, in the face amount of Thirty-Three Thousand ($33,000.00) Dollars and no cents issued to Power Up Lending Group, Ltd., (the “Holder”). The Promissory Note matures in March 2019 and provides for interest at the rate of eight (8%) percent per annum. The Note may be converted into unregistered shares of the Registrant’s common stock, par value $0.0001 per share, at the Conversion Price, as defined, in whole, or in part, at any time beginning 180 days after the date of the Note, at the option of the Holder. All outstanding principal and unpaid accrued interest is due at maturity, if not converted prior thereto. The Registrant incurred expenses amounting to $2,500 in connection with this transaction.
The Conversion Price shall be equal to 61% multiplied by the Market Price, as defined. The Market Price shall be equal to the average of the three (3) lowest closing bid prices of the Registrant’s common stock on the OTC Pink Sheets during the ten (10) trading-day period ending one trading day prior to the date of conversion by the Holder. The Conversion Price is subject to adjustment for changes in the capital structure such as stock dividends, stock splits or rights offerings. The number of shares of common stock to be issued upon conversion shall be equal to the aggregate amount of principal, interest and penalties, if any divided by the Conversion Price. The Holder anticipates that upon any conversion, the shares of stock it receives from the Registrant will be tradable by relying on an exemption under Rule 144 of the U.S. Securities and Exchange Commission.
The Conversion Price is subject to adjustment in the event of any of the following:
| 1. | During the period when a Major Announcement by the Registrant relating to a merger, consolidation, sale of the Registrant or substantially all of its assets or tender offer is in effect, as defined. |
| 2. | A merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event being consummated. |
The Registrant is not permitted to pay dividends or make other distributions of capital or repurchase or otherwise acquire any shares of its capital stock without the Holder’s consent and is subject to certain restrictions on new borrowings, while there is a remaining outstanding balance related to the convertible promissory note.
These notes may be prepaid during the first six months the notes are outstanding by paying a prepayment penalty equal to 30% during the first 60 days, increasing in 5% increments each month thereafter, to a maximum of 50%. The Company has reserved 48,266,195 shares of its unissued common stock for potential conversion of the convertible note.
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 Holder.
ITEM 9.01 FINANCIAL STATEMENT AND EXHIBITS.
(a) Financial Statements of Business Acquired.
N/A
(b) Pro Forma Financial Information.
N/A
(c) Exhibits.
COATES INTERNATIONAL LTD DE ExhibitEX-10.1 2 f8k052918ex10-1_coatesinter.htm CONVERTIBLE PROMISSORY NOTE ISSUED TO POWER UP LENDING GROUP,…To view the full exhibit click here
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.