Item 1.01 Entry Into a Material Definitive Agreement
On January 25, 2021, AYRO, Inc. (the "Company"), entered into a Securities
Purchase Agreement (the "Purchase Agreement") with certain institutional and
accredited investors (the "Purchasers"), pursuant to which the Company agreed to
issue and sell in a registered direct offering (the "Offering") an aggregate of
3,333,334 shares (the "Shares") of common stock of the Company, par value
$0.0001 per share (the "Common Stock"), at an offering price of $6.00 per share,
for gross proceeds of approximately $20 million before the deduction of fees and
offering expenses. The Shares are being offered by the Company pursuant to a
shelf registration statement on Form S-3 (File No. 333-251001) (the "Shelf
Registration Statement"), previously filed with the Securities and Exchange
Commission (the "SEC") on November 27, 2020, and declared effective by the SEC
on December 2, 2020.
Pursuant to the Purchase Agreement, in a concurrent private placement (the
"Private Placement"), the Company agreed to issue to the Purchasers,
unregistered warrants to purchase up to 3,333,334 shares of Common Stock (the
"Investor Warrants"). The Investor Warrants are exercisable six months following
issuance and terminate two and a half years following issuance and are
exercisable at an exercise price of $6.93 per share, subject to adjustment as
set forth therein. A holder of the Investor Warrants will not have the right to
exercise any portion of its Investor Warrants if the holder, together with its
affiliates, would beneficially own in excess of 4.99% (or 9.99% at the election
of the holder prior to the date of issuance) of the number of shares of Common
Stock outstanding immediately after giving effect to such exercise (the
"Beneficial Ownership Limitation"); provided, however, that upon 61 days' prior
notice to the Company, the holder may increase or decrease the Beneficial
Ownership Limitation, provided that in no event shall the Beneficial Ownership
Limitation exceed 9.99%. In addition, under the Purchase Agreement, the Company
agreed to prepare and file with the SEC a registration statement relating to the
resale of the shares of Common Stock underlying the Investor Warrants on or
before the 75th calendar day following the date of the Purchase Agreement.
Palladium Capital Group, LLC ("Palladium") is acting as the placement agent for
the Offering. The Company will pay Palladium a fee equal to 8.0% of the gross
proceeds of the offering and a warrant to purchase 233,334 shares of Common
Stock (which equals 7.0% of the aggregate number of shares of Common Stock
placed in the Offering (the "Palladium Warrants" and together with the Investor
Warrants, the "Warrants"). The Palladium Warrants will have the same terms as
the Investor Warrants.
The Warrants and the shares of our Common Stock issuable upon the exercise of
the Warrants are not being registered under the Securities Act of 1933, as
amended (the "Securities Act"), are not being offered pursuant to the Shelf
Registration Statement, and are being offered pursuant to the exemption provided
in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated
thereunder.
The closing of the Offering and Private Placement are subject to satisfaction of
customary closing conditions set forth in the Purchase Agreement and is expected
to occur on or about January 26, 2021. The representations, warranties and
covenants contained in the Purchase Agreement were made solely for the benefit
of the parties to the Purchase Agreement. In addition, such representations,
warranties and covenants (i) are intended as a way of allocating the risk
between the parties to the Purchase Agreement and not as statements of fact, and
(ii) may apply standards of materiality in a way that is different from what may
be viewed as material by stockholders of, or other investors in, the Company.
Accordingly, the Purchase Agreement is filed with this report only to provide
investors with information regarding the terms of transaction, and not to
provide investors with any other factual information regarding the Company.
Moreover, information concerning the subject matter of the representations and
warranties may change after the date of the Purchase Agreement, which subsequent
information may or may not be fully reflected in public disclosures.
The net proceeds to the Company from the Offering, after deducting fees and
expenses and the Company's estimated offering expenses, and excluding the
proceeds, if any, from the exercise of the Warrants, are expected to be
approximately $18.35 million. The Company currently intends to use these net
proceeds for working capital and general corporate purposes.
The legal opinion of Haynes and Boone, LLP relating to the legality of the
issuance and sale of the Shares in the Offering is attached as Exhibit 5.1 to
this Current Report on Form 8-K and is incorporated by reference herein.
The description of the terms and conditions of the Purchase Agreement, the
Investor Warrants and the Palladium Warrants set forth herein do not purport to
be complete and are qualified in their entirety by the full text of the forms of
Purchase Agreement, Investor Warrant, and Palladium Warrant, copies of which are
filed as Exhibits 10.1, 4.1 and 4.2, respectively, to this Current Report on
Form 8-K and are incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Current Report on Form 8-K in
relation to the Warrants and the shares of our Common Stock issuable upon the
exercise of the Warrants is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On January 25, 2021, the Company issued a press release regarding the Offering
and the Private Placement. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this
Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not
be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference in
any filing under the Exchange Act or the Securities Act of 1933, as amended,
except as shall be expressly set forth by reference in such a filing.
Furthermore, the furnishing of information under Item 7.01 of this Current
Report on Form 8-K is not intended to constitute a determination by the Company
that the information contained herein, including the exhibits hereto, is
material or that the dissemination of such information is required by Regulation
FD.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
4.1 Form of Investor Warrant
4.2 Form of Palladium Warrant
5.1 Opinion of Haynes and Boone, LLP
10.1 Form of Securities Purchase Agreement
23.1 Consent of Haynes and Boone, LLP (contained in Exhibit 5.1)
99.1 Press Release, dated January 25, 2021
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