Item 1.01 Entry into a Material Definitive Agreement
On August 8, 2022 Ainos, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Maxim Group LLC as representative of the underwriters set forth on Schedule I thereto (collectively, the “Underwriters”), relating to the Company’s offering (the “Offering”) of an aggregate of 780,000 units (the “Units”) consisting of one share (each a “Share” and collectively, the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), and one warrant to purchase one share of Common Stock (each a “Warrant” and collectively, the “Warrants”) at an exercise price equal to $4.25 per share of Common Stock. The public offering price was $4.25 per Unit and the underwriters agreed to purchase 780,000 Units at an 7.5% discount to the public offering price. The Company granted the Representative a 45-day option to purchase up to an additional 117,000 Shares and/or Warrants to purchase up to an additional 117,000 shares of Common Stock to cover over-allotments, if any. The gross proceeds from the Offering are approximately $3.3 million, before deducting underwriting discounts and commissions and other offering expenses and excluding an exercise of the over-allotment option. On August 9, 2022, the Representative gave notice that it was partially exercising its over-allotment option to purchase 117,000 Warrants for gross proceeds of approximately an additional $1,170. The Offering, including the partial exercise of the over-allotment option, closed on August 11, 2022.
Pursuant to the Underwriting Agreement, the Company agreed to issue to the Representative, as a portion of the underwriting compensation payable to the Representative, warrants to purchase up to a total of 39,000 shares of Common Stock (the “Representative’s Warrants”). The Representative’s Warrants are exercisable at $4.68 per share, are initially exercisable 180 days after the effective date of the Offering and have a term of five years from their initial exercise date. Pursuant to the customary FINRA rules, the Representative’s Warrants are subject to a lock-up agreement pursuant to which the Representative will not sell, transfer, assign, pledge, or hypothecate these warrants or the securities underlying these warrants, nor will it engage in any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the warrants or the underlying securities for a period of 180 days from the effective date of the registration statement referenced below.
The Shares and Warrants were issued pursuant to the Company’s registration statement on Form S-1 (File No. 333-264527), initially filed by the Company with the Securities and Exchange Commission (the “Commission”) on April 28, 2022, as amended, which was declared effective on August 8, 2022. A final prospectus relating to the Offering was filed with the Commission on August 10, 2022.
The Underwriting Agreement contained customary representations, warranties, and covenants by the Company and customary conditions to closing, obligations of the parties and termination provisions. Additionally, under the terms of the Underwriting Agreement, the Company has agreed to indemnify the underwriters for losses, expenses and damages arising out of or in connection with the Offering, including for liabilities under the Securities Act of 1933, as amended (the “Securities Act”), or contribute to payments the underwriters may be required to make with respect to these liabilities.
Pursuant to the Underwriting Agreement, subject to certain exceptions described in the registration statement, the Company, each director and executive officer of the Company and each of its 5% or greater shareholders have agreed, for a period of 180 days after the closing of the Offering, not to offer, sell, contract to sell, pledge or otherwise dispose of any shares of the Company’s Common Stock or securities convertible into Common Stock, without first obtaining the consent of the Representative.
Pursuant to the Underwriting Agreement, for a period of 18 months after the closing of the Offering, the Representative will have a right of first refusal to act as sole manager and book-runner and/or sole placement agent for any and all future public and private equity, convertible or debt offerings of the Company’s securities, or as exclusive financial advisor for any strategic transaction, including a merger, acquisition, joint venture, minority investment or asset sale.
The Company entered into a Warrant Agency Agreement (the “Warrant Agreement”) with American Stock Transfer & Trust Company, LLC (“AST”) as of August 11, 2022 pursuant to which AST agrees to act as warrant agent with respect to the Warrants.
The foregoing summaries of the Underwriting Agreement, the Representative’s Warrant and the Warrant Agreement do not purport to be complete and are qualified in their entirety by such documents attached hereto as Exhibits 1.1, 4.1 and 4.2, respectively, each incorporated herein by reference.