SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 10,
2017
root9B Holdings, Inc.
(Exact name of Company as specified in Charter)
|
Delaware
(State or other jurisdiction of incorporation or
organization)
|
|
000-50502
(Commission File No.)
|
|
20-0443575
(IRS Employee Identification No.)
|
102 N. Cascade Avenue, Suite 220
Colorado Springs, CO 80919
(Address of Principal Executive Offices)
(602) 889-1137
(Issuer Telephone number)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Company under
any of the following provisions (see General Instruction A.2
below).
|
☐
|
|
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)
|
|
|
|
|
|
☐
|
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b)).
|
|
|
|
|
|
☐
|
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13(e)-4(c))
|
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 July
10, 2017, the Board of Directors (the “Board”) of
root9B Holdings, Inc., a Delaware corporation (the
“Company”), approved the issuance of a convertible
promissory note (the “Note”) to Dan Wachtler, the
President and Chief Operating Officer of the Company, with a
principal amount of $500,000, along with warrants to purchase
shares (the “Warrant Shares”) of the Company’s
common stock, par value $0.001 per share (the “Common
Stock”), representing fifty percent (50%) warrant coverage
(the “Warrant”). Subject to receipt of approval from
the Company’s secured convertible promissory note holders,
the Note will be pari passu with the previously issued secured
notes and Mr. Wachtler will become a party to that certain Security
Agreement, dated September 9, 2016, by and among the Company and
the investors listed therein.
The
term of the Note is three years after issuance (the “Maturity
Date”). The Note accrues interest at a rate of 10% per annum,
payable on each March 31, June 30, September 30 and December 31,
commencing September 30, 2017 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 Mr.
Wachtler’s 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 $10.00 per share. Following the date which is six months
after the date of issuance, at the election of Mr. Wachtler, all
principal and interest due and owing under the Note is convertible
into shares of Common Stock at a conversion price equal to $10.00
(the “Conversion Shares” and, together with the Warrant
Shares and the Interest Payment Shares, the “Shares”).
The conversion price is subject to adjustment for stock splits,
stock dividends, combinations, or similar events.
The
Company may prepay any portion of the outstanding principal amount
of the Note and any accrued and unpaid interest, with the prior
written consent of Mr. Wachtler, by paying to him 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 the
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.
The
Warrant has a term of five years, an exercise price of $10.00 per
share 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 Warrant is subject to
adjustment for certain stock dividends or stock splits, or any
reclassification of the outstanding securities of, or
reorganization of, the Company.
Pursuant to the
terms of both the Note and the Warrant, Mr. Wachtler may not be
issued Shares if, after giving effect to the conversion or exercise
of the Shares, as applicable, he, would beneficially own in excess
of 19.99% of the 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 or another entity acquires 50% or more of the
outstanding Common Stock, then following such event, (i) at his
election within 30 days of consummation of the transaction, Mr.
Wachtler will be entitled to receive the Prepayment Amount, and
(ii) Mr. Wachtler will be entitled to receive upon exercise of his
Warrant the same kind and amount of securities, cash or property
which he would have received had he exercised his Warrant
immediately prior to such transaction. Any successor to the Company
or surviving entity shall assume the Company’s obligations
under the Note and the Warrant.
The
Note and Warrant were issued and sold pursuant 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
Note and Warrant will be filed in accordance with the rules and
regulations of the SEC. The foregoing description of the principal
terms of the Security Agreement does not purport to be complete and
is qualified in its entirety by reference to the Security
Agreement, a copy of which was filed as an exhibit to the Current
Report on Form 8-K filed on September 12, 2016 as Exhibit
10.4.
2
Item 2.03
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.
Item 3.02
Unregistered Sales of Equity Securities.
The
information disclosed in Item 1.01 of this Current Report on Form
8-K is incorporated by reference into this Item 3.02.
Item
9.01 Financial
Statements and Exhibits.
(d)
Exhibits.
The information set forth in the
Exhibit Index immediately following the signature page to this
Current Report on Form 8-K is incorporated by reference into this
Item 9.01.
3
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Current Report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
|
ROOT9B HOLDINGS,
INC.
|
|
|
|
|
|
|
|
| Dated: July 14, 2017 |
By:
|
/s/
William
Hoke
|
|
|
|
|
Name:
William
Hoke
|
|
|
|
|
Title:
Chief
Financial Officer
|
|
4
EXHIBIT INDEX
|
Exhibit
No.
|
|
Description
|
|
10.4
|
|
Form of
Security Agreement (incorporated by reference to Exhibit 10.4 to
the Current Report on Form 8-K of the Company filed with the
Commission on September 12, 2016).
|
5