Under the Equity Purchase Agreement, the Company is obligated to file with the SEC, on or before October 25, 2025, a registration statement on Form S-3 (the “Initial Registration Statement”) covering only the resale of the shares of Put Stock and Commitment Stock and to use its best efforts to have the Initial Registration Statement declared effective no later than November 24, 2025.
In addition, under applicable rules of Nasdaq, the Company may not issue or sell to the Investor under the Equity Purchase Agreement more than 19.99% of the shares of Class A common stock outstanding immediately prior to the execution of the Equity Purchase Agreement (the “Exchange Cap”), unless (i) the Company obtains stockholder approval to issue shares in excess of the Exchange Cap, or (ii) the average price per share paid by the Investor for all of the shares of Class A common stock that the Company directs the Investor to purchase pursuant to the Equity Purchase Agreement, if any, is equal to or greater than a price equal to the lower of (a) the official closing price of the Company’s Class A common stock on Nasdaq immediately preceding the execution of the Equity Purchase Agreement, and (b) the average official closing price of the Company’s Class A common stock on Nasdaq for the five consecutive trading days immediately preceding the execution of the Equity Purchase Agreement, so that the Exchange Cap limitation will not apply to issuances and sales of Class A common stock pursuant to the Equity Purchase Agreement. In any event, the Equity Purchase Agreement specifically provides that the Company may not issue or sell any shares of Class A common stock under the Equity Purchase Agreement if such issuance or sale would breach applicable rules of The Nasdaq Stock Market, LLC.
The Equity Purchase Agreement contains customary representations, warranties, agreements, and conditions to completing future sale transactions, indemnification rights and obligations of the parties. Among other things, the Investor represented to the Company, that it is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act).
Pre-Funded Warrant
The Pre-Funded Warrant certifies that, for value received, the Investor is entitled to be issued up to $750,000 of shares of Class A common stock based upon the Commitment Stock Price and has an initial exercise price of $0.00001 per share. The Pre-Funded Warrants may not be exercised if the aggregate number of shares of the Class A common stock beneficially owned by the holder would exceed 4.99% immediately after exercise thereof, which ownership cap may be increased by the holder up to 9.99% upon 61 days’ prior notice.
EPA Registration Rights Agreement
On the Effective Date, in connection with the Equity Purchase Agreement, the Company entered into a registration rights agreement with the Investor (the “EPA Registration Rights Agreement”), pursuant to which the Company shall, by October 25, 2025, file with the SEC the Initial Registration Statement covering the maximum number of (i) shares of Commitment Stock, (ii) shares of Put Stock, which have been, or which may, from time to time be issued, including without limitation all of the shares of Class A common stock which have been issued or will be issued to the Investor under the Equity Purchase Agreement (without regard to any limitation or restriction on purchases), and (iii) any and all shares of capital stock issued or issuable with respect to the Put Stock, Commitment Stock, and the Equity Purchase Agreement as a result of any stock split, combination, stock dividend, recapitalization, exchange, or similar event, or otherwise, without regard to any limitation on purchases under the Equity Purchase Agreement (the “Registrable Securities”), as shall be permitted to be included thereon in accordance with applicable SEC rules, regulations, and interpretations so as to permit the resale of the Registrable Securities by the Investor, including, but not limited to, under Rule 415 at then-prevailing market prices (and not fixed prices). The Initial Registration Statement shall register only Registrable Securities. The Company shall use its commercial best efforts to have the Initial Registration Statement and any amendment thereto declared effective by the SEC at the earliest possible date, but in no event later than November 24, 2025.
Nasdaq Stockholder Approval Requirement
Listing Rule 5635(d) requires stockholder approval in connection with a transaction, other than a public offering, involving the sale or issuance by the issuer of common stock (or securities convertible into or exchangeable for common stock) equal to 20% or more of the common stock or 20% or more of the voting
