Ault Alliance Announces Agreement to Sell $10.0 Million Stated Value of Convertible Preferred Stock
Ault Alliance, Inc. (NYSE American: AULT) announced a securities purchase agreement to sell 100,000 shares of preferred stock to institutional investors. This includes 83,000 shares of Series E, 1,000 shares of Series F, and 16,000 shares of Series G Convertible Preferred Stock. The Series E and F will be purchased by canceling $8.4 million of outstanding secured promissory notes. Each preferred share is convertible into common stock at a price of 85% of the previous day's closing price, with a floor price of $0.10. The offering is expected to close around March 30, 2023, pending customary conditions.
- Issuance of 100,000 shares of preferred stock may provide necessary capital.
- Reduces existing debt by canceling $8.4 million in promissory notes.
- The preferred shares' conversion price is linked to a potentially low stock price, risking dilution.
- Dependence on stockholder approval for reverse stock split may limit immediate benefits.
The Company has agreed to issue the shares of Common Stock issuable upon conversion of the Preferred Shares under its existing “shelf” registration statement.
The Series E Preferred Stock and Series F Preferred Stock permits the holders thereof to vote together with the holders of the Company’s common stock on a proposal to effectuate a reverse stock split of the Common Stock. The Series F Preferred Stock permits the holder to cast 100,000 votes per share of Series F Preferred Stock on such proposal, provided, that such votes must be cast in the same proportions as the shares of Common Stock, the Company’s existing Series B preferred stock and the Series E Preferred Stock are voted on that proposal (excluding any shares of Common Stock that are not voted on the proposal). Except as required by law or expressly provided by the certificates of designation, holders of the Series E Preferred Stock and Series F Preferred Stock will not be permitted to vote on any other matters. The holders of the Series E Preferred Stock and Series F Preferred Stock agreed not to transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the Preferred Shares until after the receipt of stockholder approval of the reverse stock split. The Series G Preferred Stock does not carry any voting rights, except as required by law or expressly provided by its certificate of designation. For a period of 90 days after the first conversion of Preferred Shares, each investor shall have the right to purchase a convertible note in the principal face amount of
The closing of the offering is expected to occur on or about
The Preferred Shares are being issued in reliance upon the exemption from the securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) as promulgated by
This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities, nor will there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such jurisdiction.
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Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,” “estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors. More information, including potential risk factors, that could affect the Company’s business and financial results are included in the Company’s filings with the
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