Giga-tronics Incorporated Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 14 - Preferred Stock and Warrants

Note 14 - Preferred Stock and Warrants

9 Months Ended

Dec. 28, 2019

Notes to Financial Statements

Preferred Stock [Text Block]

(

) Preferred Stock and Warrants

Series E Senior Convertible Voting Perpetual Preferred Stock

March 26, 2018,

the Company entered into a Securities Purchase Agreement for the sale of

42,800

shares of a newly designated series of

6.0%

Series E Senior Convertible Voting Perpetual Preferred Stock (“Series E Shares”) to approximately

private investors. The sale was completed and the Series E Shares were issued on

March 28, 2018.

Holders of Series E Shares are entitled to receive, when, as and if declared by the Company’s Board of Directors, cumulative preferential dividends, payable semiannual in cash at a rate per annum equal to

6.0%

of the initial purchase price of

$25.00

per share or in-kind (at the Company’s election) through the issuance of shares of the Company’s common stock, based on the

day volume weighted average price of the common stock. The deemed dividend is reflected on the face of the income statement as an increase in net loss or a decrease in net income to arrive a net income (loss) attributable to common shareholders.

The purchase price for each Series E Share was

$25.00.

Gross proceeds received by the Company were approximately

$1.095

million (the “Placement”). Net proceeds to the Company after fees and expenses of the Placement were approximately

$1.0

million. Placement agent fees incurred in connection with the transaction were

of gross proceeds or approximately

$57,000

in cash, plus warrants to purchase

of the number of common shares into which the Series E shares can be converted (

14,867

shares) at an exercise price of

$3.75

per share.

During the

2019

fiscal year, the Company issued and sold an additional

57,200

Series E Shares for the price of

$25.00

per share, resulting in gross proceeds of

$1,405,000.

Net proceeds from sales of Series E Shares during the

2019

fiscal year were approximately

$1.2

million after fees and expenses of approximately

$212,000.

Placement agent fees incurred in connection with the transaction were

of gross proceeds or approximately

$56,875

in cash, plus warrants to purchase

of the number of common shares into which the Series E shares can be converted (

6.67

shares) at an exercise price of

$3.75

per share.

For the

nine

months ended

December 28, 2019,

additional Series E shares were issued.

Series E Exchange

The Company completed a private exchange offer on

November 7, 2019,

issuing an aggregate of

896,636

shares of common stock in exchange for

88,600

shares of Series E Preferred Stock and the dividends accrued thereon. The shares of common stock to be issued in the exchange were issued in reliance on the exemption from registration set forth in Section

(a)(

) of the Securities Act of

1933

(the “Securities Act”), though other exemptions

may

be available.

The table below presents information as of

December 28, 2019:

Preferred Stock

	Shares Designated		Shares Previously Issued		Shares Outstanding		Liquidation Preference (in thousands)
Series B		10,000.00		9,997.00		9,245.13	$	2,136
Series C		3,500.00		3,424.65		3,424.65		500
Series D		6,000.00		5,111.86		5,111.86		731
Series E		100,000.00		100,000.00		9,200.00		345
Total at December 28, 2019		119,500.00		118,533.51		26,981.64	$	3,712