root9B Holdings, Inc. (NASDAQ:RTNB) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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Entry into a Material Definitive Agreement.
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Securities Purchase Agreement Extension
On January 24, 2017, root9B Holdings, Inc., a Delaware
corporation (the Company) entered into an amendment (the Second
Amendment), to which the Company and certain Majority Note
Holders (as defined therein) agreed to amend the Securities
Purchase Agreement (as amended, the Agreement), dated September
6, 2016, by and between the Company and certain accredited
investors (the Investors), as amended by an amendment dated
December 22, 2016 (the First Amendment). The Second Amendment
extends the date by which the last closing under the Agreement
must occur from December 31, 2016 until March 31, 2017. Except as
modified by the Second Amendment, all other terms of the
Agreement, discussed below, remain unchanged and in full force
and effect.
corporation (the Company) entered into an amendment (the Second
Amendment), to which the Company and certain Majority Note
Holders (as defined therein) agreed to amend the Securities
Purchase Agreement (as amended, the Agreement), dated September
6, 2016, by and between the Company and certain accredited
investors (the Investors), as amended by an amendment dated
December 22, 2016 (the First Amendment). The Second Amendment
extends the date by which the last closing under the Agreement
must occur from December 31, 2016 until March 31, 2017. Except as
modified by the Second Amendment, all other terms of the
Agreement, discussed below, remain unchanged and in full force
and effect.
The foregoing description of the principal terms of the Second
Amendment does not purport to be complete and is qualified in its
entirety by reference to the Second Amendment, a copy of which is
filed as an exhibit to this Current Report on Form 8-K as Exhibit
10.5.
Amendment does not purport to be complete and is qualified in its
entirety by reference to the Second Amendment, a copy of which is
filed as an exhibit to this Current Report on Form 8-K as Exhibit
10.5.
Fifth Closing
As previously disclosed, the Company is offering secured
convertible promissory notes (as amended, the Notes) with an
aggregate principal amount of up to $10,000,000, along with
warrants to purchase shares (the Warrant Shares) of the Companys
common stock, par value $0.001 per share (the Common Stock),
representing fifty percent (50%) warrant coverage (the Warrants),
to the Investors in a private placement, the Agreement. The
following description of Notes and Warrants is presented with
adjustment for the Companys reverse split of its Common Stock at
a ratio of one-for-fifteen (the Reverse Split), which was
effective on December 5, 2016.
convertible promissory notes (as amended, the Notes) with an
aggregate principal amount of up to $10,000,000, along with
warrants to purchase shares (the Warrant Shares) of the Companys
common stock, par value $0.001 per share (the Common Stock),
representing fifty percent (50%) warrant coverage (the Warrants),
to the Investors in a private placement, the Agreement. The
following description of Notes and Warrants is presented with
adjustment for the Companys reverse split of its Common Stock at
a ratio of one-for-fifteen (the Reverse Split), which was
effective on December 5, 2016.
On January 25, 2017, the Company held a fifth closing (the
Closing) of such private placement, at which the Company sold
Notes with an aggregate principal amount equal to $750,000, along
with Warrants to purchase approximately 31,250 shares of Common
Stock. Following the Closing, the Company has sold Notes with an
aggregate principal amount of $6,521,000, along with Warrants to
purchase approximately 271,708 shares of Common Stock and may
sell additional Notes with an aggregate principal amount of up to
$3,479,000, along with Warrants to purchase approximately 144,958
shares of Common Stock, at additional closings, which may be
conducted on a rolling basis until March 31, 2017.
Closing) of such private placement, at which the Company sold
Notes with an aggregate principal amount equal to $750,000, along
with Warrants to purchase approximately 31,250 shares of Common
Stock. Following the Closing, the Company has sold Notes with an
aggregate principal amount of $6,521,000, along with Warrants to
purchase approximately 271,708 shares of Common Stock and may
sell additional Notes with an aggregate principal amount of up to
$3,479,000, along with Warrants to purchase approximately 144,958
shares of Common Stock, at additional closings, which may be
conducted on a rolling basis until March 31, 2017.
The term of each Note is three years after issuance (the Maturity
Date). Each Note accrues interest at a rate of 10% per annum,
payable on each March 31, June 30, September 30 and December 31,
commencing December 31, 2016 until the earlier of (i) the entire
principal amount being converted, or (ii) the Maturity Date. The
interest payments shall be made in either cash or, at the holders
option, in shares of Common Stock (the Interest Payment Shares)
at a per share price equal to 85% of the average daily volume
weighted average price of the Common Stock during the five
consecutive trading day period immediately prior to the interest
payment date, but in no event less than $12.00 per share.
Following the date which is six months after the date of
issuance, at the election of the holder, all principal and
interest due and owing under each Note is convertible into shares
of Common Stock at a conversion price equal to $12.00 (the
Conversion Shares and, together with the Warrant Shares and the
Interest Payment Shares, collectively, the Shares). The
conversion price is subject to adjustment for stock splits, stock
dividends, combinations, or similar events. to a security
agreement entered into concurrently with the Investors, the Notes
are secured by substantially all of the Companys assets, subject
to certain exceptions including the assets related to and held by
IPSA International, Inc., a wholly-owned subsidiary of the
Company (IPSA).
Date). Each Note accrues interest at a rate of 10% per annum,
payable on each March 31, June 30, September 30 and December 31,
commencing December 31, 2016 until the earlier of (i) the entire
principal amount being converted, or (ii) the Maturity Date. The
interest payments shall be made in either cash or, at the holders
option, in shares of Common Stock (the Interest Payment Shares)
at a per share price equal to 85% of the average daily volume
weighted average price of the Common Stock during the five
consecutive trading day period immediately prior to the interest
payment date, but in no event less than $12.00 per share.
Following the date which is six months after the date of
issuance, at the election of the holder, all principal and
interest due and owing under each Note is convertible into shares
of Common Stock at a conversion price equal to $12.00 (the
Conversion Shares and, together with the Warrant Shares and the
Interest Payment Shares, collectively, the Shares). The
conversion price is subject to adjustment for stock splits, stock
dividends, combinations, or similar events. to a security
agreement entered into concurrently with the Investors, the Notes
are secured by substantially all of the Companys assets, subject
to certain exceptions including the assets related to and held by
IPSA International, Inc., a wholly-owned subsidiary of the
Company (IPSA).
The Company may prepay any portion of the outstanding principal
amount of any Note and any accrued and unpaid interest, with the
prior written consent of the holder, by paying to the holder an
amount (the Prepayment Amount) equal to (i) if the prepayment
date is prior to the first anniversary of the date of issuance
(the Anniversary Date), (1) the unpaid principal to be repaid
plus (2) any accrued but unpaid interest plus (3) an amount equal
to the interest which has not accrued as of the prepayment date
but would accrue on the principal to be repaid during the period
beginning on the prepayment date and ending on the Anniversary
Date of the then-outstanding principal amount of that Note or
(ii) if the prepayment date is after the Anniversary Date, (1)
the unpaid principal to be repaid plus (2) any accrued but unpaid
interest plus (3) an amount equal to one-half of the interest
which has not accrued as of the prepayment date but would accrue
on the principal to be repaid during the period beginning on the
prepayment date and ending on the Maturity Date. Additionally,
each holder may exercise a one-time option to partially redeem up
to 50% of the Outstanding Amount (as defined therein) if cash
proceeds received by the Company in connection with the sale of
IPSA exceed certain threshold levels.
amount of any Note and any accrued and unpaid interest, with the
prior written consent of the holder, by paying to the holder an
amount (the Prepayment Amount) equal to (i) if the prepayment
date is prior to the first anniversary of the date of issuance
(the Anniversary Date), (1) the unpaid principal to be repaid
plus (2) any accrued but unpaid interest plus (3) an amount equal
to the interest which has not accrued as of the prepayment date
but would accrue on the principal to be repaid during the period
beginning on the prepayment date and ending on the Anniversary
Date of the then-outstanding principal amount of that Note or
(ii) if the prepayment date is after the Anniversary Date, (1)
the unpaid principal to be repaid plus (2) any accrued but unpaid
interest plus (3) an amount equal to one-half of the interest
which has not accrued as of the prepayment date but would accrue
on the principal to be repaid during the period beginning on the
prepayment date and ending on the Maturity Date. Additionally,
each holder may exercise a one-time option to partially redeem up
to 50% of the Outstanding Amount (as defined therein) if cash
proceeds received by the Company in connection with the sale of
IPSA exceed certain threshold levels.
The Warrants have a term of five years, an exercise price of
$12.00 per share (after giving effect to the Reverse Split) and
may be exercised at any time following the date which is six
months after the date of issuance. The number of shares of Common
Stock issuable upon exercise of the Warrants is subject to
adjustment for certain stock dividends or stock splits, or any
reclassification of the outstanding securities of, or
reorganization of, the Company.
$12.00 per share (after giving effect to the Reverse Split) and
may be exercised at any time following the date which is six
months after the date of issuance. The number of shares of Common
Stock issuable upon exercise of the Warrants is subject to
adjustment for certain stock dividends or stock splits, or any
reclassification of the outstanding securities of, or
reorganization of, the Company.
to the terms of both the Notes and the Warrants, a holder may not
be issued Shares if, after giving effect to the conversion or
exercise of the Shares, as applicable, the holder, together with
its affiliates, would beneficially own in excess of 9.99% of the
then outstanding shares of Common Stock. In addition, in the
event the Company consummates a consolidation or merger with or
into another entity or other reorganization event in which the
Common Stock is converted or exchanged for securities, cash or
other property, or the Company sells, assigns, transfers, conveys
or otherwise disposes of all or substantially all of its assets
or the Company (other than the sale, merger or asset sale of
IPSA) or another entity acquires 50% or more of the outstanding
Common Stock, then following such event, (i) at their election
within 30 days of consummation of the transaction, the holders of
the Notes will be entitled to receive the Prepayment Amount, and
(ii) the holders of the Warrants will be entitled to receive upon
exercise of such Warrants the same kind and amount of securities,
cash or property which the holders would have received had they
exercised the Warrants immediately prior to such transaction. Any
successor to the Company or surviving entity shall assume the
Companys obligations under the Notes and the Warrants.
be issued Shares if, after giving effect to the conversion or
exercise of the Shares, as applicable, the holder, together with
its affiliates, would beneficially own in excess of 9.99% of the
then outstanding shares of Common Stock. In addition, in the
event the Company consummates a consolidation or merger with or
into another entity or other reorganization event in which the
Common Stock is converted or exchanged for securities, cash or
other property, or the Company sells, assigns, transfers, conveys
or otherwise disposes of all or substantially all of its assets
or the Company (other than the sale, merger or asset sale of
IPSA) or another entity acquires 50% or more of the outstanding
Common Stock, then following such event, (i) at their election
within 30 days of consummation of the transaction, the holders of
the Notes will be entitled to receive the Prepayment Amount, and
(ii) the holders of the Warrants will be entitled to receive upon
exercise of such Warrants the same kind and amount of securities,
cash or property which the holders would have received had they
exercised the Warrants immediately prior to such transaction. Any
successor to the Company or surviving entity shall assume the
Companys obligations under the Notes and the Warrants.
Additionally, the Notes shall not be convertible into Common
Stock (nor any Interest Payment Shares), and the Warrants shall
not be exercisable for Common Stock, until the Company has a
sufficient number of shares of Common Stock available for
issuance to permit full conversion or exercise of the Notes and
Warrants, respectively.
Stock (nor any Interest Payment Shares), and the Warrants shall
not be exercisable for Common Stock, until the Company has a
sufficient number of shares of Common Stock available for
issuance to permit full conversion or exercise of the Notes and
Warrants, respectively.
The Agreement contains customary representations, warranties, and
covenants by, among, and for the benefit of the parties. The
Agreement requires the Company at any time after the Company
files its annual report on Form 10-K for the year ended December
31, 2016, at the request of the holders of a majority in interest
of the aggregate principal amount of the then-outstanding Notes,
to file a registration statement covering the resale of the
Shares within 90 days of the request for registration. In
addition, the Agreement grants the holders piggyback registration
rights until the first day the Shares may be sold under Rule 144
of the Securities Act of 1933, as amended (the Securities Act).
covenants by, among, and for the benefit of the parties. The
Agreement requires the Company at any time after the Company
files its annual report on Form 10-K for the year ended December
31, 2016, at the request of the holders of a majority in interest
of the aggregate principal amount of the then-outstanding Notes,
to file a registration statement covering the resale of the
Shares within 90 days of the request for registration. In
addition, the Agreement grants the holders piggyback registration
rights until the first day the Shares may be sold under Rule 144
of the Securities Act of 1933, as amended (the Securities Act).
The Notes and Warrants were issued and sold to exemptions from
the registration requirements of the Securities Act, including
Section 4(a)(2) thereof and Rule 506(b) of Regulation D
thereunder, as well as comparable exemptions under applicable
state securities laws, as transactions by an issuer not involving
a public offering. The offering was not conducted in connection
with a public offering, and no public solicitation or
advertisement was made or relied upon by any Investor in
connection with the offering. Moreover, each Investor represented
to the Company that (1) it is an accredited investor, as that
term is defined under Regulation D of the Securities Act, in the
United States, acquiring the Notes, Warrants, and Shares for
investment purposes only and not with a view to or for sale in
connection with any distribution thereof, (2) either alone or
with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable
of evaluating the merits and risks of its investment, and (3) it
had the opportunity to review the Companys public filings and was
afforded (a) the opportunity to ask questions and receive answers
from the Company concerning the conditions of the offering, (b)
access to information about the Company sufficient to enable such
Investor to evaluate its investment in the Company, and (c) the
opportunity to obtain such additional information that the
Company possessed or could acquire without unreasonable effort or
expense necessary to make an informed investment decision.
the registration requirements of the Securities Act, including
Section 4(a)(2) thereof and Rule 506(b) of Regulation D
thereunder, as well as comparable exemptions under applicable
state securities laws, as transactions by an issuer not involving
a public offering. The offering was not conducted in connection
with a public offering, and no public solicitation or
advertisement was made or relied upon by any Investor in
connection with the offering. Moreover, each Investor represented
to the Company that (1) it is an accredited investor, as that
term is defined under Regulation D of the Securities Act, in the
United States, acquiring the Notes, Warrants, and Shares for
investment purposes only and not with a view to or for sale in
connection with any distribution thereof, (2) either alone or
with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable
of evaluating the merits and risks of its investment, and (3) it
had the opportunity to review the Companys public filings and was
afforded (a) the opportunity to ask questions and receive answers
from the Company concerning the conditions of the offering, (b)
access to information about the Company sufficient to enable such
Investor to evaluate its investment in the Company, and (c) the
opportunity to obtain such additional information that the
Company possessed or could acquire without unreasonable effort or
expense necessary to make an informed investment decision.
The foregoing description does not purport to be complete and is
qualified in its entirety by reference to the full text of the
Agreement, form of Note, form of Warrant, and the security
agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.3
and 10.4, respectively, to this Current Report on Form 8-K and
incorporated herein by reference. Copies of the First Amendment,
an amendment to the Notes made in connection with the First
Amendment, and the form of note issued to the Agreement as
amended by the First Amendment, which were disclosed in the
Companys Current Report on Form 8-K/A filed with the SEC on
January 6, 2017, will be filed in accordance with the rules and
regulations of the SEC, with portions omitted and filed
separately with the SEC to ta request for confidential treatment.
This Current Report on Form 8-K shall not constitute an offer to
sell or the solicitation of an offer to buy securities.
qualified in its entirety by reference to the full text of the
Agreement, form of Note, form of Warrant, and the security
agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.3
and 10.4, respectively, to this Current Report on Form 8-K and
incorporated herein by reference. Copies of the First Amendment,
an amendment to the Notes made in connection with the First
Amendment, and the form of note issued to the Agreement as
amended by the First Amendment, which were disclosed in the
Companys Current Report on Form 8-K/A filed with the SEC on
January 6, 2017, will be filed in accordance with the rules and
regulations of the SEC, with portions omitted and filed
separately with the SEC to ta request for confidential treatment.
This Current Report on Form 8-K shall not constitute an offer to
sell or the solicitation of an offer to buy securities.
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Item 2.03
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Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information disclosed in Item 1.01 of this Current Report on
Form 8-K is incorporated by reference into this Item 2.03.
Form 8-K is incorporated by reference into this Item 2.03.
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Item 3.02
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Unregistered Sales of Equity Securities.
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The information disclosed in Item 1.01 of this Current Report on
Form 8-K is incorporated by reference into this Item 3.02.
Form 8-K is incorporated by reference into this Item 3.02.
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Item 5.02
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Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On January 25, 2017, Gregory Morris announced his intention to
resign from the Companys Board of Directors (the Board) and all
committees thereof, effective April 1, 2017. Mr. Morris is a
member of the Companys Audit Committee and is the chair of the
Compensation Committee. Mr. Morriss decision to resign was not
the result of any disagreement with the Company on any matter
relating to the Companys operations, policies, or practices
during his period of service as a director. Mr. Morris is
resigning in order to focus his efforts on several new and
existing opportunities.
resign from the Companys Board of Directors (the Board) and all
committees thereof, effective April 1, 2017. Mr. Morris is a
member of the Companys Audit Committee and is the chair of the
Compensation Committee. Mr. Morriss decision to resign was not
the result of any disagreement with the Company on any matter
relating to the Companys operations, policies, or practices
during his period of service as a director. Mr. Morris is
resigning in order to focus his efforts on several new and
existing opportunities.
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Item 9.01
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Financial Statements and Exhibits.
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(d) Exhibits.
The information set forth in the Exhibit Index immediately
following the page to this Current Report on Form 8-K is
incorporated by reference into this Item 9.01.
following the page to this Current Report on Form 8-K is
incorporated by reference into this Item 9.01.
About root9B Holdings, Inc. (NASDAQ:RTNB)
root9B Holdings, Inc., formerly root9B Technologies, Inc., is engaged in providing cybersecurity, business advisory services principally in regulatory risk mitigation, and energy and controls solutions. The Company helps clients in various industries to provide cyber operations and solutions, mitigate risk, comply with regulations, and leverage and integrate technology. It operates through three segments: Cyber Solutions, IPSA International, Inc. (IPSA)/Business Advisory Solutions, and Energy and Controls Solutions. The Cyber Solutions segment provides cyber security and technology training capabilities, operational support and consulting services. The IPSA/Business Advisory Solutions segment delivers solutions in both regulatory compliance and risk mitigation. The Energy and Controls Solutions segment works with its customers to assess, design and install processes and automation. Its services include cyber operations assessments, forensics, exploitation and defense planning. root9B Holdings, Inc. (NASDAQ:RTNB) Recent Trading Information
root9B Holdings, Inc. (NASDAQ:RTNB) closed its last trading session up +0.40 at 10.95 with 15,257 shares trading hands.
