UNITED STATES
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): March 1, 2017

 

CV SCIENCES, INC.
(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of incorporation)

000-54677

(Commission File Number)

80-0944970

(I.R.S. Employer Identification No.)

 

2688 South Rainbow Boulevard, Suite B

Las Vegas, Nevada 89146

(Address of principal executive offices)

 

(866) 290-2157
(Registrant’s telephone number, including area code)

 

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:

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

 

 

 

   
 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On March 1, 2017 (the “Closing Date”), CV Sciences, Inc. (the “Company”) entered into a Securities Purchase Agreement (“SPA”) with an institutional accredited investor (“Investor”) pursuant to which Investor invested $750,000 (the “Financing”). On the Closing Date, the Company issued to Investor a Secured Convertible Promissory Note (the “Note”) in the principal amount of $770,000, in exchange for payment by Investor of $750,000. The principal sum of the Note reflects the amount invested, plus a $15,000 “Original Issue Discount” (“OID”) and a $5,000 reimbursement of Investor’s legal fees. The Company paid no commissions or other placement agent fees.

 

In connection with the Financing, and in addition to the SPA and the Note, on the Closing Date, the Company and Investor entered into a Security Agreement, pursuant to which the Company granted a first priority lien and security interest in and to its inventory, accounts receivable and equipment to secure payment under the Note. The SPA, the Note and the Security Agreement are collectively referred to herein as the “Transaction Documents.”

 

The Note matures in 14 months, and is convertible at the option of Investor at any time into shares of the Company’s common stock at a conversion price equal to $0.50 per share. The Company may prepay the Note at any time by payment to Investor of 125% of the principal, interest and other amounts then due under the Note. The Company may prepay the Note notwithstanding an earlier notice of conversion from Investor, provided that in such event Investor may convert an amount not to exceed $200,000 under the Note.

 

Commencing on the date that is six (6) months from the issuance of the Note, Investor may redeem a portion of the Note in monthly amounts not to exceed $100,000. Provided the Company has not suffered an “Event of Default” and is in compliance with certain “Equity Conditions” (unless waived by Investor in either case), the Company may make redemption payments by the issuance of common stock in lieu of cash payments. If the Company chooses to make redemption payments in stock, the number of shares issuable shall be determined based upon a price per share equal the lesser of $0.50 per share or 70% of the average of the three (3) lowest closing bid prices in the previous twenty (20) trading days; provided, however, that the percentage reflected above (the “Conversion Factor”) shall adjust downward if (a) the 20-day average bid price is below $0.25 per share (in which case the Conversion Factor shall be reduced by 10%), (b) the Company is not DWAC eligible (in which case the Conversion Factor shall be reduced by 5%), (c) there has occurred a “Major Default” (in which case the Conversion Factor shall be reduced by 5% for each Major Default).

 

Events of Default include the events set forth in Section 4.1 of the Note, and include, but are not limited to, failure to make timely payments, failure to deliver conversion shares, bankruptcy, receivership, insolvency, failure to reserve required shares for issuance upon conversion, and failure to be DWAC eligible. The Equity Conditions required for payment of redemption installments in stock are set forth in Attachment 1, Section A11 of the Note, and include, but are not limited to, maintaining eligibility under Rule 144, listing on an exchange, the timely delivery of all conversion shares, compliance with laws and no trading suspension.

 

Upon an Event of Default under the Note, Investor may accelerate the outstanding principal amount of all outstanding Note, plus accrued and unpaid interest, and other amounts owing through the date of acceleration. In the event of such acceleration, the interest rate on the Note shall accrue at the greater of 22% per annum or the maximum rate permitted under applicable law. Upon acceleration, the amount due will be 115% of the outstanding principal amount of the Note and accrued and unpaid interest, together with payment of all other amounts, costs, expenses and liquidated damages due under the Notes.

 

Pursuant to the terms of the SPA and the Note, the Company is required to reserve and keep available out of its authorized and unissued shares of common stock a number of shares of common stock at least equal to three (3) times the number of shares issuable on conversion of the Note.

 

The foregoing summary description of the terms of the Transaction Documents may not contain all information that is of interest to the reader. For further information regarding the terms of the Transaction Documents, reference is made to such Transaction Documents, which are filed hereto as Exhibits 10.1 – 10.3, and are incorporated herein by this reference.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant

 

The information provided above in “Item 1.01 – Entry into a Material Definitive Agreement” 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 provided above in “Item 1.01 – Entry into a Material Definitive Agreement” of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.

 

 

 2 
 

 

The issuance of the Notes and the issuance of the shares of the Company’s common stock upon conversion of the Notes in connection with the Financing is exempt from registration under the Securities Act of 1933, as amended (the “Act”), in reliance on exemptions from the registration requirements of the Act in transactions not involved in a public offering pursuant to Rule 506(b) of Regulation D, as promulgated by the Securities and Exchange Commission under the Act.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

10.1Form of Securities Purchase Agreement, dated March 1, 2017, by and between the Company and Investor.
10.2Form of Secured Convertible Promissory Note, issued the Company on March 1, 2017 to Investor.
10.3Security Agreement, dated March 1, 2017, by and between the Company and Investor.

 

 

 

 

 

 

 

 

 

 

 3 
 

 

SIGNATURES

 

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.

 

Date: March 6, 2017

 

 

CV SCIENCES, INC.

 

 

By: /s/ Michael Mona, Jr.                                              

Michael Mona, Jr.

President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 4