Investor Esousa Holdings commits to buy up to 50,000 shares per day
By Angela McDaniels
Tacoma, Wash., July 12 – Net Element, Inc. entered into a common stock purchase agreement with Esousa Holdings, LLC on July 6. The investor agreed to purchase up to $10 million of the company’s common stock over the 30-month term of the agreement.
The company has the right to direct Esousa to purchase up to 50,000 shares per business day at a per share price equal to the lesser of the consolidated closing bid price of the company’s common stock on the purchase date and the arithmetic average of the three lowest consolidated closing bid prices for the stock during the 10 consecutive trading days ending on the trading day immediately preceding the purchase date.
However, no regular purchase may exceed $1 million per business day.
The number of shares for each regular purchase may be increased to up to 75,000 shares if the consolidated closing bid price is not below $0.50 and to up to 100,000 shares if the consolidated closing bid price is not below $1.00.
In addition, on any date on which the company submits a purchase notice and its stock price is not less than $0.25 per share, the company also has the right to direct Esousa to purchase on the next trading day an amount of stock not to exceed the lesser of two times the maximum number of shares allowed to be sold for a regular purchase with applicable consolidated closing bid prices or 20% of the trading volume of the common stock on the business day following the purchase notice. The purchase price would be the lesser of the consolidated closing bid price on the purchase date and 95% of volume-weighted average price for the common stock on the purchase date.
Under the terms of the purchase agreement, no sales will be made if the consolidated closing bid price of the company’s common stock is less than $0.50.
The company agreed that during the lesser of 30 months from the date of the purchase agreement and the period when Esousa still owns the common stock issued under the purchase agreement, the company will not, without Esousa’s consent, issue any floating conversion rate or variable priced securities convertible into common stock if those convertible securities have no floor price.
In consideration for entering into the purchase agreement, on the earlier of six months after the date of the purchase agreement and on or one business day after the SEC declares effective the registration statement for the stock to be issued in the purchase agreement, the company will issue to Esousa a number of shares with a value of $200,000 calculated using the average volume-weighted average price for the common stock during the three trading days immediately preceding the date of issuance of such shares.
Any proceeds the company receives under the purchase agreement are expected to be used for working capital and general corporate purposes.
Net Element is a Miami-based online media and technology company.
| Issuer: | Net Element, Inc.
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| Issue: | Common stock purchase agreement
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| Amount: | Up to $10 million
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| Term: | 30 months
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| Shares: | Up to 50,000 shares per business day
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| Price: | Lesser of consolidated closing bid price on purchase date and arithmetic average of three lowest consolidated closing bid prices during 10 consecutive trading days ending on trading day immediately preceding purchase date
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| Warrants: | No
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| Investor: | Esousa Holdings, LLC
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| Agreement date: | July 6
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| Stock symbol: | Nasdaq: NETE
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| Stock price: | $1.86 at close July 12
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| Market capitalization: | $21.03 million
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