COPSYNC, INC. (NASDAQ:COYN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement. |
Securities Purchase Agreement
On January 6, 2017, COPsync, Inc. (the Company, we or us) entered
into a securities purchase agreement (the Securities Purchase
Agreement) with certain accredited investors named in the pages
thereto (the Purchasers) to which the Company agreed to issue and
sell an aggregate of 1,772,614 shares (the Shares) of its common
stock, par value $0.0001 per share (the Common Stock), in a
registered direct offering (the Registered Direct Offering) and,
in a concurrent private placement, the Company agreed to sell
eighteen-month warrants to purchase up to 1,772,614 shares of
Common Stock (the Class A Warrants), with an exercise price of
$1.03 per share, and five-year warrants to purchase up to
1,772,614 shares of Common Stock (the Class B Warrants and,
together with the Class A Warrants, the Purchase Warrants), with
an exercise price of $1.03 per share (the Private Placement). The
combined purchase price for one registered Share, one
unregistered Class A Warrant and one unregistered Class B Warrant
is $0.65.
The Company expects to receive aggregate net proceeds, after
deducting the placement agents fees and other estimated offering
expenses, in the amount of approximately $957,256. The Company
intends to use the aggregate net proceeds for expansion of sales
and marketing, working capital, and continued product development
and network enhancement, and for other corporate purposes.
The closing of the Registered Direct Offering and the Private
Placement is expected to take place on January 11, 2017, subject
to customary closing conditions.
The Shares are being offered and sold to the public to our shelf
registration statement on Form S-3 (File No. 333-212389)
initially filed with the Securities and Exchange Commission (the
Commission) on July 1, 2016 and declared effective on July 13,
2016 (the Registration Statement). A prospectus supplement
relating to the Registered Direct Offering was filed with the
Commission on January 6, 2017.
The Securities Purchase Agreement contains customary
representations, warranties and agreements by us and customary
conditions to closing. Under the Securities Purchase Agreement,
the Company has agreed not to enter into any agreement to issue
or announce the issuance or proposed issuance of any common stock
or common stock equivalents for a period of 30 days following the
closing of the offering. In addition, the Company has also agreed
with the Purchasers that for a period of two years following the
closing of the offering, the Company will not effect or enter
into an agreement to effect a Variable Rate Transaction as
defined in the Securities Purchase Agreement.
Purchase Warrants
Each Purchase Warrant will be exercisable beginning on the date
that is six months after the date of the closing of the Private
Placement (the Initial Exercise Date), at an exercise price of
$1.03 per share for the Class A Warrants, and an exercise price
of $1.03 per share for the Class B Warrants, in each case subject
to adjustment as provided therein. The Class A Warrants will be
exercisable for eighteen months from the Initial Exercise Date,
and the Class B Warrants will be exercisable for five years from
the Initial Exercise Date, but in each case not thereafter.
Subject to limited exceptions, a holder of Purchase Warrants will
not have the right to exercise any portion of its Purchase
Warrants if the holder, together with its affiliates, would
beneficially own in excess of 4.99% of the number of shares of
our common stock outstanding immediately after giving effect to
such exercise (the Beneficial Ownership Limitation); provided,
however, that upon 61 days prior notice to us, the holder may
increase the Beneficial Ownership Limitation, provided that in no
event shall the Beneficial Ownership Limitation exceed 9.99%.
The exercise price and number of the shares of our common stock
issuable upon the exercise of the Purchase Warrants will be
subject to adjustment in the event of any stock dividends and
splits, reverse stock split, recapitalization, reorganization or
similar transaction, as described in the Purchase Warrants. In
addition, in the event of certain Fundamental Transactions (as
defined therein), holders of the Class A Warrants may require the
Company (or the successor entity, if applicable) to purchase the
Class A Warrants from such holders for an amount equal to the
Black Scholes Value (as defined in the Class A Warrants) of the
remaining unexercised portion of such warrants, by delivering a
request before the ninetieth (90th)
day after the consummation of such Fundamental Transaction.
The Purchase Warrants are not and will not be listed for trading
on any national securities exchange. The Purchase Warrants and
the shares of Common Stock underlying the Purchase Warrants (the
Warrant Shares) are not being registered under the Securities Act
of 1933, as amended (the Securities Act), to the Registration
Statement and are not being offered to the prospectus supplement
and the accompanying base prospectus. The Purchase Warrants and
the Warrant Shares are being offered to an exemption from the
registration requirement of the Securities Act provided in
Section 4(a)(2) of the Securities Act and/or Regulation D. The
Purchase Warrants and the Warrant Shares may not be offered or
sold in the United States in the absence of an effective
registration statement or exemption from the registration
requirement of the Securities Act.
After the Initial Exercise Date, if a registration statement
covering the issuance or resale of the Warrant Shares is not
available for the issuance or resale, as applicable, the
Purchasers may exercise the Purchase Warrants by means of a
cashless exercise.
The foregoing descriptions of the Securities Purchase Agreement
and the Purchase Warrants are qualified in their entirety by
reference to the full text of the Form of Class A Warrant, Form
of Class B Warrant and the Form of Securities Purchase Agreement,
which are attached to this Current Report on Form 8-K as Exhibits
4.1, 4.2 and 10.1, respectively, and incorporated herein by
reference in their entirety.
The legal opinion, including the related consent, of Harter
Secrest Emery LLP relating to the legality of the issuance and
sale of the Shares is filed as Exhibit 5.1 hereto.
We note that the representations, warranties and covenants made
by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference in this report were
made solely for the benefit of the parties to such agreement,
including, in some cases, for the purpose of allocating risk
among the parties to such agreements, and should not be deemed to
be a representation, warranty or covenant to or in favor of any
stockholder or potential stockholder of the Company other than
the parties thereto. In addition, the assertions embodied in any
representations, warranties and covenants contained in such
agreements may be subject to qualifications with respect to
knowledge and materiality different from those applicable to
security holders generally. Moreover, such representations,
warranties or covenants were accurate only as of the date when
made, except where expressly stated otherwise. Accordingly, such
representations, warranties and covenants should not be relied on
as accurately representing the current state of our affairs at
any time.
This report contains forward-looking statements. Forward-looking
statements include, but are not limited to, statements that
express our intentions, beliefs, expectations, strategies,
predictions or any other statements related to our future
activities, or future events or conditions. These statements are
based on current expectations, estimates and projections about
our business based, in part, on assumptions made by management.
These statements are not guarantees of future performances and
involve risks, uncertainties and assumptions that are difficult
to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in the
forward-looking statements due to numerous factors, including
those risks discussed in our Annual Report on Form 10-K and in
other documents that we file from time to time with the
Commission. Any forward-looking statements speak only as of the
date on which they are made, and we do not undertake any
obligation to update any forward-looking statement to reflect
events or circumstances after the date of this report, except as
required by law.
The prospectus supplement relating to the Registered Direct
Offering has been filed with the Commission and is available on
the Commissions web site at http://www.sec.gov. Copies of the
prospectus supplement may also be obtained from Maxim Group LLC,
405 Lexington Avenue, New York, NY 10174, (212) 895-3745.
This report does not constitute an offer to sell, or the
solicitation of an offer to buy, and these securities cannot be
sold in any state or jurisdiction in which an offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any state or
jurisdiction. Any offer will be made only by means of a
prospectus, including a prospectus supplement, forming a part of
the effective registration statement.
Item 3.02 |
Unregistered Sale of Equity Securities. |
The information contained in Item 1.01 of this Current Report on
Form 8-K in relation to the Purchase Warrants and the Warrant
Shares is incorporated herein by reference.
On July 1, 2016, the Company issued a convertible promissory note
in the amount of $150,000 to an individual. As of October 1,
2016, the amount owing under this note automatically increased to
$300,000. On January 3, 2017, the Company amended and restated
this note (as amended and restated as of January 3, 2017, the
July 1 Note). The July 1 Note bears interest at a rate of 15% per
annum and has a maturity date of February 1, 2017. The note is
convertible (i) at the option of the holder into any financing
that closes prior to the maturity date in which the Company
receives more than $500,000 at the terms of such financing, or
(ii) upon an event of default under the note, at the option of
the holder at 60% of the lowest volume weighted average price in
the twenty consecutive trading days prior to the effective
conversion date, but in no event less than $0.17 per share. The
holder of the July 1 Note, as amended and restated, has waived
his option to convert the note in connection with the Registered
Direct Offering.
On October 4, 2016, the Company issued a convertible promissory
note in the amount of $149,526 to a third party consultant for
services. On January 3, 2017, the Company amended and restated
this note (as amended and restated as of January 3, 2017, the
October 4 Note). The October 4 Note bears interest at a rate of
15% per annum and has a maturity date of April 4, 2017. The note
is convertible (i) at the option of the holder into any financing
that closes during the term of this note, greater than $500,000
at the terms of such financing, or (ii) upon an event of default
under the note, at the option of the holder at 60% of the lowest
volume weighted average price in the twenty consecutive trading
days prior to the effective conversion date, but in no event less
than $0.17 per share. The holder of the October 4 Note, as
amended and restated, has waived his option to convert the note
in connection with the Registered Direct Offering.
On January 3, 2017, the Company issued a convertible promissory
note in the amount of $550,000 to an individual, (the January 3
Note and, together with the July 1 Note and the October 4 Note,
each as amended and restated as of January 3, 2017, (the Notes)).
The January 3 Note bears interest at a rate of 15% per annum and
has a maturity date of the earlier of (i) October 3, 2017 or (ii)
the closing by the Company of a public or private offering of at
least $4.5 million of the Companys equity interests. The note is
convertible upon an event of default under the note, at the
option of the holder at 60% of the lowest volume weighted average
price in the twenty consecutive trading days prior to the
effective conversion date, but in no event less than $0.17 per
share.
to their terms, in no event may the Notes be collectively
converted, in the aggregate, into more than 471,000 shares of
common stock.
The issuance of the Notes was exempt from the registration
requirement of the Securities Act to the exemption for
transactions by an issuer not involving any public offering
under Section 4(a)(2) of the Securities Act. No general
solicitation or general advertising was used in connection with
the issuance of the Notes, and the Company had a pre-existing
relationship with the holders thereof.
Item 8.01 |
Other Events. |
On January 6, 2017, the Company issued a press release announcing
the Registered Direct Offering and the concurrent Private
Placement. A copy of this press release is attached hereto as
Exhibit 99.1.
Item 9.01 |
Financial Statements and Exhibits. |
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Exhibit No. |
Description |
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4.1 |
Form of Class A Warrant |
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4.2 |
Form of Class B Warrant |
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5.1 |
Opinion of Harter Secrest Emery LLP |
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10.1 |
Form of Securities Purchase Agreement |
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23.1 |
Consent of Harter Secrest Emery LLP (included in Exhibit 5.1 hereto) |
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99.1 |
Press Release, dated January 6, 2017, entitled “COPsync Announces $1.15 Million Registered Direct Offering. |
About COPSYNC, INC. (NASDAQ:COYN)
COPsync, Inc. operates a law enforcement mobile data information system in the United States. The Company provides COPsync Network service, which is a real-time, in-car information sharing, communication and data interoperability network, which is delivered through software as a service. The Company offers the COPsync911 threat alert service for use in schools, hospitals, day care facilities, Government office buildings and other facilities. The COURTsync service enables judges and court personnel to instantly send emergency alerts directly to the closest law enforcement officers in their patrol vehicles and to the local 911 dispatch center, from any computer within the facility. The Company also augments other services with its own law enforcement in-car video system, named VidTac. The Company’s VidTac is an in-vehicle video system, software driven, digital in-car video system for law enforcement. COPSYNC, INC. (NASDAQ:COYN) Recent Trading Information
COPSYNC, INC. (NASDAQ:COYN) closed its last trading session up +0.009 at 0.685 with 115,653 shares trading hands.
