SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 17, 2019 (October 10, 2019)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
(Commission File Number)
2041 NW 15thAvenue, Pompano Beach, Florida 33069
(Address of principal executive offices) (Zip Code)
(Registrants telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))
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Securities registered pursuant to Section 12(b) of the Act: None
Title of each class
Name of each exchange on which registered
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01. Entry into a Material Definitive Agreement.
On October 10, 2019, Basanite, Inc. (the Company) entered into a Securities Purchase Agreement the (SPA) with Labrys Fund, LP (the Investor) pursuant to which the Investor purchased a 15% Convertible Promissory Note (the Note) from the Company. Unless there is a specific Event of Default (as such term is defined in the Note) or the Note remains unpaid by April 16, 2020 (the Maturity Date), then the Investor shall not have the ability to convert the principal and interest under the Note into shares of the Company's common stock, par value $0.001 per share (the Common Stock).
If the Note is not repaid prior to the Maturity Date, the per share conversion price into which the principal amount and interest under the Note may be converted is equal to the lesser of (i) 60% multiplied by the lowest Trade Price (as such term is defined in the Note) of the Common Stock during the 25 consecutive trading days ending on the latest complete trading day prior to the date of issuance of the Note, and (ii) 60% multiplied by the lowest Market Price (as such term is defined in the Note) of the Common Stock during the 25 trading day period ending on the latest complete trading day prior to the Conversion Date (as such term is defined in the Note).
Pursuant to the SPA, the Company agreed to issue and sell to the Investor the Note, in the principal amount of $338,000. The Company received net proceeds from the Note of $300,000 after an original issue discount of $33,800 and a reduction for Investors legal counsel fees of $4,200. Additionally, the Company issued 1,300,000 shares of Common Stock to the Investor as a commitment fee (the Returnable Shares). The Returnable Shares must be returned to the Company in the event the Note is fully paid and satisfied prior to the Maturity Date. The proceeds from the Note will be used for general working capital purposes.
The Company is also subject to certain customary negative covenants under the SPA, including but not limited to, the requirement to maintain its corporate existence and assets subject to certain exceptions, and to not to make any offers or sales of any security under circumstances that would have the effect of establishing rights or otherwise benefitting other investors in a manner more favorable in any material respect than those rights and benefits established in favor of the Investor under the terms of the SPA and the Notes.
The Company agreed at all times to have authorized and reserved 5 times the number of shares of Common Stock that are issuable upon full conversion of the Note. Initially, the Company instructed its transfer agent to reserve 21,666,666 shares of Common Stock in the name of the Investor for issuance upon conversion.
The foregoing descriptions of the SPA and the Note do not purport to be complete and are qualified in their entirety by reference to the full text of the SPA and the Note, which are filed as, respectively, Exhibits 10.1 and 10.2 hereto. Additionally, Amendment #1 to the Convertible Promissory Note Issued on October 10, 2019 between the Company and Investor dated October 16, 2019 whereby the Maturity Date of the Note is amended from April 10, 2020 to April 16, 2020 is filed as Exhibit 10.3 hereto.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure under Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 3.02 by reference. The issuance of the securities set forth herein was made in reliance on the exemption provided by Section 4(a)(2) and Rule 506(b) under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 17, 2019
/s/ Richard Krolewski
Chief Executive Officer