Page 8 of 25 – SEC Filing
provided that, at any time prior to the time the Issuer obtains stockholder approval, as required pursuant to Nasdaq Rule 5635(b) any conversion of Preferred Stock by a holder into shares of the Voting Common Stock would be prohibited if, as a result of such conversion, the holder, together with such holders attribution parties, would beneficially own more than 19.99% of the total number of shares of the Voting Common Stock issued and outstanding after giving effect to such conversion. The conversion price is subject to certain adjustments in the event of any stock dividend, stock split, reverse stock split, combination or other similar recapitalization.
Mandatory Conversion
The shares of Preferred Stock will be mandatorily converted upon the date and time, or the occurrence of an event, specified by vote or written consent of the holders of a majority of the then outstanding shares of Preferred Stock at a conversion price of $0.185 per share. In each case, shares of Voting Common Stock will be held in abeyance to the extent necessary to satisfy limitations on beneficial ownership as described under Voluntary Conversion above.
Optional Redemption
At any time after the first anniversary of the issuance of the Purchased Series A Shares, so long as certain call conditions specified in the Certificate of Designation have been satisfied, the Issuer shall have the right to offer to redeem shares of Preferred Stock at a share price equal to two times the original share issue price of the Purchased Series A Shares. The Issuer is only permitted to exercise this right to redeem two times, the first of which must be for an aggregate redemption price of $9,199,001 and the second of which must be for all remaining shares of Preferred Stock remaining. If a holder of shares of Purchased Stock fails to accept the Issuers redemption offer, such holders shares of Preferred Stock shall be automatically converted into shares of Voting Common Stock pursuant to the terms of Mandatory Conversion as described above.
Mandatory Redemption
If (i) the Issuers consolidated net revenues attributable to the Issuers Mytesi products (Mytesi Revenues) for the six-month period ended March 31, 2021 are less than $22 million, (ii) the average volume-weighted average price of the Common Stock for the thirty days immediately prior to the Measurement Date (as defined below) is less than $1.00 or (iii) the Issuer fails to file with the U.S. Securities and Exchange Commission (the SEC) on or before June 30, 2021 its quarterly report on Form 10-Q for the three months ended March 31, 2021, then the holders of at least a majority of the shares of Preferred Stock then outstanding may require the Issuer to redeem all shares then outstanding at a per share purchase price equal to $2.3057. For purposes of the foregoing sentence, Measurement Date means the later of (x) April 30, 2021 and (y) the date on which the Issuer files its quarterly report on Form 10-Q for the three months ended March 31, 2021 (but in no event later than June 30, 2021).
The mandatory redemption right described above shall terminate if, prior to the Measurement Date, both (i) the Mytesi Revenues for any six-month period ending at the end of a calendar quarter are equal to or exceed $22 million and (ii) the average volume-weighted average price of the Common Stock for the thirty days immediately preceding the end of such calendar quarter is equal to or greater than $1.00.
Fundamental Change
The Certificate of Designation provides the holders of Preferred Stock with a right to require the Issuer to repurchase shares of Preferred Stock at a price to be calculated pursuant to the terms of the Certificate of Designation upon the occurrence of any of the following events (each a Fundamental Change):
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