Item 1.01
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Entry into a Material Definitive Agreement.
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On
November 9, 2017, Nxt-ID, Inc., a Delaware corporation (the “Company”), entered into a placement agency agreement
(the “Placement Agency Agreement”) with Aegis Capital Corp. (the “Placement Agent”) under which the Placement
Agent agreed to serve as the sole placement agent, on a “reasonable best efforts” basis, in connection with the registered
direct public offering (the “Registered Direct Offering”) of an aggregate of 2,941,177 shares of the Company’s
common stock, par value $0.0001 per share (the “Shares”), for an aggregate purchase price of $4,000,000. Also on November
9, 2017, to effect the Registered Direct Offering, the Company entered into a securities purchase agreement (the “Purchase
Agreement”) with certain institutional investors named in the signature pages thereto (the “Purchasers”) under
which we agreed to issue and sell the Shares directly to the Purchasers. The Shares are being offered at a price of $1.36 per
share.
In
a concurrent private placement (the “Private Placements”; together with the Registered Direct Offering, the “Offering”),
we are also selling to the Purchasers, for no additional consideration, a warrant (each a “Warrant” and collectively,
the “Warrants”) to purchase 0.85 of a share of Common Stock for each Share purchased for cash in the Offering. The
Warrants will be exercisable beginning on the six (6)-month anniversary of the date of issuance (the “Initial Exercise Date”),
at an exercise price of $2.00 per share and will expire on the fifth (5
th
) anniversary of the Initial Exercise Date.
The
Company expects the Offering to close on or about November 13, 2017, subject to the satisfaction of customary closing conditions
in the Purchase Agreement. The Purchase Agreement contains customary representations, warranties and agreements of the Company
and the Purchasers and customary indemnification rights and obligations of the parties.
The
Placement Agency Agreement contains customary representations, warranties and agreements by us and customary conditions to closing.
The Placement Agency Agreement provides that the Company will indemnify the Placement Agent against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or reimburse the Placement Agent for payments that the Placement Agent
may be required to make because of such liabilities. Additionally, under the Placement Agency Agreement the Company agreed not
to contract to issue or announce the issuance or proposed issuance of any Common Stock or Common Stock equivalents for 150 days
following the closing of the Offering.
The
Placement Agent did not purchase or sell any securities, nor is it required to arrange the purchase or sale of any minimum number
or dollar amount of securities. The Placement Agent agreed to use its reasonable best efforts to arrange for the sale of all of
the Shares and Warrants being issued and sold in the Offering. The Placement Agent will be paid a cash fee (the “Placement
Fee”) in an aggregate amount equal to 6% of the gross cash proceeds received by the Company from the sale of the Shares
in the Offering and for its out of pocket expenses, which includes fees of counsel to the Placement Agent, subject to compliance
with FINRA Rule 5110(f)(2)(D). The Company estimates the total expenses of this Offering, which will be payable by us, excluding
the Placement Agent fee, will be approximately $100,000. After deducting the Placement Agent fees due to the Placement Agent and
our estimated offering expenses, we expect the net proceeds from this offering to be approximately $3.65 million. The Company
will use $2,000,000 of the proceeds to reduce the outstanding debt on its balance sheet.
The
Shares will be issued pursuant to a prospectus supplement to the Company’s effective shelf registration statement on Form
S-3 (Registration No. 333-203637), which was initially filed with SEC on April 24, 2015 and was declared effective on May 14,
2015. The Company expects to file the prospectus supplement for the Registered Direct Offering on or about November 10, 2017.
The
Warrants and the shares of Common Stock issuable upon the exercise of the Warrants (the “Warrant Shares”), are not
being registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the registration
statement of which the aforementioned prospectus supplement and the accompanying base prospectus form a part and are not being
offered pursuant to aforementioned prospectus supplement and the accompanying base prospectus. The Warrants are being offered
pursuant to an exemption from the registration requirements of the Securities Act provided in Section 4(a)(2) of the Securities
Act and/or Regulation D promulgated thereunder. The Warrants are not and will not be listed for trading on any national securities
exchange. The Placement Agent is acting as the sole placement agent for the offer and sale of the Warrants.
The
foregoing description of the Placement Agency Agreement, Purchase Agreement, and the Warrants are qualified in their entirety
by reference to the full text of the Placement Agency Agreement, the Purchase Agreement, and the Warrants, the forms of which
are attached as Exhibit 1.1, Exhibit 10.1, and Exhibit 4.2, respectively, to this Current Report on Form 8-K (this “Report”),
and which are incorporated herein in their entirety by reference. The Company is filing the opinion of its counsel, Robinson Brog
Leinwand Greene Genovese & Gluck P.C., relating to the legality of the issuance and sale of the Shares, as Exhibit 5.1
hereto. Exhibit 5.1 is incorporated herein by reference and into the registration statement.
This
Report contains forward-looking statements. Forward-looking statements include, but are not limited to, statements that express
our intentions, beliefs, expectations, strategies, predictions or any other statements related to our future activities, or future
events or conditions. These statements are based on current expectations, estimates and projections about the Company’s
business based, in part, on assumptions made by management. These statements are not guarantees of future performances and involve
risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially
from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed
in the Company’s Annual Report on Form 10-K, as amended, and in other documents the Company files from time to time with
the Securities and Exchange Commission (the “Commission”). Any forward-looking statements speak only by the date on
which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances
after the date of this report, except as required by law.
The
prospectus supplement relating to the Offering will be available on the Commission’s web site at
http://www.sec.gov
.
Copies of the prospectus supplement may also be obtained from Aegis Capital Corp., 810 Seventh Avenue, 18th Floor, New York, New
York 10019, (212) 813-1047.