Autozi Internet Technology (Global) Ltd. Announces the Execution of Securities Purchase Agreement

Rhea-AI Summary

Autozi Internet Technology (NASDAQ: AZI) has entered into a Securities Purchase Agreement with an institutional investor on January 27, 2025. The agreement involves issuing a senior unsecured convertible note and warrants to purchase additional convertible notes, generating gross proceeds of $27.5 million.

The company will issue an additional note of $500,000 upon registration statement effectiveness, and the warrants are exercisable for additional notes up to $24 million every 90 days following the closing date. The notes are convertible into ordinary shares at a price based on the closing sale price.

The proceeds will support three strategic initiatives: pursuing mergers and acquisitions within China's auto parts supply chain, building a cross-border supply chain platform for global expansion, and increasing R&D investment in digital and intelligent platforms.

Positive

• Secured $27.5 million in gross proceeds through convertible note financing
• Additional funding potential of up to $24 million through warrant exercises every 90 days
• Strategic expansion plans including M&A opportunities in auto parts supply chain
• Investment in cross-border supply chain platform for global market penetration

Negative

• Potential shareholder dilution through convertible notes and warrants
• Additional debt burden from senior unsecured convertible notes
• Share price risk due to conversion price being tied to market price

Insights

Financial Analyst

Autozi's $27.5M convertible note financing represents a strategic but complex capital raise that merits careful analysis. The structure includes three key components: an initial convertible note, warrants for additional notes totaling up to $24M exercisable quarterly and a $500,000 note tied to registration effectiveness.

The variable conversion price mechanism, based on market prices at conversion time, introduces significant flexibility but also potential dilution risks for existing shareholders. This structure suggests the company prioritized securing growth capital while maintaining flexibility over immediate equity dilution.

The strategic allocation of funds across three initiatives reveals a comprehensive growth strategy:

• Domestic M&A within China's auto parts supply chain indicates a vertical integration approach to enhance margins and market control
• Cross-border supply chain platform development suggests preparation for international market penetration
• R&D investment in digital platforms demonstrates commitment to maintaining technological competitive advantages

The quarterly warrant exercise structure provides a potential $24M funding pipeline, effectively creating a rolling financing facility that could support sustained growth initiatives while allowing the company to draw capital as needed. However, this also means potential ongoing dilution pressure depending on conversion timing and stock performance.

The private placement structure under Section 4(a)(2) and Rule 506(b) exemptions indicates a sophisticated institutional investor base, which typically brings additional market validation but also heightened expectations for execution and governance.

Legal Expert

The financing's legal architecture demonstrates sophisticated structuring, with multiple layers of regulatory compliance and investor protection mechanisms. The Section 4(a)(2) and Rule 506(b) exemptions effectively facilitate private placement while maintaining regulatory compliance, though this restricts immediate transferability of the securities.

The registration rights agreement creates binding obligations for the company to file a registration statement for the underlying shares, providing a clear path to liquidity for the investor. This structure balances the company's need for capital with investor protection mechanisms, including:

• Mandatory registration rights for conversion shares
• Structured warrant exercise periods providing predictable funding windows
• Variable conversion price mechanisms with likely anti-dilution provisions

The involvement of established legal counsel on both sides (Pryor Cashman and Sichenzia Ross) suggests robust documentation and compliance frameworks. The Form 6-K filing commitment ensures transparent disclosure of material terms to the market.

BEIJING, Jan. 31, 2025 /PRNewswire/ -- Autozi Internet Technology (Global) Ltd. ("Autozi" or the "Company") (NASDAQ: AZI), one of the leading and fast-growing lifecycle automotive service providers in China, today announced that it entered into a definitive Securities Purchase Agreement (the "Agreement") with an institutional investor (the "Buyer") on January 27, 2025, pursuant to which the Company issued to the Buyer a senior unsecured convertible note (the "Initial Note") and warrant to purchase additional senior unsecured convertible notes (the "Warrants" and together with the Initial Note, the "Notes"). The closing of the transaction contemplated by the Agreement occurred on January 27, 2025 (the "Closing Date"). The transaction will result in gross proceeds to the Company of $27.5 million. Proceeds from the transaction will enhance Autozi's financial flexibility to support its strategic growth initiatives and expand operational capacity.

Dr. Houqi Zhang, Founder, Chairman, and Chief Executive Officer of Autozi, commented. "This financing represents a significant milestone for Autozi as we strengthen our foundation for sustainable growth and innovation. The capital raised will enable us to execute on three strategic priorities. First, we will actively pursue targeted mergers and acquisitions within China's auto parts supply chain to achieve end-to-end coverage, enhancing our competitive edge and efficiency. Second, we are committed to building a cross-border supply chain platform, which will serve as the cornerstone for our global expansion and overseas market penetration. Third, we will further increase investment in R&D to advance our digital and intelligent platforms ensuring our technology remains at the forefront of industry trends. These initiatives reflect our vision to lead the automotive services sector through innovation, scale, and global reach, ultimately delivering sustainable value for our shareholders and partners."

Under the Agreement, the Company will issue an additional Note in the principal amount of $500,000 on the effectiveness date of the registration statement registering the Class A ordinary shares of the Company (the "Ordinary Shares") underlying the Notes. The Warrants are exercisable for additional Notes in an aggregate principal amount of up to $24,000,000 every 90 days following the Closing Date. The Notes are convertible into the Company's Ordinary Shares at a conversion price determined based on the closing sale price of the Company's Ordinary Shares at the time of conversion, subject to adjustment as provided in the Notes.

The Notes and Warrants were offered pursuant to exemptions from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506(b) of Regulation D. The Notes, Warrants, and underlying Ordinary Shares have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption. In connection with the transaction, the Company entered into a registration rights agreement, pursuant to which it has agreed to file a registration statement with the U.S. Securities and Exchange Commission ("SEC") to register the resale of the Ordinary Shares issuable upon conversion of the Notes. The Company plans to file a Report of Foreign Private Issuer on Form 6-K with the SEC, which will include details of the Agreement, Notes, Warrants, and the Registration Rights Agreement.

Pryor Cashman LLP acted as legal counsel to the Buyer, and Sichenzia Ross Ference Carmel LLP served as U.S. legal counsel to the Company.

About Autozi Internet Technology (Global) Ltd.
Autozi Internet Technology (Global) Ltd. is a leading, fast-growing provider of lifecycle automotive services in China. Founded in 2010, Autozi offers a comprehensive range of high-quality, affordable, and professional automotive products and services through both online and offline channels across the country. Leveraging its advanced online supply chain cloud platform and SaaS solutions, Autozi has built a dynamic ecosystem that connects key participants across the automotive industry. This interconnected network enables more efficient collaboration and streamlined processes throughout the entire supply chain, positioning Autozi as a key driver of innovation and growth in the automotive services sector.

Forward-Looking Statements
All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. These forward-looking statements speak only as of the date of this announcement, and the Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, as actual results may be impacted by a variety of factors, including without limitation, changes in macroeconomic conditions, industry dynamics, competitive landscape, regulatory requirements, the Company's ability to successfully implement its growth strategies and effectively manage costs and operations, and unforeseen business challenges. The Company encourages investors to review other factors that may affect its future results in the Company's registration statement, periodic reports, including its Annual Report on Form 20-F and Current Report on Form 6-K, and in its other filings with the SEC.

Contact Information
The Blueshirt Group
Jack Wang
Email: Jack@blueshirtgroup.co

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SOURCE Autozi Internet Technology (Global) Ltd.

FAQ

What is the total value of Autozi's (AZI) January 2025 convertible note financing?

Autozi secured $27.5 million in initial gross proceeds, with potential additional funding of up to $24 million through warrant exercises every 90 days.

How will Autozi (AZI) use the proceeds from its January 2025 financing?

The proceeds will fund three strategic initiatives: M&A in China's auto parts supply chain, building a cross-border supply chain platform, and increasing R&D investment in digital platforms.

What is the conversion mechanism for Autozi's (AZI) 2025 convertible notes?

The notes are convertible into ordinary shares at a price determined by the closing sale price of AZI's shares at the time of conversion, subject to adjustments.

When can the warrants be exercised in Autozi's (AZI) 2025 financing agreement?

The warrants can be exercised every 90 days following the January 27, 2025 closing date, for additional notes up to $24 million.