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Subsequent Events
9 Months Ended
Sep. 30, 2017
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 15 – SUBSEQUENT EVENTS

 

Acquisition of DxT Medical, LLC

 

On October 16, 2017, Mobile Science Technologies, Inc., a wholly owned subsidiary of the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) by and among, an individual residing in the State of South Carolina, and Corral Court Capital LLC, a Georgia limited liability company, as sellers (together, the “Seller”), the Company, as parent, and Mobile Science Technologies, Inc., as buyer (“Buyer”), pursuant to which Buyer acquired from Seller all of Seller’s right, title and interest in and to 100% of the membership interests (the “Membership Interests”) of DxT Medical, LLC, a South Carolina limited liability company that owns and operates a national healthcare distribution business. As consideration for the Membership Interests, the Company issued to the Seller an aggregate of 350,000 restricted shares of the Company’s common stock, par value $0.025 per share, allocated in accordance with the terms of the Purchase Agreement. 

 

Closing of Securities Purchase Agreement; Amendment to Certificate of Incorporation and Issuance of Series E Preferred Stock

 

In October and November of 2017, the Company received $2,290,000 in funding (the “Funding”) in connection with a private placement offering to accredited investors (the “Offering”) of up to $3,000,000 of units (the “Units”), with each Unit comprised of (i) one (1) share of Series E Preferred Stock, par value $0.001 per share (the “Series E Preferred Stock”) and (ii) fifteen (15) warrants (the “Warrants”) to purchase shares of the Company’s common stock. In connection with the Funding, the Company entered into a definitive securities purchase agreement (the “Securities Purchase Agreement”) with accredited investors (the “Investor”), and an aggregate of 229,000 shares of Series E Preferred Stock and 3,435,000 Warrants was issued, for aggregate gross proceeds to the Company of $2,290,000. The Warrants are five year warrants to purchase shares of Common Stock at an exercise price of $1.20 per share, exercisable beginning six months after the date of issuance thereof. The Warrants provide for cashless exercise to the extent that there is no registration statement available for the underlying shares of Common Stock.

 

The Company is utilizing the services of Garden State Securities, Inc., a FINRA-registered placement agent and Carter, Terry & Co., a FINRA-registered placement agent, for the Offering. In connection with this Offering, the Company will pay such placement agents an aggregate cash fee of $141,000 and will issue to such placement agent or its designees 167,500 Warrants. The net proceeds to the Company from the Closing, after deducting the foregoing fees and other Offering expenses, are expected to be approximately $2,000,000. 

  

Effective October 17, 2017, in connection with the Offering, the Company and the Investor entered into a Registration Rights Agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company shall prepare and, as soon as practicable, but in no event later than 10 days from the date of the effectiveness of the resale registration statement filed in connection with the offering of units that included shares of the Company’s Series D Preferred Stock, file with the SEC an initial Registration Statement on Form S-3 covering the resale of all shares of Common Stock comprising the Units, including shares of Common Stock underlying the Warrants, or the largest amount thereof permissible. The Company shall use its best efforts to have such initial Registration Statement, and each other Registration Statement required to be filed pursuant to the terms of the Registration Rights Agreement, declared effective by the SEC as soon as practicable. 

 

On October 21, 2017, the Company amended its Certificate of Incorporation by filing the Certificate of Amendment of the Certificate of Incorporation of the Company with the Secretary of State of the State of New York (the “Amendment to Certificate”), which established 300,000 shares of the Series E Preferred Stock, having such designations, rights and preferences as set forth in the Series E Designations, as determined by the Company’s Board of Directors in its sole discretion, in accordance with the Company’s Certificate of Incorporation and bylaws.

 

The shares of Series E Preferred Stock have a stated value of $10.00 per share and, subject to the approval of a majority of the Company’s shareholders (“Shareholder Approval”), are convertible into Common Stock at a price of $1.00 per share, and earn dividends at the rate of 20% per annum, with such dividends for the first year earned in advance, to be issued in the form of common stock following Shareholder Approval. The Company and certain key stockholders of the Company entered into a voting agreement with the Investor related to the obtaining of Shareholder Approval (the “Voting Agreement”).

 

Capital Leases

 

In October of 2017, the Company leased equipment to be installed at its Petersburg, Virginia and Lunenburg, Virginia landfill facilities. The total cost of the equipment is approximately $2,900,000, 20% paid up front and the remaining balance payable over the next 36 months at an annual interest rate of 5.95%.

 

American Science and Technology Corporation License Agreement and Lease

 

Effective November 9, 2017, Meridian Innovations, LLC (“Innovations”), a wholly owned subsidiary of the Company, as licensee, entered into an Exclusive Commercial Patent License Agreement (the “License Agreement”) with American Science and Technology Corporation (“AST”), as licensor, and a principal shareholder of AST. Pursuant to the License Agreement, effective January 1, 2018, AST will grant to Innovations an exclusive commercial license in, to and under certain licensed patents to make, have made, use, offer to sell, market, advertise, sell, dispose of, and import certain licensed products, for a term of 24 months, unless terminated earlier. Pursuant to the License Agreement, on January 1, 2018, Innovations will pay to AST $200,000 and the Company will issue to AST 200,000 shares of the Company’s restricted common stock, and, beginning effective January 1, 2019, Innovations will pay to AST a monthly license fee of $50,000.

 

Effective November 9, 2017, in connection with the License Agreement, Innovations, as tenant, entered into a Commercial Lease (the “Lease”) with AST, as landlord, and the Company, as guarantor. Pursuant to the Lease, effective January 1, 2018, AST will lease to Innovations the premises located at 6445 Packer Drive, Wausau, Wisconsin and all improvements located thereon and all equipment and fixtures located therein, for a term of 24 months, unless terminated earlier. Pursuant to the Lease, on January 1, 2018, Innovations will pay to AST $300,000 and the Company will issue to AST 300,000 shares of the Company’s restricted common stock, and, beginning effective January 1, 2019, Innovat6ions will pay to AST a monthly rent of $75,000. Pursuant to the Lease, Innovations and AST entered into an Option Agreement (the “Option”), granting Innovations the option to purchase the assets of AST for $2,500,000, in addition to certain royalty and other future payments.

 

On November 7, 2017, the Company entered into an Investment Agreement (the “Investment Agreement”) with YA II PN, LTD (“YA”). Pursuant to the terms of the Investment Agreement, for a period of twenty-four months commencing on the date of execution and delivery of the Investment Agreement, YA has committed to purchase up to $10,000,000 (the “Commitment Amount”) of the Company’s common stock, par value $0.025 per share (the “Advance Shares”). At its option, the Company may require YA to purchase the Advance Shares at the price of $1.00 per Advance Share, subject to and in accordance with the terms and conditions of the Investment Agreement, including, without limitation, the requirement that the Advance Shares be registered and that the Market Price (as defined in the Investment Agreement) is at least $1.20. The Company is not required to make any minimum sale of the Advance Shares and there is no applicable non-usage fee. The Company may terminate the Investment Agreement at any time, provided there are no Advance Shares required to be delivered and no other amounts are owed by the Company to YA, and, in the event that such termination occurs prior to May 8, 2018, the Company shall pay a termination fee of $100,000.

 

As further consideration for YA entering into the Investment Agreement, the Company shall pay to YA a commitment fee in the amount of $250,000, in the form of 242,718 shares of Common Stock to be registered pursuant to the Company’s Registration Statement on Form S-3 (File No. 216621).