|
|
|
|
|
|
|
|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
On February 22, 2021, KushCo Holdings, Inc. (the “Company”) entered into securities purchase agreements (each a “Purchase Agreement” and collectively, the “Purchase Agreements”) with certain accredited investors identified on the signature pages thereto (the “Purchasers”), pursuant to which the Company agreed to issue and sell an aggregate of 24,242,424 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and warrants to purchase 9,696,969 shares of Common Stock (each a “Warrant” and collectively, the “Warrants”), in a registered direct offering (the “Offering”). The Common Stock and Warrants will be sold in units (the “Units”), with each unit consisting of one share of Common Stock and a Warrant to purchase 0.4 of a share of Common Stock. The Units are being offered by the Company pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-231019) filed with the Securities and Exchange Commission (the “Commission”) on April 25, 2019 and declared effective on May 6, 2019 and a prospectus supplement thereunder, dated February 22, 2021 and filed with the Commission on February 24, 2021. Subject to certain ownership limitations, the Warrants will be immediately exercisable at an exercise price equal to $2.00 per share of Common Stock. The Warrants are exercisable for five years from the date of issuance.
The purchase price for a Unit is $1.65. The closing of the Offering is expected to occur on February 24, 2021. The Company expects the aggregate gross proceeds from the Offering to be approximately $40 million. The Company expects the aggregate net proceeds from the Offering, after deducting the placement agent fees and other estimated offering expenses, to be approximately $37.1 million. The Company intends to use the net proceeds from this offering, together with other available funds, for working capital and for other general corporate purposes, which may include, among other things, debt repayment, product development, acquisitions, capital expenditures and other business opportunities.
The Purchase Agreements contain customary representations, warranties and agreements by the Company and customary conditions to closing. Under the Purchase Agreements, the Company has agreed, subject to certain exceptions, not to enter into any agreement to issue or announce the issuance or proposed issuance of any Common Stock or Common Stock equivalents for a period of 90 days following the Offering.
A.G.P./Alliance Global Partners (“A.G.P.”) is acting as placement agent for the Offering (the “Placement Agent”).
The Company agreed to pay the Placement Agent an aggregate cash fee equal to 7% of the aggregate gross proceeds raised in the Offering pursuant to a Placement Agency Agreement entered into by the Company and the Placement Agent on February 22, 2021 (the “Placement Agency Agreement”). The Company also agreed to reimburse the Placement Agent up to $60,000 for fees and expenses, including the fees and expenses of the Placement Agent’s counsel.
The foregoing summaries of the Warrants, the Purchase Agreements and the Placement Agency Agreement (the “Transaction Documents”) do not purport to be complete and are qualified in their entirety by reference to the full texts of the form of Warrant, the form of Purchase Agreement and the Placement Agency Agreement that are filed herewith as Exhibits 4.1, 10.1 and 10.2, respectively. The representations, warranties and covenants contained in Transaction Documents were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to the Transaction Documents, and may be subject to limitations agreed upon by the contracting parties. Accordingly, the Transaction Documents are incorporated herein by reference only to provide investors with information regarding the terms of the Transaction Documents, and not to provide investors with any other factual information regarding the Company or its business, and should be read in conjunction with the disclosures in the Company’s periodic reports and other filings with the Commission.
This Current Report on Form 8-K does not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or 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 jurisdiction.