POSITIVEID CORPORATION (OTCMKTS:PSID) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
M2B Funding Convertible Promissory Note
On February 2, 2018, PositiveID Corporation (the “Company”) issued a Convertible Promissory Note in the aggregate principal amount of $100,000 (the “Note”) to M2B Funding Corp. (the “Investor”). The Note bears an interest rate of 12% and is due and payable on February 2, 2019. The Note may be converted by the Investor at any time into shares of the Company’s common stock (as determined in the Note) at a 37.5% discount to the lowest price of the common stock as reported on the OTC Link ATS owned by OTC Markets Group for the 15 prior trading days including the day upon which a notice of conversion is received by the Company. The Note also contains a demand right whereby the Holder, beginning 90 days after issuance may demand payment, for 115% of outstanding principal.
The Note is a long-term debt obligation that is material to the Company. The Note may be prepaid in accordance with the terms set forth in the Note. The Note also contains certain representations, warranties, covenants and events of default including if the Company is delinquent in its periodic report filings with the SEC, and increases in the amount of the principal and interest rates under the Note in the event of such defaults. In the event of default, at the option of the Investor and in the Investor’s sole discretion, the Investor may consider the Note immediately due and payable.
ENG Funding and Dilution
On June 12, 2017, the Company entered into a Stock Purchase Agreement (“SPA I”) with E-N-G Mobile Systems, Inc., a California corporation and the Company’s wholly-owned subsidiary (“ENG”), and Holdings ENG, LLC, a Florida limited liability company and an affiliate of East West Resources Corporation (the “Purchaser”), to which, among other things, the Company sold 49%, or two hundred ninety nine (299) shares of Series A Convertible Preferred Stock (the “Purchased Shares”), of ENG. The Company received one million four hundred ninety-five thousand dollars ($1,495,000.00) in exchange for the Purchased Shares. The terms of SPA I were disclosed in that certain Current Report on Form 8-K filed by the Company on June 14, 2017.
On January 30, 2018, the Company entered into a Stock Purchase Agreement (“SPA II”) with ENG and the Purchaser, to which (i) ENG sold six hundred forty one (641) shares (the “Shares”) of Series A Convertible Preferred Stock of ENG for a purchase price of approximately $312 per share, for an aggregate purchase price of $200,000; and (ii) the Company declined to exercise its right to purchase a pro rata portion of the Shares and has approved the issuance and sale of the Shares by ENG to the Purchaser, and waived all rights it may have with respect to ENG’s purchase of the Shares. In connection with the transaction, the Company also committed to issue a promissory note in the amount of $54,000 to ENG for settlement of past and current intercompany transactions and liabilities. As a result of this transaction the Company’s equity interest in ENG has decreased to 24% and prospectively the Company will deconsolidate the balance sheet, results of operations and cash flows of ENG in its consolidated financial statements. While the Company owned 51% of ENG it controlled ENG’s assets. These assets represented between 50% and 55% of the Company’s overall assets. The Company now owning 24% of ENG and no longer controlling ENG’s assets resulted in the deconsolidation of a significant amount of the Company’s assets.
The foregoing description of the terms of the Note and SPA II does not purport to be complete and is qualified in its entirety by the complete text of the documents attached as Exhibit 4.1 and 10.1, respectively, to this Current Report on Form 8-K.
Item 2.01 Completion of Acquisition or Disposition of Assets
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities
The descriptions in Item 1.01 of the Note issued by the Company that are convertible into the Company’s equity securities at the option of the holder of the note are incorporated herein. The issuance of the securities set forth herein was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act. The Company’s reliance upon Section 4(a)(2) of the Securities Act in issuing the securities was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there was only one recipient; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the securities were not broken down into smaller denominations; (e) the negotiations for the issuance of the securities took place directly between the individual and the Company; and (f) the recipient of the securities is an accredited investor. Since January 12, 2018, the Company has issued, in reliance upon Section 4(a)(2) of the Securities Act, 219,926,941 shares of common stock to conversion notices of convertible redeemable notes outstanding totaling $237,381.95. The issuance of such convertible notes was previously disclosed in the Company’s periodic reports filed with the SEC.
Item 9.01 Financial Statements and Exhibits
POSITIVEID Corp ExhibitEX-4.1 2 ex4-1.htm Exhibit 4.1 NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,…To view the full exhibit click here
About POSITIVEID CORPORATION (OTCMKTS:PSID)
PositiveID Corporation, formerly VeriChip Corporation, is a life sciences and technology company focused on the healthcare and homeland security markets. The Company operates through three segments: Molecular Diagnostics, Medical Devices and Mobile Labs. It develops molecular diagnostic systems for medical testing and bio-threat detection. Its Microfluidic Bio-agent Autonomous Networked Detector system is an airborne bio-threat detection system developed for the homeland defense industry to detect biological weapons of mass destruction. It is developing Firefly Dx, an automated pathogen detection system for diagnostics, both for clinical and point-of-need applications. Through its contractual control of Thermomedics, Inc., it markets and sells the Caregiver product for clinical use. Its subsidiary, E-N-G Mobile Systems, Inc., operates in specialty technology vehicle market, with a focus on mobile laboratories, command and communications applications, and mobile cellular systems.