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): October 12, 2020
CBAK ENERGY TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 001-32898 | 86-0442833 | ||
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(State or other
jurisdiction
of incorporation) |
(Commission File No.) |
(IRS Employer
Identification No.) |
BAK Industrial Park, Meigui Street
Huayuankou Economic Zone
Dalian, China, 116450
(Address, including zip code, of principal executive offices)
(86)(411)-3918-5985
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.001 par value | CBAT | Nasdaq Capital Market |
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 (see General Instruction A.2. below):
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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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. ☐
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
As previously disclosed, on July 24, 2019, CBAK Energy Technology, Inc. (the “Company”) entered into a securities purchase agreement with Atlas Sciences, LLC (the “Lender”), pursuant to which the Company issued a promissory note (the “First Note”) to the Lender. The First Note has an original principal amount of $1,395,000, bears interest at a rate of 10% per annum and would mature 12 months after the issue date, unless earlier paid or redeemed in accordance with its terms. The Company received proceeds of $1,250,000 after an original issue discount of $125,000 and payment of the Lender’s expenses of $20,000.
On December 30, 2019, the Company entered into another securities purchase agreement with the Lender, pursuant to which the Company issued a promissory note (the “Second Note” and together with the “First Note”, the “Notes”) to the Lender, which has an original principal amount of $1,670,000, bears interest at a rate of 10% per annum and will mature 12 months after the issue date, unless earlier paid or redeemed in accordance with its terms. The Company received proceeds of $1,500,000 after an original issue discount of $150,000 and payment of Lender’s expenses of $20,000.
Pursuant to the Notes, beginning on the date that is six (6) months after the Purchase Price Date of the respective Note (as defined in the Notes), Lender will have the right, exercisable at any time in its sole and absolute discretion, to redeem any amount of outstanding balance of each Note up to $250,000.00 per calendar month.
Starting on January 27, 2020, the Company entered into multiple exchange agreements with the Lender (the “Exchange Agreements”). Pursuant to each Exchange Agreement, the parties partitioned a new promissory note in various original principal amounts from the outstanding balance of the Notes and exchanged the partitioned promissory note for the issuance of shares of the Company’s common stock to the Lender. Each above exchange was entered into and consummated through mutual negotiations between the parties on a case-by-case basis and in each case, the Company had the option to decide whether to agree to exchange the debt into its common stock.
In order to reduce the transaction costs, on October 12, 2020, the Company and the Lender entered into certain Amendment to Promissory Notes (the “Amendment”), pursuant to which the Lender has the right at any time until the outstanding balance of the Notes has been paid in full, at its election, to convert all or any portion of the outstanding balance of the Notes into shares of common stock of the Company. The conversion price for each conversion will be calculated pursuant to the following formula: 80% multiplied by the lowest closing price of the Company common stock during the ten (10) trading days immediately preceding the applicable conversion (the “Conversion Price”). Notwithstanding the foregoing, in no event will the Conversion Price be less than $1.00. In addition, the total cumulative number of shares of common stock issued to the Lender under the Notes including all shares of common stock that have been previously issued pursuant to the Exchange Agreements may not exceed the limitation under Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”). Once the Nasdaq 19.99% Cap is reached, any remaining outstanding balance of the Notes must be repaid in cash.
The foregoing descriptions of the Amendment are not complete and are qualified in their entireties by reference to the full text of the Amendment, copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information set forth in Item 1.01 of this Current Report on Form 8-K, to the extent required by this Item 2.03, is incorporated herein by reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
The information contained above in Item 1.01 regarding the issuance of the shares of Company common stock pursuant to the Amendment is hereby incorporated by reference into this Item 3.02. The aforementioned securities were sold to the Lender pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"). The Lender represented to the Company that it is an "accredited investor" as defined in Rule 501 of the Securities Act and the Notes, as amended and the shares of common stock issuable upon conversion of the Notes are being acquired solely for investment purposes and with no intention to distribute.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
| (d) | Exhibits |
| Exhibit | Description | |
| 10.1 | Amendment to Promissory Notes, by and between the Company and Atlas Sciences, LLC, dated October 12, 2020 |
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SIGNATURE
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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CBAK ENERGY TECHNOLOGY, INC. | |
| Date: October 16, 2020 | By: | /s/ Yunfei Li |
| Yunfei Li | ||
| Chief Executive Officer | ||
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EXHIBIT INDEX
| Exhibit | Description | |
| 10.1 | Amendment to Promissory Notes, by and between the Company and Atlas Sciences, LLC, dated October 12, 2020 |
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Exhibit 10.1
AMENDMENT TO PROMISSORY NOTES
This Amendment to Promissory Notes (this “Amendment”) is entered into as of October 12, 2020, by and between Atlas Sciences, LLC, a Utah limited liability company (“Lender”), and CBAK Energy Technology, Inc., a Nevada corporation (“Borrower”). Capitalized terms used in this Amendment without definition shall have the meanings given to them in the Notes (as defined below).
A. Borrower previously issued to Lender a Promissory Note dated July 24, 2019 in the original principal amount of $1,395,000.00 (the “Note #1”).
B. Borrower previously issued to Lender a Promissory Note dated December 30, 2019 in the original principal amount of $1,670,000.00 (“Note #2”, and together with Note #1, the “Notes”).
C. Starting on January 27, 2020, Borrower entered into multiple exchange agreements with Lender (the “Exchange Agreements”), pursuant to each Exchange Agreement, it partitioned a new promissory note in various original principal amounts from the outstanding balance of the Notes and exchanged the partitioned promissory note for the issuance of shares of the Company common stock to the Lender.
D. Borrower has requested that Lender amend the Notes to make the outstanding balances convertible into Borrower’s common stock.
E. Lender has agreed, subject to the terms, amendments, conditions and understandings expressed in this Amendment, to make the Notes convertible.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Recitals. Each of the parties hereto acknowledges and agrees that the recitals set forth above in this Amendment are true and accurate and are hereby incorporated into and made a part of this Amendment.
2. Amendments.
(a) The following sentence shall be added to each of the Notes at the end of Section 4.1:
“Borrower’s failure to deliver Conversion Shares (as defined below) to Lender within three (3) Trading Days (as defined below) of its receipt of a Conversion Notice (as defined below) shall be considered an Event of Default hereunder. Notwithstanding the foregoing, on up to three (3) separate occasions, Borrower shall have an additional five (5) Trading Days after the original delivery date to deliver such Conversion Shares before the occurrence of an Event of Default hereunder.”
(b) The following provision shall be added to each of the Notes as Section 17 (with respect to Note #1) and Section 18 (with respect to Note #2):
“17. Conversion.
17.1 Conversions. Lender has the right at any time after the issuance date of this Note until the outstanding balance has been paid in full, at its election, to convert (“Conversion”) all or any portion of the outstanding balance of this Note into shares (“Conversion Shares”) of fully paid and non-assessable common stock, $0.001 par value per share (“Common Stock”), of Borrower as per the following conversion formula: the number of Conversion Shares equals the amount being converted (the “Conversion Amount”) divided by the Conversion Price (as defined below). Conversion notices (each, a “Conversion Notice”) may be effectively delivered to Borrower by any method set forth in the “Notices” Section of the Purchase Agreement, and all Conversions shall be cashless and not require further payment from Lender.
17.2 Conversion Price. Subject to the adjustments set forth herein, the conversion price for each Conversion shall be calculated pursuant to the following formula: 80% multiplied by the lowest closing price of the Common Stock during the ten (10) Trading Days immediately preceding the applicable Conversion (the “Conversion Price”). As used herein, the term “Trading Day” shall mean any day on which Nasdaq is open for trading. Notwithstanding the foregoing, in no event shall the Conversion Price be less than $1.00.”
(c) The following provision shall be added to each of the Notes as Section 18 (with respect to Note #1) and Section 19 (with respect to Note #2):
“18. Ownership Limitation. Notwithstanding anything to the contrary contained in this Note, Borrower shall not effect any conversion of this Note to the extent that after giving effect to such conversion would cause Lender (together with its affiliates) to beneficially own a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (including for such purpose the shares of Common Stock issuable upon such issuance) (the “Maximum Percentage”). For purposes of this section, beneficial ownership of Common Stock will be determined pursuant to Section 13(d) of the 1934 Act. By written notice to Borrower, Lender may increase, decrease or waive the Maximum Percentage as to itself but any such waiver will not be effective until the 61st day after delivery thereof. The foregoing 61-day notice requirement is enforceable, unconditional and non-waivable and shall apply to all affiliates and assigns of Lender.”
(d) The following provision shall be added to each of the Notes as Section 19 (with respect to Note #1) and Section 20 (with respect to Note #2):
“19. Issuance Cap. Notwithstanding anything to the contrary contained in this Note, Borrower and Lender agree that the total cumulative number of shares of Common Stock issued to Lender hereunder together with all other Transaction Documents, including all shares of Common Stock that have been issued pursuant to Exchange Agreements, may not exceed the requirements of Nasdaq Listing Rule 5635(d) (“Nasdaq 19.99% Cap”). Once the Nasdaq 19.99% Cap is reached, any remaining Outstanding Balance must be repaid in cash.”
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3. Representations and Warranties. In order to induce Lender to enter into this Amendment, Borrower, for itself, and for its affiliates, successors and assigns, hereby acknowledges, represents, warrants and agrees as follows:
(a) Borrower has full power and authority to enter into this Amendment and to incur and perform all obligations and covenants contained herein, all of which have been duly authorized by all proper and necessary action. No consent, approval, filing or registration with or notice to any governmental authority is required as a condition to the validity of this Amendment or the performance of any of the obligations of Borrower hereunder, other than (i) the filings required under applicable federal state securities law, and (ii) application(s) to each applicable trading market for the listing of the shares of Common Stock issued and issuable under the Notes.
(b) There is no fact known to Borrower or which should be known to Borrower which Borrower has not disclosed to Lender on or prior to the date of this Amendment which would or could materially and adversely affect the understanding of Lender expressed in this Amendment or any representation, warranty, or recital contained in this Amendment.
(c) Except as expressly set forth in this Amendment, Borrower acknowledges and agrees that neither the execution and delivery of this Amendment nor any of the terms, provisions, covenants, or agreements contained in this Amendment shall in any manner release, impair, lessen, modify, waive, or otherwise affect the liability and obligations of Borrower under the terms of the Transaction Documents.
(d) Borrower has no defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes of action of any kind or nature whatsoever against Lender, directly or indirectly, arising out of, based upon, or in any manner connected with, the transactions contemplated hereby, whether known or unknown, which occurred, existed, was taken, permitted, or begun prior to the execution of this Amendment and occurred, existed, was taken, permitted or begun in accordance with, pursuant to, or by virtue of any of the terms or conditions of the Transaction Documents. To the extent any such defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, counterclaims, actions or causes of action exist or existed, such defenses, rights, claims, counterclaims, actions and causes of action are hereby waived, discharged and released. Borrower hereby acknowledges and agrees that the execution of this Amendment by Lender shall not constitute an acknowledgment of or admission by Lender of the existence of any claims or of liability for any matter or precedent upon which any claim or liability may be asserted.
(e) Borrower represents and warrants that as of the date hereof no Events of Default or other material breaches exist under the Transaction Documents or have occurred prior to the date hereof.
4. Certain Acknowledgments. Each of the parties acknowledges and agrees that no property or cash consideration of any kind whatsoever has been or shall be given by Lender to Borrower in connection with any amendment to the Notes granted herein.
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5. Other Terms Unchanged. The Notes, as amended by this Amendment, remain and continue in full force and effect, constitute legal, valid, and binding obligations of each of the parties, and are in all respects agreed to, ratified, and confirmed. Any reference to the Notes after the date of this Amendment is deemed to be a reference to the Notes as amended by this Amendment. If there is a conflict between the terms of this Amendment and the Notes, the terms of this Amendment shall control. No forbearance or waiver may be implied by this Amendment. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment to, any right, power, or remedy of Lender under the Notes, as in effect prior to the date hereof. For the avoidance of doubt, this Amendment shall be subject to the governing law, venue, and Arbitration Provisions, as set forth in the Notes.
6. No Reliance. Borrower acknowledges and agrees that neither Lender nor any of its officers, directors, members, managers, equity holders, representatives or agents has made any representations or warranties to Borrower or any of its agents, representatives, officers, directors, or employees except as expressly set forth in this Amendment and the Transaction Documents and, in making its decision to enter into the transactions contemplated by this Amendment, Borrower is not relying on any representation, warranty, covenant or promise of Lender or its officers, directors, members, managers, equity holders, agents or representatives other than as set forth in this Amendment.
7. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. The parties hereto confirm that any electronic copy of another party’s executed counterpart of this Amendment (or such party’s signature page thereof) will be deemed to be an executed original thereof.
8. Further Assurances. Each party shall do and perform or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Amendment and the consummation of the transactions contemplated hereby.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date set forth above.
| LENDER: | ||
| Atlas Sciences, LLC | ||
| By: | /s/ John Finlayson | |
| John Finlayson, CEO | ||
| BORROWER: | ||
| CBAK Energy Technology, Inc. | ||
| By: | /s/ Yunfei Li | |
| Printed Name: | Yunfei Li |
| Title: | Chief Executive Officer |
[Signature Page to Amendment to Promissory Notes]
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