ITEM 3.02
Unregistered Sales of Equity Securities.
On
December 21, 2018, Non-Invasive Monitoring Systems, Inc., a Florida corporation (the “
Company
”), entered into
stock purchase agreements (each, a “
Purchase Agreement
”) with Frost Gamma Investments Trust (“
FGIT
”),
a trust controlled by Dr. Philip Frost, and Jane Hsiao, Ph.D., the Company’s Chairman and Interim CEO. Pursuant to the Purchase
Agreements, the Company issued and sold to FGIT and Dr. Hsiao an aggregate of 8,571,428 shares (the “
PIPE Shares
”)
of the Company’s common stock, par value $0.01 per share (“
Common Stock
”), at a purchase price of $0.07
per share. Each of FGIT and Dr. Hsiao beneficially owned in excess of 10% of the Company’s issued and outstanding shares
of Common Stock prior to the issuance of the PIPE Shares and the Exchange Shares (as defined below).
Also
on December 21, 2018, the Company entered into a Debt Exchange Agreement (the “
Exchange Agreement
”) with FGIT,
Dr. Hsiao, Hsu Gamma Investments LP (“
HSU Gamma
”), Marie Wolf and Frost Real Estate Holdings, LLC (collectively,
the “
Creditors
”), pursuant to which the Company issued to the Creditors or designees thereof an aggregate of
53,321,804 shares of Common Stock (the “
Exchange Shares
” and together with the PIPE Shares, the “
Offered
Shares
”) in exchange for aggregate indebtedness for borrowed money and unpaid rent, including principal and accrued
and unpaid interest thereon, of $3,732,526.17 held by the Creditors, which indebtedness was cancelled by the Company upon its
acquisition. The Company issued the Exchange Shares at a price of $0.07 per share.
Pursuant
to the Exchange Agreement, the Company satisfied and discharged all of its obligations under certain previously reported promissory
notes, which are identified in the Exchange Agreement, and that certain Note and Security Agreement, dated as of March 31, 2010,
by and among the Company, FGIT and Hsu Gamma (as amended, the “
Credit Agreement
”) and terminated the Credit
Agreement, including all commitments of the lenders to lend thereunder and the lenders’ security interest in all collateral
identified therein, which included substantially all of the Company’s personal property. The material terms of the Credit
Agreement are described under “Liquidity and Capital Resources—2010 Credit Facility” in Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form
10-K for the year ended July 31, 2018, as filed with the Securities and Exchange Commission (the “
SEC
”) on
November 13, 2018, which description is incorporated by reference in this Current Report on Form 8-K.
After
giving effect to the issuance thereof, the Offered Shares comprise approximately 43.9% of the Company’s currently issued
and outstanding shares of Common Stock. The Offered Shares were issued in connection with, and as contemplated by, the Company’s
previously reported Equity Exchange Agreement with IRA Financial Trust Company, a South Dakota trust corporation, IRA Financial
Group LLC, a Florida limited liability company, Adam Bergman and Fred Horner, which is described in the Company’s Current
Report on Form 8-K, as filed with the SEC on December 4, 2018, which description is incorporated by reference in this Current
Report on Form 8-K.
None
of the Offered Shares has been registered under the Securities Act of 1933, as amended (the “
Securities Act
”).
The Company offered (i) the PIPE Shares in reliance upon the exemptions from registration contained in Section 4(a)(2) of the
Securities Act and Rule 506 of Regulation D promulgated thereunder and (ii) the Exchange Shares in reliance upon the exemption
from registration contained in Section 3(a)(9) of the Securities Act. FGIT and Dr. Hsiao, in respect of the PIPE Shares, represented
to the Company that they are “accredited investors” as defined in Rule 501(a) under the Securities Act and that they
are acquiring their respective PIPE Shares for investment and not with a view to distribution thereof in violation of the Securities
Act.
The
foregoing description of the Purchase Agreement and the Exchange Agreement is only a summary and is qualified in its entirety
by reference to the complete text of the form of Purchase Agreement and the Exchange Agreement, which are filed as Exhibit 10.1
and Exhibit 10.2, respectively, to this Current Report on Form 8-K and incorporated by reference herein.
