Current Report Filing (8-k)
December 06 2019 - 4:09PM
Edgar (US Regulatory)
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): December 6, 2019
DROPCAR,
INC.
(Exact name of Registrant as specified
in its charter)
Delaware
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001-34643
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98-0204758
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File No.)
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Identification No.)
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DropCar, Inc.
1412 Broadway, Suite 2105
New York, New York 10018
(Address of principal executive offices and zip code)
Registrant's telephone number, including
area code: (646) 342-1595
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:
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¨
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Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common stock, par value $0.0001 per share
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DCAR
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The Nasdaq Stock Market
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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 December 6, 2019, DropCar, Inc. (the
"Company") entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with certain
institutional and accredited investors (collectively, the "Investors"), pursuant to which the Company issued to the Investors
an aggregate of 34,722 shares of the Company's newly designated Series H-5 Convertible Preferred Stock, par value $0.0001 per share
(the "Series H-5 Shares"), and warrants to purchase 3,472,200 shares of common stock of the Company, par value $0.0001
per share ("Common Stock"), with an exercise price of $0.792 per share, subject to adjustments (the "Warrants").
The purchase price per Series H-5 Share was $72.00, equal to (i) the closing price of the Common Stock on the Nasdaq Capital Market
on December 5, 2019, plus $0.125 multiplied by (ii) 100. The aggregate purchase price for the Series H-5 Shares and Warrants was
approximately $2.5 million. Subject to certain ownership limitations, the Warrants will be exercisable beginning six months from
the issuance date and will be exercisable for a period of five years from the initial exercise date.
In connection with the offering, the Company
entered into a Registration Rights Agreement (the "Registration Rights Agreement") with the Investors, pursuant to which
the Company is obligated, among other things, to (i) file a registration statement with the U.S. Securities and Exchange Commission
(the "SEC") by the earlier of (a) the 120th day after the date of signing of the Registration Rights Agreement
or (b) the 45th day following a change in control of the Company, for purposes of registering the shares of Common Stock
issuable upon conversion of the Series H-5 Shares and the shares of Common Stock issuable upon exercise of the Warrants for resale
by the Investors, (ii) use its commercially reasonable efforts to have the registration statement declared effective as soon as
practicable after filing, and in any event no later than 60 days after the initial filing date (or 100 days after the initial filing
date if the registration statement is reviewed by the SEC), and (iii) maintain the registration until all registrable securities
may be sold pursuant to Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), without restriction
as to volume. The Registration Rights Agreement contains customary terms and conditions for a transaction of this type, including
certain customary cash penalties on the Company for its failure to satisfy specified filing and effectiveness time periods.
The offering is exempt from registration
pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) the Securities
Act and Regulation D under the Securities Act.
The securities sold and issued in connection
with the Securities Purchase Agreement are not registered under the Securities Act or any state securities laws and may not be
offered or sold in the United States absent registration with the SEC or an applicable exemption from the registration requirements.
The foregoing descriptions of the Securities
Purchase Agreement, the Registration Rights Agreement and the form of Warrant are not complete and are subject to and qualified
in their entirety by reference to the Securities Purchase Agreement, the Registration Rights Agreement and the form of Warrant,
respectively, copies of which are attached as Exhibits 10.1, 10.2 and 4.1 to this Current Report on Form 8-K, respectively, and
are incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity
Securities.
The information set forth in Item 1.01
of this Current Report on Form 8-K is incorporated herein by reference.
Pursuant to the Securities Purchase Agreement,
at the closing, the Company issued to Palladium Capital Advisors, LLC ("Palladium") Warrants to purchase 243,054 shares
of Common Stock as partial compensation as placement agent for the offering.
Item 3.03 Material Modification
to Rights of Security Holders.
The information set forth in Items 1.01
and 5.03 of this Current Report on Form 8-K is incorporated herein by reference.
Item 5.03 Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year.
On December 6, 2019, the Company filed
the Certificate of Designations, Preferences and Rights of the Series H-5 Convertible Preferred Stock (the "Certificate of
Designation") with the Secretary of State of the State of Delaware, establishing and designating the rights, powers and preferences
of the Series H-5 Convertible Preferred Stock (the "Series H-5 Stock"). The Company designated up to 50,000 shares of
Series H-5 Stock and each share has a stated value of $72.00 (the "Stated Value"). Each share of Series H-5 Stock is
convertible at any time at the option of the holder thereof, into a number of shares of Common Stock determined by dividing the
Stated Value by the initial conversion price of $0.72 per share, subject to a 9.99% blocker provision. The Series H-5 Stock will
have the same dividend rights as the Common Stock, and no voting rights except as provided for in the Certificate of Designation
or as otherwise required by law. In the event of any liquidation or dissolution of the Company, the Series H-5 Stock ranks senior
to the Common Stock in the distribution of assets, to the extent legally available for distribution. A copy of the Certificate
of Designation is attached hereto as Exhibit 3.1 and incorporated herein by reference. The foregoing description of the Certificate
of Designation is qualified in its entirety by reference to Exhibit 3.1 attached hereto.
Item 8.01 Other Events.
The information set forth in Items 1.01
and 5.03 of this Current Report on Form 8-K is incorporated herein by reference.
As previously reported, on August 19, 2019, the
Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”)
indicating that the Company no longer complied with the minimum stockholders' equity requirement under Nasdaq Listing
Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market because the Company's stockholders' equity
of $2,466,776, as reported in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
2019, was below the required minimum of $2,500,000, and as of August 15, 2019, the Company did not meet the
alternatives of market value of listed securities or net income from continuing operations.
On
December 6, 2019, pursuant to the Securities Purchase Agreement, the Company issued 34,722 Series H-5 Shares and Warrants to
purchase 3,472,000 shares of Common Stock for gross proceeds of approximately $2.5 million. As a result of this transaction,
as of the date hereof, the Company believes it has regained compliance with the
stockholders’ equity requirement based upon the specific transaction and events referenced above.
Nasdaq will continue to monitor the
Company’s ongoing compliance with the stockholders’ equity requirement, and if at the time of its next periodic
report the Company does not evidence compliance, it may be subject to delisting.
Item 9.01. Financial Statements and
Exhibits.
Reference is made to the Exhibit Index
included with this Current Report on Form 8-K.
Forward-Looking Statements
Certain statements in this Current Report
on Form 8-K constitute forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors
that may cause such forward-looking statements not to be realized. Factors that could cause actual results to differ materially
from the forward-looking statements include changes to the listing standards, policies and procedures of The Nasdaq Capital Market,
fluctuations in the Company’s general financial and operating results, changes in the Company’s liquidity and capital
resources, declines in the market price of the Company’s shares of common stock, changes in the capital markets, competition,
and general and industry-specific economic conditions. The Company believes these factors include but are not limited to those
described under “Risk Factors” in its Annual Report on Form 10-K, as such factors may be updated from time to time
in the Company’s periodic filings with the Securities and Exchange Commission (the “SEC”), which are accessible
on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction
with the other cautionary statements that are included in this Current Report on Form 8-K, the Company’s Annual Report on
Form 10-K and other filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking
statement, whether as a result of new information, future developments or otherwise.
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.
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DROPCAR, INC.
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Date: December 6, 2019
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By:
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/s/ Spencer Richardson
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Name: Spencer Richardson
Title: Chief Executive Officer
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