Expion360 Announces Closing of $10 Million Underwritten Public Offering

Rhea-AI Summary

Expion360 Inc. (Nasdaq: XPON), a lithium-ion battery power storage solutions company, has closed a $10 million underwritten public offering. The offering consists of 50,000,000 Common Units or Pre-Funded Units, each priced at $0.20 or $0.199 respectively. Each unit includes common stock or pre-funded warrants, two Series A warrants, and one Series B warrant. Aegis Capital Corp. acted as the Sole Bookrunner and partially exercised its over-allotment option.

The company plans to use the net proceeds to repay approximately $3.4 million in outstanding debt, including $0.7 million to stockholders and $2.7 million to 3i, LP. The remaining funds will be used for working capital and general corporate purposes. The offering closed on August 8, 2024, subject to customary closing conditions.

Positive

• Raised $10 million in gross proceeds through public offering
• Plans to fully repay outstanding debt of $3.4 million
• Potential for additional capital through warrant exercises

Negative

• Significant dilution for existing shareholders due to large number of units issued
• Complex warrant structure may create uncertainty for investors
• Offering price of $0.20 per unit indicates low valuation

Insights

Financial Analyst

Expion360's $10 million public offering is a significant capital raise for the company, but comes with substantial dilution. The offering price of $0.20 per unit is notably low, indicating potential financial distress. The company's plan to use $3.4 million to repay debt, including $2.7 million to 3i, LP, suggests a pressing need to improve its balance sheet.

The complex structure of the offering, including pre-funded warrants and two series of warrants, adds layers of potential future dilution. The exercise price of $0.24 for Series A warrants represents only a slight premium to the offering price, which could limit upside potential for current shareholders.

While the debt repayment is positive, investors should closely monitor how effectively management deploys the remaining capital for working capital and growth initiatives.

Market Research Analyst

This offering reflects the challenging market conditions for small-cap companies in the energy storage sector. Expion360's need for capital at such dilutive terms suggests investors' cautious stance towards lithium-ion battery companies. The low offering price may indicate market skepticism about the company's near-term prospects or competitive position.

The inclusion of warrants, particularly the immediately exercisable Series B warrants, could create selling pressure on the stock. However, if Expion360 can effectively utilize the new capital to accelerate growth, it might improve investor sentiment. The market's reaction to this offering will be important to watch, as it could set the tone for future capital raises in the sector.

Legal Expert

The detailed disclosure in Expion360's announcement demonstrates regulatory compliance with SEC requirements for public offerings. The company's use of a registered direct offering provides some assurance to investors, as the securities have been vetted through the SEC registration process.

The complex warrant structure, particularly the adjustable terms of the Series B warrants, may require careful scrutiny by investors. The 45-day over-allotment option granted to Aegis Capital Corp. adds another layer of potential dilution. Shareholders should pay close attention to any future announcements regarding the exercise of these options and warrants, as they could significantly impact ownership structure.

The debt repayment, especially to related parties, helps mitigate potential conflicts of interest but also underscores the company's previous reliance on insider funding.

REDMOND, Ore., Aug. 08, 2024 (GLOBE NEWSWIRE) -- Expion360 Inc. (Nasdaq: XPON) (“Expion360” or the “Company”), a lithium-ion battery power storage solutions company, today announced the closing of a firm commitment underwritten public offering (“Offering”) with gross proceeds to the Company expected to be approximately $10.0 million, before deducting underwriting discounts and other estimated expenses payable by the Company. The base Offering consists of 50,000,000 Common Units or Pre-Funded Units, each Unit consisting of one share of the Company’s common stock (“Common Stock”) or one pre-funded warrant to purchase one share of Common Stock (each, a “Pre-Funded Warrant”), two Series A warrants each to purchase one share of Common Stock (each, a “Series A Warrant”) and one Series B warrant to purchase such number of shares of Common Stock as determined in the Series B warrant (each, a “Series B Warrant” and together with the Series A Warrants, the “Common Warrants”). The purchase price of each Common Unit was $0.20, and the purchase price of each Pre-Funded Unit is $0.199 (which is equal to the public offering price per Common Unit minus $0.001). The Pre-Funded Warrants will be immediately exercisable and may be exercised at any time until all the Pre-Funded Warrants are exercised in full.

The Series A Warrants will be exercisable beginning on the first trading day following the Company’s notice to the Series A Warrant holders of approval by the Company’s stockholders, will expire five (5) years from such date, and will have an initial exercise price of $0.24 per share. Each Series B Warrant will be exercisable immediately. The exercise price and number of shares of Common Stock issuable under the Series B Warrants are subject to adjustment as described in the Series B Warrant. The Company intends to use the net proceeds from the Offering to fully repay the Company’s outstanding debt of approximately $3.4 million, including an aggregate of approximately $0.7 million due to stockholders under certain unsecured promissory note agreements and approximately $2.7 million due under the senior convertible note issued to 3i, LP, as well as for working capital and general corporate purposes.

In addition, the Company has granted Aegis Capital Corp. a 45-day option to purchase additional shares of Common Stock and/or Pre-Funded Warrants and/or Common Warrants, representing up to 15% of the number of securities sold in the Offering, solely to cover over-allotments, if any. Aegis Capital Corp. partially exercised its over-allotment option with respect to an additional 15,000,000 Series A Warrants and 7,500,000 Series B Warrants.

The closing of the Offering occurred on August 8, 2024, subject to the satisfaction of customary closing conditions.

Aegis Capital Corp. acted as the Sole Bookrunner for the Offering. Stradling Yocca Carlson & Rauth LLP acted as counsel to the Company for the Offering. Kaufman & Canoles, P.C. served as counsel to Aegis Capital Corp. for the Offering.

The securities described above were offered pursuant to a registration statement on Form S-1 (File No. 333-280996) originally filed with the Securities and Exchange Commission (“SEC”) on July 25, 2024, as amended, and which registration statement became effective on August 6, 2024. The Offering was made only by means of a prospectus, which forms a part of the effective registration statement. Electronic copies of the final prospectus may be obtained for free on the SEC’s website located at http://www.sec.gov and may also be obtained, when available, by contacting Aegis Capital Corp., Attention: Syndicate Department, 1345 Avenue of the Americas, 27th floor, New York, NY 10105, by email at syndicate@aegiscap.com, or by telephone at (212) 813-1010. Before investing in this Offering, interested parties should read in their entirety the registration statement and the preliminary prospectus and the other documents that the Company has filed with the SEC that are incorporated by reference in such registration statement and the preliminary prospectus, which provide more information about the Company and the Offering.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Expion360

Expion360 designs, assembles, manufactures, and sells lithium iron phosphate (LiFePO4) batteries and supporting accessories for recreational vehicles, marine applications and home energy storage products with plans to expand into industrial applications.

Forward-Looking Statements and Safe Harbor Notice

This press release contains certain 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, which statements are subject to considerable risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this press release, including statements about our beliefs and expectations, are "forward-looking statements" and should be evaluated as such. Forward-looking statements may be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “suggest”, “will,” and similar expressions. Forward-looking statements in this press release include, without limitation, statements relating to statements relating to the timing, size and expected gross proceeds of the Offering, the completion of the Offering, the satisfaction of customary closing conditions related to the Offering and sale of securities, the Company’s ability to complete the Offering, and the intended use of proceeds from the Offering. The Company has based these forward-looking statements on its current expectations and projections about future events. Forward-looking statements are subject to and involve risks, uncertainties, and assumptions that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements predicted, assumed or implied by such forward-looking statements, including, without limitation, risks, uncertainties and assumptions related to market conditions and the satisfaction of closing conditions related to the Offering, risks disclosed in the section titled “Risk Factors” included in the registration statement on Form S-1 filed with the SEC on July 25, 2024, and risks disclosed under item 1A. “Risk Factors” in the Company’s most recently filed Form 10-K filed with the SEC, as updated by the Company’s subsequent Quarterly Reports on Form 10-Q. This press release speaks as of the date indicated above. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. The Company expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any future changes in the Company’s expectations of results or any future change in events, except as required by law.

Company Contact:
Brian Schaffner, CEO
541-797-6714
Email Contact

External Investor Relations:
Chris Tyson, Executive Vice President
MZ Group - MZ North America
949-491-8235
XPON@mzgroup.us
www.mzgroup.us

FAQ

What was the size of Expion360's (XPON) public offering?

Expion360 (XPON) closed a $10 million underwritten public offering on August 8, 2024.

How many units were offered in Expion360's (XPON) public offering?

Expion360 (XPON) offered 50,000,000 Common Units or Pre-Funded Units in their public offering.

What is the price per unit in Expion360's (XPON) offering?

The price per Common Unit was $0.20, and the price per Pre-Funded Unit was $0.199 in Expion360's (XPON) offering.

How will Expion360 (XPON) use the proceeds from the offering?

Expion360 (XPON) plans to use the proceeds to repay $3.4 million in outstanding debt and for working capital and general corporate purposes.

Who was the underwriter for Expion360's (XPON) public offering?

Aegis Capital Corp. acted as the Sole Bookrunner for Expion360's (XPON) public offering.