Page 8 of 11 – SEC Filing
(d) No Reporting Person has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) No Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
(f) Mr. Mendola is a citizen of the United States of America.
| Item 3. | Source and Amount of Funds or Other Consideration. |
The Master Fund purchased the Shares from the Issuer in a private placement with working capital at a total purchase price of $1,750,000. Such purchase price included warrants to purchase an additional 875,000 Shares at an exercise price of $2.10 per Share, which warrants are currently exercisable and will be exercisable through July 30, 2022 (the “Warrants”). The number of Shares beneficially owned by the Reporting Persons on each of their cover pages and in Item 5 includes the Shares issuable on the exercise of the Warrants.
| Item 4. | Purpose of Transaction. |
The Master Fund purchased the Shares and the Warrants pursuant to a Common Stock and Warrant Purchase Agreement, a form of which is incorporated by reference herein as Exhibit 10.1 (the “Purchase Agreement”).
Pursuant to the Purchase Agreement, the Issuer agreed to use commercially reasonable efforts to file a registration statement with the SEC (the “Registration Statement”) within 45 days following the closing of the Purchase Agreement (the “Closing”) to register the resale by the purchasers of the Shares and the Shares issuable under the Warrants (the “Purchasers”) and to cause the Registration Statement to become effective within 120 days following the Closing. The Purchase Agreement also requires the Issuer to apply for listing of the Shares on the NASDAQ Capital Market (“NASDAQ”) within 60 days following the Closing and to cause the Shares to be listed on the NASDAQ no later than 120 days after the Closing.
The Issuer also entered into a Board Representation Agreement with PCG, the form of which is incorporated by reference herein as Exhibit 10.2, under which, PGC was granted the right to designate one person to be nominated for election to the Issuer’s Board of Directors so long as (i) PGC together with its affiliates beneficially owns at least 4.99% of the Shares, or (ii) PGC together with its affiliates beneficially owns at least 75% of the securities purchased under the Purchase Agreement. PCG has not yet designated such person.
The Reporting Persons acquired the Shares for investment purposes. In the future, depending on general market and economic conditions affecting the Issuer and other relevant factors, the Reporting Persons may purchase additional securities of the Issuer or dispose of some or all of the securities they currently own from time to time in open market transactions, private transactions or otherwise. In pursuing their investment purposes, they may also engage in option, swap or other derivative securities transactions with respect to or otherwise deal in such securities at times, and in such manner, as they deem advisable to benefit from changes in the Shares’ market price, changes in the Issuer’s operations, business strategy or prospects, or from the sale or merger of the Issuer. To evaluate such alternatives, the Reporting Persons routinely will monitor the Issuer’s operations, prospects, business development, management, competitive and strategic matters, capital structure and prevailing market conditions, as well as alternative investment opportunities, the Reporting Persons’ liquidity requirements and other investment considerations. Consistent with their investment and evaluation criteria, the Reporting Persons may discuss such matters with the Issuer’s management, the Board, other stockholders, industry analysts, existing or potential strategic partners or competitors, investment and financing professionals, sources of credit and other investors.
The Reporting Persons also may propose other changes in the Issuer’s operations, governance or capitalization, or one or more of the other actions described in sections (a) through (j) of Item 4 of Schedule 13D. They also may formulate other plans and take such actions with respect to the Shares.
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