NOTE 14 - EQUITY

Amendment to the Articles of Incorporation

On November 17, 2015, the Company filed with the Wisconsin Department of Financial Institutions an amendment to the Company’s Articles of Incorporation (the “Articles of Amendment”) increasing the number of authorized shares of common stock from 150,000,000 shares to 300,000,000 shares. The Articles of Amendment were approved by the Company’s shareholders on November 17, 2015.

SPI Energy Co., Ltd. Securities Purchase Agreement

On July 13, 2015 we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with SPI Energy Co., Ltd. (“SPI”), (formerly known as Solar Power, Inc.), pursuant to which we sold SPI for an aggregate purchase price of $33,390,000 a total of (i) 8,000,000 shares of common stock (the “Purchased Common Shares”) and (ii) 28,048 shares of Series C Convertible Preferred Stock (the “Purchased Preferred Shares”) which were potentially convertible, subject to the completion of projects under our supply agreement with SPI (as described below), into a total of up to 42,000,600 shares of Common Stock. The aggregate purchase price for the Purchased Common Shares was based on a purchase price per share of $0.6678 and the aggregate purchase price for the Purchased Preferred Shares was determined based on a price of $0.6678 per common share equivalent. Pursuant to the Purchase Agreement, SPI was also issued a warrant to purchase 50,000,000 shares of Common Stock for an aggregate purchase price of $36,729,000 (the “Warrant”).

In connection with the Purchase Agreement, the Company incurred $807,807 of financing related costs. The specific costs directly attributable to the Purchase Agreement have been charged against the gross proceeds of the offering.

The Company also entered into a supply agreement with SPI pursuant to which the Company agreed to sell and SPI agreed to purchase certain products and services offered by the Company from time to time, including certain energy management system solutions for solar projects (the “Supply Agreement”). Due to SPI’s failure to meet its purchase obligations, on May 4, 2017 the Company terminated the Supply Agreement.

The Purchased Preferred Shares were sold for $1,000 per share and were potentially convertible at a conversion price of $0.6678 based upon SPI’s satisfying its purchase obligations under the Supply Agreement. The Warrant represents the right to acquire 50,000,000 shares of Common Stock at an exercise price equal to $0.7346 but only becomes exercisable upon SPI’s fully satisfying its purchase obligations under the Supply Agreement. As a result of the termination of the Supply Agreement, it is no longer possible for SPI to satisfy the conditions that would have enabled it to convert the Purchased Preferred Shares or exercise the Warrant.

On August 30, 2016, SPI entered into a share purchase agreement (the “Share Purchase Agreement”) with Melodious Investments Company Limited (“Melodious”) pursuant to which SPI sold to Melodious all of the Purchased Common Shares, all 7,012 outstanding shares of Series C-1 Preferred Stock and 4,341 shares of Series C-2 Preferred Stock for a total purchase price of $17.0 million (which is equal to the price SPI paid for such securities). The Share Purchase Agreement provides that if the purchased shares of Series C-1 Preferred Stock and Series C-2 Preferred Stock are not converted into shares of common stock within six months following the closing date, Melodious will have the right to require SPI to repurchase such shares for a price equal to approximately 102% of the price paid by Melodious for such shares (plus 10% interest accrued from the closing date). As of March 31, 2017, Melodious had not elected to exercise such right. Following the sale of such securities, SPI continues to hold the Requisite Shares, and the Governance Agreement remains in effect.

March 13, 2013 Aspire Capital Financing

On March 13, 2013, the Company entered into a Common Stock Purchase Agreement (“Common Stock Purchase Agreement”) with Aspire Capital Fund, LLC, an Illinois limited liability company (“Aspire Capital”), which provided that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital was committed to purchase up to an aggregate of $10 million of shares of the Company’s common stock over the two-year term of the Common Stock Purchase Agreement. On August 18, 2014, the Company provided notice to Aspire Capital electing to terminate the Common Stock Purchase Agreement.

August 27, 2014 Underwritten Public Offering

On August 27, 2014, the Company completed an underwritten public offering of its common stock at a price to the public of $1.12 per share. The Company sold a total of 13,248,000 shares of its common stock in the offering for aggregate proceeds of approximately $14.8 million. The Company received approximately $13.7 million of net proceeds from the offering, after deducting the underwriting discount and expenses.

Series B Convertible Preferred Stock Securities Purchase Agreement

On September 26, 2013 the Company entered into a Securities Purchase Agreement with certain investors providing for the sale of 3,000 shares of Series B Convertible Preferred Stock (the “Preferred Stock”). Certain Directors of the Company purchased 500 shares.

Shares of Preferred Stock were sold for $1,000 per share (the “Stated Value”) and accrue dividends on the Stated Value at an annual rate of 10%. The net proceeds to the Company, after deducting $96,966 of offering costs, were $2,903,004. During the year ended June 30, 2014, 425 shares of Preferred Stock were converted into 470,171 shares of common stock of the Company. During the year ended June 30, 2016, 275 shares of Preferred Stock were converted into 352,696 shares of common stock of the Company.

At March 31, 2017, 2,300 shares of Preferred Stock were convertible into 3,420,885 shares of common stock of the Company (“Common Stock”) at a conversion price equal to $0.95. Upon any liquidation, dissolution or winding up of the Company, holders of Preferred Stock are entitled to receive out of the assets of the Company an amount equal to two times the Stated Value, plus any accrued and unpaid dividends thereon. At March 31, 2017 the liquidation preference of the Preferred Stock was $5,549,840.

In connection with the purchase of the Preferred Stock, investors received warrants to purchase a total of 3,157,895 shares of Common Stock at an exercise price of $0.95. The warrants were exercisable at any time prior to September 27, 2016. During the year ended June 30, 2014, 1,447,369 warrants were exercised via a cashless exercise resulting in the issuance of 850,169 shares of common stock of the Company. In addition, the Company issued a total of 81,579 warrants to a placement agent in connection with the transaction. These warrants expired on September 27, 2016.