CV SCIENCES, INC. (OTCMKTS:CVSI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On March 1, 2017 (the Closing Date), CV Sciences, Inc. (the
Company) entered into a Securities Purchase Agreement (SPA) with
an institutional accredited investor (Investor) to which Investor
invested $750,000 (the Financing). On the Closing Date, the
Company issued to Investor a Secured Convertible Promissory Note
(the Note) in the principal amount of $770,000, in exchange for
payment by Investor of $750,000. The principal sum of the Note
reflects the amount invested, plus a $15,000 Original Issue
Discount (OID) and a $5,000 reimbursement of Investors legal
fees. The Company paid no commissions or other placement agent
fees.
In connection with the Financing, and in addition to the SPA and
the Note, on the Closing Date, the Company and Investor entered
into a Security Agreement, to which the Company granted a first
priority lien and security interest in and to its inventory,
accounts receivable and equipment to secure payment under the
Note. The SPA, the Note and the Security Agreement are
collectively referred to herein as the Transaction Documents.
The Note matures in 14 months, and is convertible at the option
of Investor at any time into shares of the Companys common stock
at a conversion price equal to $0.50 per share. The Company may
prepay the Note at any time by payment to Investor of 125% of the
principal, interest and other amounts then due under the Note.
The Company may prepay the Note notwithstanding an earlier notice
of conversion from Investor, provided that in such event Investor
may convert an amount not to exceed $200,000 under the Note.
Commencing on the date that is six (6) months from the issuance
of the Note, Investor may redeem a portion of the Note in monthly
amounts not to exceed $100,000. Provided the Company has not
suffered an Event of Default and is in compliance with certain
Equity Conditions (unless waived by Investor in either case), the
Company may make redemption payments by the issuance of common
stock in lieu of cash payments. If the Company chooses to make
redemption payments in stock, the number of shares issuable shall
be determined based upon a price per share equal the lesser of
$0.50 per share or 70% of the average of the three (3) lowest
closing bid prices in the previous twenty (20) trading days;
provided, however, that the percentage reflected above (the
Conversion Factor) shall adjust downward if (a) the 20-day
average bid price is below $0.25 per share (in which case the
Conversion Factor shall be reduced by 10%), (b) the Company is
not DWAC eligible (in which case the Conversion Factor shall be
reduced by 5%), (c) there has occurred a Major Default (in which
case the Conversion Factor shall be reduced by 5% for each Major
Default).
Events of Default include the events set forth in Section 4.1 of
the Note, and include, but are not limited to, failure to make
timely payments, failure to deliver conversion shares,
bankruptcy, receivership, insolvency, failure to reserve required
shares for issuance upon conversion, and failure to be DWAC
eligible. The Equity Conditions required for payment of
redemption installments in stock are set forth in Attachment 1,
Section A11 of the Note, and include, but are not limited to,
maintaining eligibility under Rule 144, listing on an exchange,
the timely delivery of all conversion shares, compliance with
laws and no trading suspension.
Upon an Event of Default under the Note, Investor may accelerate
the outstanding principal amount of all outstanding Note, plus
accrued and unpaid interest, and other amounts owing through the
date of acceleration. In the event of such acceleration, the
interest rate on the Note shall accrue at the greater of 22% per
annum or the maximum rate permitted under applicable law. Upon
acceleration, the amount due will be 115% of the outstanding
principal amount of the Note and accrued and unpaid interest,
together with payment of all other amounts, costs, expenses and
liquidated damages due under the Notes.
to the terms of the SPA and the Note, the Company is required to
reserve and keep available out of its authorized and unissued
shares of common stock a number of shares of common stock at
least equal to three (3) times the number of shares issuable on
conversion of the Note.
The foregoing summary description of the terms of the Transaction
Documents may not contain all information that is of interest to
the reader. For further information regarding the terms of the
Transaction Documents, reference is made to such Transaction
Documents, which are filed hereto as Exhibits 10.1 10.3, and are
incorporated herein by this reference.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of
Registrant
The information provided above in Item 1.01 Entry into a Material
Definitive Agreement of this Current Report on Form 8-K is
incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity
Securities
The information provided above in Item 1.01 Entry into a Material
Definitive Agreement of this Current Report on Form 8-K is
incorporated by reference into this Item 3.02.
The issuance of the Notes and the issuance of the shares of the
Companys common stock upon conversion of the Notes in connection
with the Financing is exempt from registration under the
Securities Act of 1933, as amended (the Act), in reliance on
exemptions from the registration requirements of the Act in
transactions not involved in a public offering to Rule 506(b) of
Regulation D, as promulgated by the Securities and Exchange
Commission under the Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| 10.1 |
Form of Securities Purchase Agreement, dated March 1, 2017, by and between the Company and Investor. |
| 10.2 |
Form of Secured Convertible Promissory Note, issued the Company on March 1, 2017 to Investor. |
| 10.3 |
Security Agreement, dated March 1, 2017, by and between the Company and Investor. |
About CV SCIENCES, INC. (OTCMKTS:CVSI)
CV Sciences, Inc. is a life science company. The Company operates in two segments: specialty pharmaceuticals and consumer products. The Company’s specialty pharma business segment is focused on developing and commercializing therapeutics utilizing synthetic Cannabidiol (CBD) across several therapeutic areas. The consumer product business segment is focused on manufacturing, marketing and selling plant-based CBD products to a range of market sectors. CV SCIENCES, INC. (OTCMKTS:CVSI) Recent Trading Information
CV SCIENCES, INC. (OTCMKTS:CVSI) closed its last trading session up +0.020 at 0.420 with shares trading hands.