Item 1.01 Entry into a Material Definitive Agreement.
On July 12, 2022, Venus Concept Inc., a Delaware corporation, (the “Company”), entered into a purchase agreement (the “Purchase Agreement”) with Lincoln
Park Capital Fund, LLC (“Lincoln Park”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company may sell to Lincoln Park up to $11,000,000 of shares (the “Purchase Shares”) of its common
stock, par value $0.0001 per share (the “Common Stock”). Concurrently with entering into the Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park, pursuant to which it agreed to provide Lincoln Park with
certain registration rights related to the shares issued under the Purchase Agreement (the “Registration Rights Agreement”).
On the Commencement Date (as defined below), the Company has the right, in its sole discretion, to present Lincoln Park with a purchase notice (a “Regular
Purchase Notice”), directing Lincoln Park to purchase up to 125,000 Purchase Shares provided that the closing sale price of the Common Stock is not below a threshold price set forth in the Purchase Agreement (a “Regular Purchase”). The amount of
Purchase Shares may be increased to up to 225,000 Purchase Shares depending on the market price of the Common Stock at the time of sale or may be increased to up to an additional 1,000,000 Purchase Shares upon mutual agreement by the Company and
Lincoln Park, provided that Lincoln Park’s committed obligation under any single Regular Purchase will not, subject to limited exceptions, exceed $2,000,000. The above-referenced share amount limitations and closing sale price thresholds are subject
to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as provided in the Purchase Agreement. The purchase price per share for each Regular Purchase will be based on
prevailing market prices of the Common Stock immediately preceding the time of sale as computed in accordance with the terms set forth in the Purchase Agreement. There are no upper limits on the price per share that Lincoln Park must pay for shares
of Common Stock under the Purchase Agreement. Lincoln Park may not assign or transfer its rights and obligations under the Purchase Agreement.
If the Company directs Lincoln Park to purchase the maximum number of shares of Common Stock that the Company may sell in a Regular Purchase, then in
addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park to purchase additional shares of Common Stock in an “accelerated purchase” (each, an “Accelerated
Purchase”) and an “additional accelerated purchase” (each, an “Additional Accelerated Purchase”) (including multiple Additional Accelerated Purchases on the same trading day) as provided in the Purchase Agreement. The purchase price per share for
each Accelerated Purchase and Additional Accelerated Purchase will be based on market prices of the Common Stock on the applicable purchase date for such Accelerated Purchases and such Additional Accelerated Purchases.
The purchase price of Regular Purchases, Accelerated Purchases and Additional Accelerated Purchases and the minimum closing sale price for a Regular
Purchase will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price.
The aggregate number of shares that the Company can issue to Lincoln Park under the Purchase Agreement may in no case exceed 12,873,368 shares (subject to
proportional adjustments for stock splits, reverse stock splits and similar events as described above), which number of shares is equal to 19.99% of the outstanding shares of Common Stock immediately prior to the execution of the Purchase Agreement
(the “Exchange Cap”), unless (i) stockholder approval is obtained to issue shares of Common Stock in excess of the Exchange Cap, in which case the Exchange Cap will no longer apply, or (ii) the average price of all sales of Purchase Shares to Lincoln
Park under the Purchase Agreement equals or exceeds the lower of (i) the Nasdaq official closing price immediately preceding the execution of the Purchase Agreement or (ii) the arithmetic average of the five Nasdaq official closing prices for the
Common Stock immediately preceding the execution of the Purchase Agreement, plus an incremental amount to take into account the issuance of the Commitment Shares to Lincoln Park under the Purchase Agreement, such that the transactions contemplated by
the Purchase Agreement are exempt from the Exchange Cap limitation under applicable Nasdaq rules. In all instances, the Company may not sell shares of its Common Stock to Lincoln Park under the Purchase Agreement if it would result in Lincoln Park
beneficially owning more than 9.99% of the outstanding shares of Common Stock. The Company issued 685,529 shares of Common Stock to Lincoln Park as a commitment fee in connection with entering into the Purchase Agreement (the “Commitment Shares” and
together with the Purchase Shares, the “Shares”).
The Purchase Agreement contains customary representations, warranties, covenants, closing conditions and indemnification and termination provisions. Sales
under the Purchase Agreement may commence only after certain conditions have been satisfied (the date on which all requisite conditions have been satisfied, the “Commencement Date”), which conditions include the delivery to Lincoln Park of a
prospectus supplement covering the shares of Common Stock issued or sold by the Company to Lincoln Park under the Purchase Agreement, the filing with The Nasdaq Stock Market of a Listing of Additional Shares Notification Form with respect to the
Shares and Nasdaq having raised no objection to the consummation of transactions contemplated under the Purchase Agreement, and the receipt by Lincoln Park of a customary opinion of counsel and other certificates and closing documents. We anticipate
that such conditions will be satisfied on or around July 12, 2022.
The Purchase Agreement may be terminated by the Company at any time, at its sole discretion, without any cost or penalty, by giving one business day notice
to Lincoln Park to terminate the Purchase Agreement. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Common Stock. Although the Company has agreed to reimburse
Lincoln Park for a limited portion of the fees it incurred in connection with the Purchase Agreement, the Company did not pay any additional amounts to reimburse or otherwise compensate Lincoln Park in connection with the transaction, other than the
issuance of the Commitment Shares.
There are no limitations on use of proceeds, financial or business covenants, restrictions on future financings (other than restrictions on the Company’s
ability to enter into variable rate transactions described in the Purchase Agreement), rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement. The Company may deliver Purchase Notices under the
Purchase Agreement, subject to market conditions, and in light of its capital needs from time to time and under the limitations contained in the Purchase Agreement. Any proceeds that the Company receives under the Purchase Agreement are expected to
be used for working capital and general corporate purposes.
The issuance of the Purchase Shares and Commitment Shares have been registered pursuant to the Company’s effective shelf registration statement on Form S-3
(File No. 333-260267) (the “Registration Statement”), and the related base prospectus included in the Registration Statement, as supplemented by a prospectus supplement to be filed on or around the Commencement Date (the “Prospectus Supplement”). A
copy of the legal opinion as to the legality of the Shares is filed as Exhibit 5.1 attached hereto.
The foregoing is a summary description of certain terms of the Purchase Agreement and the Registration Rights Agreement and, by its nature, is incomplete.
Copies of the Purchase Agreement and the Registration Rights Agreement are filed as Exhibits 10.1 and 10.2 attached hereto. The foregoing descriptions of the Purchase Agreement and the Registration Rights Agreement are qualified in their entirety by
reference to such exhibits. The Purchase Agreement and Registration Rights Agreement contain customary representations and warranties, covenants and indemnification provisions that the parties made to, and solely for the benefit of, each other in the
context of all of the terms and conditions of such agreements and in the context of the specific relationship between the parties thereto. The provisions of the Purchase Agreement and Registration Rights Agreement, including any representations and
warranties contained therein, are not for the benefit of any party other than the parties thereto and are not intended as documents for investors and the public to obtain factual information about the current state of affairs of the parties thereto.
Rather, investors and the public should look to other disclosures contained in the Company’s annual, quarterly and current reports it may file with the Securities and Exchange Commission (the “SEC”).
The information contained in this Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the shares of the
Company’s Common Stock discussed herein, nor shall there be any offer, solicitation or sale of the shares in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws
of any such jurisdiction.
Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
“1933 Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”), including, without limitation, statements about the offering under the Purchase Agreement, including when any applicable closing conditions under the
Purchase Agreement may be satisfied, and other statements containing the words “expect,” “intend,” “may,” “will,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of
1995. These forward-looking statements include, but are not limited to, statements about the expected synergies and cost savings from the Company’s business combination with Venus Concept Ltd.; the Company’s financial performance; the growth in
demand for the Company’s systems and other products; and general economic conditions, including the global economic impact of COVID-19, and involve risks and uncertainties that may cause results to differ materially from those set forth in the
statements. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about the Company’s business and the industry in which it operates and management’s beliefs and assumptions and are not guarantees
of future performance or developments and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond the Company’s control. Factors that could materially affect the Company’s business operations and financial
performance and condition include, but are not limited to, those risks and uncertainties described under Part I Item 1A—”Risk Factors” in the Company’s most recent Annual Report on Form 10-K, Part II Item 1A—”Risk Factors” in the Company’s Form 10-Q
for the quarter ended March 31, 2022, and in other documents the Company may file with the SEC. You are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the
forward-looking statements. The forward-looking statements are based on information available to the Company as of the date of this Report. Unless required by law, the Company does not intend to publicly update or revise any forward-looking
statements to reflect new information or future events or otherwise.