As previously disclosed on a Current Report on Form 8-K of Yunhong CTI Ltd. (the Company), on January 3, 2020, the Company entered into a stock purchase agreement (the Purchase Agreement), pursuant to which the Company agreed to issue and sell, and LF International Pte. Ltd., a Singapore private limited company (the Investor), agreed to purchase, up to 500,000 shares of the Companys newly created Series A Convertible Preferred Stock (Series A Preferred), with each share of Series A Preferred initially convertible into ten shares of the Companys common stock, at a purchase price of $10.00 per share, for aggregate gross proceeds of $5,000,000 (the LF Offering).
As permitted by the Purchase Agreement, as amended, the Company may, in its discretion, issue up to an additional 200,000 shares of Series A Preferred for a purchase price of $10.00 per share (the Additional Offering, together with the LF Offering, the Offering). On April 1, 2020, an investor converted an accounts receivable of $482,000 owed to the investor by the Company in exchange for 48,200 shares of Series A Preferred. In connection with the foregoing, the Company relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
As previously disclosed on a Current Report on Form 8-K of the Company, on November 21, 2019, the Company received a notice of failure to satisfy a continued listing standard from Nasdaq under Listing Rule 5550(b)(1) which requires a minimum stockholders equity of $2,500,000 (the Deficiency Letter). On January 2, 2020, the Company submitted to Nasdaq its plan to regain compliance under Listing Rule 5550(b)(1). On January 13, 2020, the Company received notice from Nasdaq that it had granted the Company an extension until March 31, 2020 to regain compliance under Listing Rule 5550(b)(1) (the Extension Notice).
As of March 31, 2020, the Company has sold an aggregate of 362,660 shares of Series A Preferred under the Offering for aggregate proceeds of $3,626,600. Accordingly, the Company believes that, as of March 31, 2020, it has regained compliance under Listing Rule 5550(b)(1). As noted above, on April 1, 2020, the Company increased its stockholders equity by an additional $482,000 through the issuance of 48,200 shares of Series A Preferred. Nasdaq will continue to monitor the Companys ongoing compliance with the stockholders equity requirement and, if at the time of the Companys next periodic report the Company does not evidence compliance, it may be subject to delisting.
The description of the Deficiency Letter and Extension Notice is only a summary and is qualified in its entirety by reference to the full text of the forms of the Deficiency Letter and Extension Notice attached hereto as
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 is incorporated by reference herein.
Item 9.01 Financial Statements And Exhibits.
The exhibits listed below are furnished as Exhibits to this Current Report on Form 8-K.
Deficiency Letter, dated November 21, 2019, incorporated by reference to Exhibit 99.1 of the Companys Current Report on Form 8-k dated November 26, 2019
Extension Notice, dated January 13, 2020, incorporated by reference to Exhibit 99.1 of the Companys Current Report on Form 8-k dated January 16, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 2, 2020
YUNHONG CTI LTD.
/s/ Frank Cesario
President, Chief Executive Officer and Chief Financial Officer
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