Duos Technologies Group, Inc. (OTCMKTS:DUOT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
Securities Purchase Agreement, Note, and Warrant.
On December 20, 2016, Duos Technologies Group, Inc., a Florida
corporation (the Company), entered into a Securities Purchase
Agreement (the Purchase Agreement) with JMJ Financial, a Nevada
sole proprietorship (JMJ, and together with the Company, the
Parties). to the Purchase Agreement, JMJ purchased from the
Company (i) a Promissory Note in the aggregate principal amount
of up to $2,500,000 (the Note) for consideration of up to
$2,350,000 representing an original issue discount of 5%, due and
payable on the earlier of May 15, 2016 or the third business day
after the closing of the Public Offering (as defined below), and
(ii) a Common Stock Purchase Warrant (the Warrant) to purchase
4,035,086 shares of the Company’s common stock (Common Stock) at
an exercise price per share equal to the lesser of (i) 80% of the
per share price of the Common Stock in the Company’s
contemplated public offering of securities (the Public Offering),
(ii) $0.15 per share, (iii) the lowest daily closing price of the
the Common Stock during the ten days prior to the Public Offering
(subject to adjustment); (iv) the lowest daily closing price of
the Common Stock during the ten days prior to the Maturity Date
(subject to adjustment); (v) 80% of the unit price in the Public
Offering (if applicable), or (vi) 80% of the exercise price of
any warrants issued in the Public Offering. Additionally, to the
Purchase Agreement, the Company will issue JMJ shares of Common
Stock equal to 30% of the principal sum of the Note (Origination
Shares) on the 5thtrading day after the pricing of the Public
Offering, but in no event later than May 30, 2017. The number of
Origination Shares will equal the principal sum of the Note
divided by the lowest of (i) the lowest daily closing price of
the Common Stock during the ten days prior to delivery of the
Origination Shares or during the ten days prior to the date of
the Public Offering (in each case subject to adjustment for stock
splits), (ii) 80% of the common stock offering price of the
Public Offering, (iii) 80% of the unit price offering price of
the Public Offering (if applicable), or (iv) 80% of the exercise
price of any warrants issued in the Public Offering.
In accordance with its terms, the Purchase Agreement became
effective (the Effective Date) upon (i) execution by the Parties
of the Purchase Agreement, Note, the Warrant, and (ii) delivery
of an initial advance to the Note of $575,000, which occurred on
December 21, 2016 (the Initial Advance). to the Note, JMJ is
obligated to provide the Company an additional $925,000 advance
under the Note in tranches, as certain milestones, contained
within the Note, are achieved (theAdditional Advances). JMJ may
make further advances of up to $1,000,000 under the Note, in such
amounts and at such times as the Parties may agree (each, a
Further Advance). In the event of an Additional Advance or
Further Advance, the Company shall deliver an additional warrant
within three days of such advances in the form of the Warrant
(the Additional Warrant), with the following terms: (i) an
aggregate exercise amount equal to 50% of the principal sum
attributable to the Additional Advance or Further Advance,
respectively (ii) at the per share exercise price then in effect
on the Warrant, and (iii) the number of shares for which the
Additional Warrant is exercisable equal to the aggregate exercise
amount for the Additional Warrant divided by the exercise price.
JMJ may, at its election, exercise the Warrant, and each
Additional Warrant, if any, to a cashless exercise.
If the Company fails to repay the balance due under the Note, or
issues a Variable Security (as defined in the Note) up to and
including the date of the closing of thePublic Offering, JMJ has
the right to convert all or any portion of the outstanding Note
into shares of Common Stock, subject to the terms and conditions
set forth in the Note. All amounts due under the Note become
immediately due and payable upon the occurrence of an event of
default as set forth in the Note. Further, upon an event of
default, JMJ has the right, at any time, at its election, to
convert all or part of the outstanding and unpaid principal sum
(and any other fees) into shares of fully paid and non-assessable
shares of Common Stock.
The foregoing descriptions of the Purchase Agreement, the Note,
and the Warrant do not purport to be complete and are qualified
in their entirety by the terms and conditions of such documents.
Copies of the Purchase Agreement, the Note, and the Warrant are
attached hereto as Exhibits 10.1, 10.2, and 4.1, respectively,
and are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant
The information set forth in Item 1.01 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 set forth in Item 1.01 of this Current Report on
Form 8-K is incorporated by reference into this Item 3.02.
These securities were not registered under the Securities Act of
1933, as amended (the Securities Act), but qualified for
exemption under Section 4(a)(2) of the Securities Act. The
securities were exempt from registration under Section 4(a)(2) of
the Securities Act because the issuance of such securities by the
Company did not involve a public offering, as defined in Section
4(a)(2) of the Securities Act, due to the insubstantial number of
persons involved in the transaction, size of the offering, manner
of the offering and number of securities offered. The Company did
not undertake an offering in which it sold a high number of
securities to a high number of investors. In addition, this
investor had the necessary investment intent as required by
Section 4(a)(2) of the Securities Act since they agreed to, and
will receive, share certificates bearing a legend stating that
such securities are restricted to Rule 144 of the Securities Act.
This restriction ensures that these securities would not be
immediately redistributed into the market and therefore not be
part of a public offering. Based on an analysis of the above
factors, we have met the requirements to qualify for exemption
under Section 4(a)(2) of the Securities Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. |
Description |
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4.1* |
Common Stock Purchase Warrant, dated December 20, 2016, |
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10.1* |
Securities Purchase Agreement, dated December 21, 2016, |
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10.2* |
Promissory Note, dated December 20, 2016, issued by the |
*filed herewith
About Duos Technologies Group, Inc. (OTCMKTS:DUOT)
Duos Technologies Group, Inc. (Duos), formerly Information Systems Associates, Inc., is primarily engaged in the design and deployment of artificial intelligence driven intelligent technologies systems and information technology (IT) infrastructure services. The Company’s subsidiary, Duos Technologies, Inc. (duostech), is focused on the design, development and deployment of technology applications and turnkey engineered systems. It develops and deploys homeland and border security-centric critical infrastructure applications suite. It has two technology platforms: praesidium and centraco, both distributed as licensed software suites, and embedded within engineered turnkey systems. praesidium is a modular suite of analytics applications, which process and analyze data streams from conventional sensors and/or data points. Duos Technologies Group, Inc. (OTCMKTS:DUOT) Recent Trading Information
Duos Technologies Group, Inc. (OTCMKTS:DUOT) closed its last trading session down -0.0260 at 0.0240 with 32,500 shares trading hands.