Integral Technologies, Inc. (OTCMKTS:ITKG) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01 Entry into a Material Definitive Agreement.
ITEM 3.02 Unregistered Sales of Equity
Securities.
Securities Purchase Agreements
On May 18, 2017, Integral Technologies, Inc. (the Company)
entered into securities purchase agreements (the Purchase
Agreements) with L2 Capital LLC (L2) and SBI Investments LLC,
2014-1 (SBI). to the Purchase Agreements, the Company agreed to
sell original issue discount convertible notes in the aggregate
principal amount of up to $604,227 (the Notes) for an aggregate
purchase price of up to $515,000 (the Consideration) and warrants
to purchase up to an aggregate of 4,255,118 shares (the
Warrants). At the closing of the Purchase Agreements on May 25,
2017, the investors paid the company an aggregate of $176,400
such that the outstanding principal of the Notes was $238,454.54.
The Notes
Each holder may pay, in its sole discretion, such additional
amounts of the Consideration and at such dates as the holder may
choose in its sole discretion. The maturity date for each tranche
funded shall be six months from the effective date of each
payment. The Notes bear interest at a rate of 8% per year and a
default interest rate of 24% per year. The Notes contain a 9.99%
beneficial ownership limitation and may be converted by the
holder at any time following an event of default. The conversion
price of the Notes is equal to the product of (i) 0.675
multiplied by (ii) the average of the two lowest trading prices
for the Companys common stock during the 20 trading day period
ending on the last complete trading day prior to the date of
conversion. In the event that the Company enters into a 3(a)(9)
or 3(a)(10) transaction, in which any third party has the right
to convert monies owed to that third party or receive shares to a
settlement agreement or otherwise at a discount to market greater
than the conversion price in effect at that time, then the
conversion price shall be automatically adjusted to such greater
discount.
So long as a Note is outstanding, if any security of the Company
contains any term more favorable to the holder of such security
or with a term in favor of the holder of such security that was
not similarly provided to the holders in the Notes, then, at the
holders option, such term shall become a part of the transaction
documents with the holder. The types of terms contained in
another security that may be more favorable to the holder of such
security include, but are not limited to, terms addressing
conversion discounts, prepayment rate, conversion look back
periods, interest rates, original issue discounts, stock sale
price, private placement price per share, and warrant coverage.
Events of default include cross defaults on other debt,
appointment of a new auditor, restatement of financial
statements, failure to repay the Note in full upon a financing of
$1,000,000 or more and other customary events of default. As
described in the Notes, upon certain events of default, the
company shall be required to immediately pay the holder the
product of (i) two multiplied by (ii) an amount equal to 140%
(plus an additional 5% per each additional event of default that
occurs) multiplied by the then outstanding entire balance of the
Note (including principal and accrued and unpaid interest) plus
default interest, if any, plus any certain other amounts owed to
the holder.
The Notes may be prepaid at any time during the 90 days following
May 25, 2017 at a rate of 120% of the amounts outstanding and
prepaid at any time after the 90 day period at a rate of 140% of
the amounts outstanding. The Company shall be required to pay
certain penalties upon entry into Section 3(a)(10) transactions
and Section 3(a)(9) transactions, reverse splits and failures to
provide holder with piggyback registration rights except with
respect to the Companys next underwritten public offering. The
Company granted the holders a right of first refusal on all
future financings and agreed to use up to 50% of the proceeds
received in a new financing to repay amounts owed under the
Notes.
The Warrants
The Warrants may be exercised immediately and have a term of
seven years. The exercise price of the Warrants is $0.055,
subject to adjustment as provided therein. The Company may redeem
a Warrant at any time during the 12 month period immediately
following the Issue Date, by making payment to the holder of an
amount in cash equal to the greater of (i) 140% multiplied by
110% of the closing bid price of the common stock on the Issuance
Date and (ii) 140% multiplied by the volume weighted average
price of the common stock during the 20 trading days immediately
preceding the date of holders receipt of the redemption notice.
If the highest traded price of the common stock during the 30
trading days prior to the date of an exercise of notice is
greater than the exercise price, then the holder may elect to
exercise the Warrant to a cashless exercise. The Warrants have a
9.99% beneficial ownership limitation and the exercise price
shall be adjusted in the event of future issuances of Company
securities at a price per share below $0.055.
Equity Purchase Agreement and Commitment Notes
On May 19, 2017, the Company entered into an equity purchase
agreement with the holders of the Notes (the Investment
Agreement). to the Investment Agreement, the Company agreed to
issue and sell to the investors an indeterminate number of shares
of the Companys common stock in exchange for their commitment to
invest up to an aggregate of $5,000,000, based upon an exemption
from registration provided under Section 4(a)(2) of the 1933
Securities Act, and Section 506 of Regulation D promulgated
thereunder. Concurrently, the Company and the investors entered
into a registration rights agreement (the Registration Rights
Agreement), as inducement to the investors to execute and deliver
the Investment Agreement, whereby the Company agreed to use its
best efforts to file, within 75 days of the date of the
Registration Rights Agreement, with the Securities and Exchange
Commission, a registration statement or registration statements
(as is necessary) on Form S-1, covering the resale of shares of
common stock issuable to the investors under the Investment
Agreement.
In connection with entry into the Investment Agreement, the
Company on May 25, 2017 issued to the investors convertible
promissory notes in the total aggregate amount of $210,000.00 (in
the amount of $105,000.00 to L2 and $105,000.00 to SBI). The
Commitment Notes have the same terms as the Notes described
above.
The Notes, Warrants and Commitment Notes were issued and sold to
accredited investors (as defined by Rule 501 under the Securities
Act) in reliance upon exemptions from registration under the
Securities Act afforded by Section4(a)(2) of the Securities Act
and Rule 506 of Regulation D promulgated thereunder and
corresponding provisions of state securities laws. The foregoing
description of the terms and conditions of the Purchase
Agreement, the Notes, the Warrants, the Investment Agreement, the
Registration Rights Agreement and the Commitment Notes is only a
summary and is qualified in its entirety by the full text of the
Form of Purchase Agreement, the Form of Note, the Form of
Warrant, the Investment Agreement, the Registration Rights
Agreement and the Form of Commitment Note, which are filed as
Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6 to this Current
Report and incorporated herein by reference.
Trading Agreement
Exhibit 10.7 filed herewith contains a trading agreement entered
into between SBI and L2 Capital. In accordance with the terms of
the trading agreement, all shares purchased from the Company to
the aforementioned parties agreements with the Company will be
held by a designated brokerage firm and the proceeds of sale will
be paid 50% to L2 Capital and 50% to SBI.
ITEM 9.01 Financial Statements and Exhibits.
(d)Exhibits
|
Exhibit Number |
Description |
|
|
10.1 |
Form of Purchase Agreement |
|
|
10.2 |
Form of Note |
|
|
10.3 |
Form of Warrant |
|
|
10.4 |
Registration Rights Agreement |
|
|
10.5 |
Form of Commitment Note |
|
| 10.6 | Trading Agreemnet |
About Integral Technologies, Inc. (OTCMKTS:ITKG)
Integral Technologies, Inc. is engaged in the business of researching, developing and commercializing new electrically conductive resin-based materials called ElectriPlast. The Company is focused on devoting all of its resources to the research, development and commercialization of its ElectriPlast with Flexible Content Technology. The ElectriPlast technology possesses a multitude of applications in industries, such as auto industry, the aerospace, consumer electronics, and commercial aviation. It is focused on business development and marketing efforts on securing licensing and/or joint development agreements in areas for which it holds patents covering specific materials, components, parts, applications or end-products incorporating conductive resins and ElectriPlast technology. It collaborates with suppliers, vendors, original equipment manufacturers (OEMs) and manufacturers of products who would benefit from the incorporation of any of the ElectriPlast applications.