Item 1.01 Entry into a Material Definitive Agreement.
Public Offering of Units
Pricing and Closing
On November 12, 2021, BT Brands, Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting Agreement”) with Maxim Group LLC (“Maxim”) and Joseph Gunnar & Co., LLC, as the representatives of the several underwriters (the “Underwriters”), for an underwritten public offering (the “Public Offering”) of (i) 2,400,000 units with a public offering price of $5.00 per unit, each containing one share of common stock (each a “Share”) of the Company, par value $0.002 per share (the “Common Stock”), and one warrant to purchase one share of Common Stock at an exercise price of $5.50 per share (each, a “Warrant”). Additionally, the Company granted the Underwriters a 45-day option to purchase up to an additional 360,000 shares of our Common Stock at a price of $5.00 per share and/or Warrants at a price of $0.01 per warrant. A copy of the Underwriting Agreement is filed as Exhibit 99.1 to this Current Report. A copy of the form of Warrant is included as an exhibit to the Warrant Agreement discussed below.
On November 12, 2021, the Underwriters exercised their option to purchase the Warrants subject to the over-allotment option and on November 16, 2021, the public offering closed.
The net proceeds to the Company from the offering, including the exercise of the Underwriter’s option to purchase additional Warrants, were approximately $10.94 million, excluding any proceeds from the exercise of Warrants, after deducting underwriting discounts and commissions and before payment of estimated offering expenses of approximately $375,000. As compensation for their role in the offering, the Company also issued to the Underwriters warrants to purchase up to 192,000 shares of Common Stock (the “Underwriter Warrants”), which will be exercisable at any time, and from time to time, in whole or in part, during the five-year period commencing 180 days after November 12, 2021 at a price of $5.50 per share or on a cashless basis at an exercise price equal to $5.50 per share. The exercise price and number of shares of Common Stock issuable upon exercise of the Warrants and the Underwriter Warrants are subject to adjustment upon the happening of certain events, as are customary for such securities. A copy of the Underwriting Warrant is filed as Exhibit 99.2 to this Current Report.
The issuance and sale of the Shares, the Warrants, and the Underwriter Warrants offered in the offering, as well as the Common Stock underlying all of the warrants, were registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Company’s effective registration statement on Form S-1 (File No. 333-250957).
Nasdaq Listing
On November 12, 2021, the Common Stock and the Warrants commenced trading on The NASDAQ Capital Market under the symbols “BTBD” and “BTBDW,” respectively.
Underwriting Agreement
The Underwriting Agreement contains customary representations and warranties, agreements and obligations, conditions to closing and termination provisions. The Underwriting Agreement provides for indemnification by the Underwriter of the Company, its directors, certain of its executive officers and others, and by the Company of the Underwriter, its directors, certain of its executive officers and others, for certain liabilities, including liabilities arising under the Securities Act, and affords certain rights of contribution with respect thereto.
Pursuant to the Underwriting Agreement, the Company granted to Maxim a right of first refusal for a period of eighteen months from November 16, 2021 to act as a sole lead manager, underwriter and/or placement agent for any and all future public or private offerings of equity or debt (excluding commercial bank debt) offerings undertaken during such period by the Company, any Subsidiary.
The Company agreed, in the Underwriting Agreement, that until 180 days after the closing of the offering, that neither it nor any of its subsidiaries will issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or any securities convertible into, or exercisable or exchangeable for, shares of Common Stock, without the prior written approval of the Underwriters, except for certain exempt securities, such as the issuance of shares of Common Stock upon the exercise of options under its employees stock option plan.
Warrant Agreement
Prior to the closing of the Offering, the Company entered into a warrant agent agreement (the “Warrant Agent Agreement”) with Continental Stock Transfer and Trust Company (“CST”), to serve as the Company’s warrant agent for the Warrants. Upon the closing of the Offering, CST issued the Warrants. The foregoing description of the Warrant Agent Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Warrant Agent Agreement, which is filed as Exhibit 99.3 to this Current Report.