The Dutchess deal is actually pretty good. It's one of the best Line of credit / stock purchase deals I've seen in a while.
We entered into the Investment Agreement with Dutchess on December 9, 2013. Pursuant to the Investment Agreement, Dutchess committed to purchase, subject to certain restrictions and conditions, up to that number of shares of the Company’s common stock having an aggregate purchase price of ten million dollars ($10,000,000), over a period of 36 months from the first trading day following the effectiveness of the registration statement of which this prospectus forms a part. We may terminate the Investment Agreement at any time, at our discretion, without any cost to us, upon notice to Dutchess. Although the maximum aggregate amount that Dutchess may purchase under the Investment Agreement is $10 million, we registered only 1,127,392 shares of our common stock, with an average market price of $0.30, and a total maximum offering amount of $338,217.61, which is equal to one-third of our current float. If our share price increases, the total amount of money raised will increase, up to a maximum of $10 million.
We may draw funds from the Equity Line facility by selling shares of common stock to Dutchess from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Investment Agreement. The purchase price of the shares shall be ninety-five percent (95%) of the lowest daily volume weighted average price (VWAP) of the Common Stock during the five (5) consecutive trading day period beginning on the date of delivery of the applicable draw down notice. We refer to such five-day period as the “ Pricing Period .” We are making such a drawdown in this prospectus.
Dutchess has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with the Investment Agreement. There are no limitations on use of proceeds, financial or business covenants, restrictions on future funding, rights of first refusal, participation rights, penalties or liquidated damages in the Investment Agreement.
The maximum number of shares of common stock that the Company is entitled to put to Dutchess in any one draw down notice is the greater of either: (i) two hundred percent (200%) of the average daily volume (U.S. market only) of the Company’s common stock for the three (3) trading days prior to the date of delivery of the applicable draw down notice, multiplied by the average of the three (3) daily closing prices immediately preceding the notice date or (ii) one hundred thousand dollars ($100,000). There are put restrictions applied on days between the draw down notice date and the closing date with respect to that particular put. During such time, we are not entitled to deliver another draw down notice.
The Company has the right to specify a suspension price for a given put. In the event the common stock price falls below the specified suspension price, the put will be temporarily suspended. The put will resume at the time that the common stock is above the suspension price, provided the dates for the Pricing Period for that particular put are still valid. We cannot change a suspension price for a put once it is submitted to Dutchess
