Comstock (LODE) 8-KComstock Terminates Equity Purchase Agreement with New $2.5 Million Investment

 

 

 

Date of Report (Date of earliest event reported): July 19, 2024

 

(Exact Name of Registrant as Specified in its Charter)

 

 

(Address of Principal Executive Offices, including Zip Code)

Registrant’s Telephone Number, including Area Code: (775) 847-5272

 

(Former Name or Former Address, if Changed Since Last Report)

 

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:

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

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.      ☐

 

 

 

The Convertible Note was issued with an original aggregate principal amount of $2,717,500 (the “Principal Amount”) and an 8% original issue discount, meaning that the purchase price paid by the Investor for the Convertible Note was $2,500,000. A portion of the proceeds will redeem $500,000 of existing convertible indebtedness at 110%. The Convertible Note accrues interest at a per annum interest rate of 8% and is redeemable for 30-days following closing at 125% of the Principal Amount, plus accrued interest.

 

The Convertible Note is convertible into common stock of the Company at a conversion price equal to the lower of (i) 150% of the Closing Price on the Closing Date and (ii) 80% of the lowest VWAP (70% during an event of default) of the 10 trading days prior to and including the date of the Conversion Notice. "VWAP" means, for or as of any date, the dollar volume-weighted average price for such security on the trading market as reported by www.quotemedia.com.

 

On the eleventh day following the closing of the Convertible Note, the Company will issue (i) registered shares of its common stock equal to 3% of the Principal Amount of the Convertible Note, based on a price per share equal to the 20-day VWAP for the VWAP Period, and (ii) restricted shares of the Company’s common stock equal in value to 2% of the Principal Amount of the Convertible Note, based on a price per share equal to the 20-day VWAP for the VWAP Period, in each case, for no additional consideration.

 

The Securities Purchase Agreement included customary representations and covenants for the sale and purchase of securities. In addition, the Securities Purchase Agreement has a covenant of the Investor not to take short positions in the Company’s stock while the Convertible Note is outstanding. The Company also agreed not to enter into any Variable Rate Transactions for the substantial life of the Convertible Note,” meaning any transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of credit or an “at-the-market offering,” whereby the Company may issue securities at a future determined price regardless of whether shares pursuant to such agreement have actually been issued and regardless of whether such agreement is subsequently canceled.

 

The Convertible Note also provides that the Investor is entitled to receive consideration that common shareholders receive in the event of certain “Fundamental Transactions,” as defined.

 

The foregoing descriptions of the Securities Purchase Agreement and the Convertible Note are qualified in their entirety by the Securities Purchase Agreement and the Convertible Note, which are incorporated herein by reference and is attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively. A copy of the press release announcing the transactions described herein and other transactions of the Company is attached as Exhibit 99.1 to this Form 8-K.

 

 

 

 

 

 

 

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.