| Item 1.01. | Entry into a Material Definitive Agreement. |
On March 18, 2020, Venus Concept, Inc. (the “Company”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain investors named therein (collectively, the “Investors”) pursuant to which the Company will issue and sell to the Investors an aggregate of 2,300,000 shares (the “Shares”) of common stock, par value $0.0001 per share (the “Common Stock”), 660,000 shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), which is convertible into 6,600,000 shares of Common Stock (the “Conversion Shares”), and warrants (the “Warrants”) to purchase up to 6,675,000 shares of Common Stock (the “Warrant Shares”) with an exercise price of $3.50 per share (the “Private Placement”), subject to adjustments as provided under the terms of the Warrants. The Warrants have a five-year term and are exercisable beginning 181 days after their issue date. The Series A Preferred Stock will automatically convert into shares of Common Stock upon receipt of stockholder approval. The Series A Preferred Stock has no voting rights other than as required by law.
The closing of the Private Placement is subject to certain conditions and is expected to occur on or before March 20, 2020. The gross proceeds to the Company from the Private Placement are expected to be $22.25 million, before placement agent fees and other offering expenses. Proceeds from the Private Placement will be used to for general corporate purposes.
The Securities Purchase Agreement contains customary representations, warranties and agreements by the Company, indemnification obligations of the Company, including for liabilities under the Securities Act of 1933, as amended (the “Securities Act”), and other obligations of the parties. The representations, warranties, and covenants contained in the Securities Purchase Agreement were made only for purposes of such agreement and are made as of specific dates; are solely for the benefit of the parties (except as specifically set forth therein); may be subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Securities Purchase Agreement, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties, instead of establishing matters as facts; and may be subject to standards of materiality and knowledge applicable to the contracting parties that differ from those applicable to the investors generally. Investors should not rely on the representations, warranties, and covenants or any description thereof as characterizations of the actual state of facts or condition of the Company.
The securities issued by the Company pursuant to the Securities Purchase Agreement and to be issued upon conversion of the shares of Series A Preferred Stock and the exercise of the Warrants have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company relied and will rely on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Registration D, promulgated by the SEC, and on similar exemptions under applicable state laws.
Pursuant to the terms of the Securities Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors pursuant to which the Company is required, among other things, to file a shelf registration statement with respect to the Shares, the Conversion Shares and the Warrant Shares held by such Investors with the U.S. Securities and Exchange Commission (the “SEC”) within 30 days following the closing of the Private Placement. The Registration Rights Agreement contains customary terms and conditions for a transaction of this type.
The foregoing description of the Securities Purchase Agreement, the Series A Preferred Stock, the Warrants and the Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Securities Purchase Agreement, the form of Warrant and the Registration Rights Agreement, each of which will be filed as an exhibit to the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2019 and the Certificate of Designation for the Series A Preferred Stock filed herewith as Exhibit 3.1.
| Item 3.02. | Unregistered Sales of Equity Securities. |
The information contained in Items 1.01 and 5.03 of this Current Report on Form8-K is incorporated by reference into this Item 3.02.
| Item 5.03 | Amendment to Articles of Incorporation of Company or Bylaws; Change in Fiscal Year |
On March 18, 2020, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of the Series A Convertible Preferred Stock with the Secretary of State of the State of Delaware (the “Certificate of Designation”) creating a new series of authorized preferred stock of the Company designated as the “Series A Convertible Preferred Stock”. The Certificate of Designation became effective with the Secretary of State of the State of Delaware upon filing.
The number of shares of Series A Preferred Stock designated shall be up to 660,000. No dividends will be paid on the outstanding shares of Series A Preferred Stock. Except as otherwise required by law, the Series A Preferred Stock does not have voting rights. However, as long as any shares of Series A Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or alter or amend the Certificate of Designation, (b) amend its amended and restated certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Preferred Stock, (c) increase the number of authorized shares of Series A Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing. The Series A Preferred Stock does not have a preference upon any liquidation, dissolution or winding-
