Item 1.01 Entry into a Material Definitive Agreement.
Offering of Convertible Notes
On September 8, 2017, Ascent Solar Technologies, Inc., a Delaware corporation (the “Company”), entered into a securities purchase agreement (the “Note SPA”) with St. George Investments LLC (“Investor”), for the private placement of $1,725,000 principal amount of the Company’s Original Issue Discount Convertible Promissory Notes (“Notes”).
On September 11, 2017, the Company sold and issued $1,725,000 principal amount of Notes to Investor in exchange for $1,500,000 of gross proceeds.
Terms of the Notes
Unless earlier converted or prepaid, the Notes will mature on March 11, 2019. The Notes do not bear interest in the absence of an event of default.
For the first six months after the issuance of the Notes, the Company will make a monthly cash repayment on the Notes of approximately $96,000. Thereafter, the Investor may request that the Company make monthly partial redemptions of the Note up to $150,000 per month. If the Investor does not request the full $150,000 redemption amount in any one month, the unused portion of such monthly redemption amount can be added to future monthly redemption amounts. But in no event can the amount requested by the Investor for any one month exceed $275,000.
Redemption amounts are payable by the Company in cash. Beginning ten months after the issuance of the Notes, cash redemption payments by the Company will be subject to a 15% redemption premium.
Beginning six months after the issuance of the Notes, the Company also has the option (subject to customary equity conditions) to pay redemption amounts in the form of shares of common stock. Payments in the form of shares would be calculated using a variable conversion price equal to the lower of (i) 85% of the average VWAP for the shares over the prior five trading days or (ii) the closing bid price for the shares on the prior trading day.
All principal and accrued interest on the Notes are convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a fixed conversion price of $0.004 per share.
The Notes contain standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes; and (ii) bankruptcy or insolvency of the Company. Upon the occurrence of an event of default, the Notes will begin to bear interest at the rate of 22% per annum. In addition, upon the occurrence of an event of default, the Investor has the option to increase the outstanding balance of the Notes by 25%.
In connection with the closing under the Note SPA, the Company issued 37,500,000 unregistered shares of common stock to the Investor as an origination fee.
The Notes may not be converted and shares of Common Stock may not be issued pursuant to the Notes if, after giving effect to the conversion or issuance, the holder together with its affiliates would beneficially own in excess of 4.99% of the outstanding shares of Common Stock.
The foregoing description of the Note SPA and the Notes is a summary and is qualified in its entirety by reference to the documents attached hereto as Exhibits 10.1 and 10.2, which documents are incorporated herein by reference.