Page 4 of 9 – SEC Filing
| CUSIP No. 171077407 | SC 13D/A | Page 4 of 8 |
EXPLANATORY STATEMENT.
This Amendment No. 1 to Schedule 13D (Amendment No. 1) relates to shares of Common Stock of the
Issuer and is being filed on behalf of the Reporting Persons. This Amendment No. 1 amends and supplements the Schedule 13D previously filed with the Securities and Exchange Commission on May 8, 2017 (the Initial Schedule
13D, together with this Amendment No. 1, the Schedule 13D). This Amendment No. 1 is being amended to reflect certain changes to the aggregate amount of shares beneficially owned by the Reporting
Persons.
| ITEM 4. | PURPOSE OF TRANSACTION. |
Securities Purchase Agreement
On April 26, 2017, Pioneer Step Holdings Limited and Champion River Ventures Limited (Champion River, each a
Purchaser and together, the Purchasers) entered into a Securities Purchase Agreement with the Issuer (the Purchase Agreement). Pursuant to the Purchase Agreement, the
Issuer agreed to sell and issue up to $25 million of its Common Stock at a purchase price of $2.60 per share in three tranches of approximately $3.5 million, $16.4 million and $5.1 million, respectively. The first tranche (the
First Tranche) closed on April 27, 2017, at which closing the Issuer issued 538,462 Shares to Pioneer Step and 807,692 Shares to the other Purchaser. Pursuant to the First Amendment to Securities Purchase Agreement,
dated May 24, 2017 (the First Amendment), the second tranche (the Second Tranche) closed on May 24, 2017, at which closing the Issuer issued 2,521,526 Shares to Pioneer Step and 3,782,288
Shares to the other Purchaser. At the closing of the third tranche (the Third Tranche), subject to the terms and conditions set forth in the Purchase Agreement, it is proposed that the Purchasers will acquire, in the
aggregate, an additional 1,965,417 Shares. The closing of the Third Tranche is subject to approval by the Issuers stockholders.
Following the
closing of the Second Tranche, pursuant to the Purchase Agreement, the Issuer shall permit two individuals (collectively, the Observers), with each Purchaser being entitled to nominate one Observer, to attend all meetings
of the Issuers Board of Directors (the Board) in a non-voting capacity, and in connection therewith, the Issuer is required to provide the Observers with certain information
that the Issuer provides to the Board. The observer rights applicable to a particular Purchaser terminate on the date on which such Purchasers director nominee is first actually appointed or elected to the Board. In addition, subject to
certain ownership and other requirements, the Purchase Agreement provides the Purchasers with certain information and access rights relating to the Issuer and its business.
As a result of the completion of the Second Tranche, the Purchase Agreement requires that the Issuers Board increase the number of authorized directors
so as to create two vacant seats on the Board, which vacancies shall be filled on a date following the Issuers 2017 Annual Meeting of Stockholders by one nominee selected by each of the Purchasers (the Purchaser
Designees).
In addition, from and after the date of the Purchase Agreement, upon prior written request thereof by any Purchaser, the Issuer
shall use reasonable efforts to enter into one or more voting agreements with one or more of the Purchasers and such other substantial holders of Common Stock as reasonably requested by such Purchaser(s) and agreed to by the Issuer in respect of the
election of the Purchaser Designees.
Registration Rights Agreement
At the closing of the First Tranche and unless otherwise waived by the Purchasers, the Purchase Agreement requires that the Issuer and the Purchasers promptly
enter into a Registration Rights Agreement in form and substance reasonably acceptable to the Purchasers (the Registration Rights Agreement) with respect to the Shares acquired under the Purchase Agreement. The Issuer and
the Purchasers entered into the Registration Rights Agreement on April 29, 2017. The Registration Rights Agreement grants the Purchasers customary shelf and piggyback registration rights.
The foregoing descriptions of the Purchase Agreement, the Registration Rights Agreement, and the First Amendment are not complete and are qualified in their
entirety by reference to the full text of the Purchase Agreement, the Registration Rights Agreement, and the First Amendment, which are incorporated by reference into this Schedule 13D pursuant to Exhibits 99.2, 99.3, and 99.4 of Item 7 hereof.
Pioneer Step acquired the Shares as investment in its ordinary course of business.
