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Subsequent Events
12 Months Ended
Dec. 31, 2020
Subsequent Events [Abstract]  
Subsequent Events

Note 18. SUBSEQUENT EVENTS

 

Underwritten public offering - On January 14, 2021, the Company consummated an underwritten public offering (the “Offering”) of (i) 2,800,000 shares of common stock (”Shares”), (ii) pre-funded warrants to purchase up to 7,200,000 of Common Stock (the “Pre-Funded Warrants”), issuable to investors whose purchase of shares of Common Stock would otherwise result in such investor, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding Common Stock immediately following the consummation of the Registered Offering (“Pre-Funded Warrants”); and (iii) common stock purchase warrants (“Warrants”) to purchase up to an aggregate of 10,000,000 shares of Common Stock (the “Warrant Shares”), which are exercisable for a period of five years after issuance at an initial exercise price $3.25 per share, subject to certain adjustments, as provided in the Warrants. The Offering was conducted pursuant to an underwriting agreement, dated January 12, between the Company and Kingswood Capital Markets, division of Benchmark Investments, Inc. (the “Underwriters”), acted as the exclusive placement agent in connection with the Offering pursuant to a placement agency agreement. The common stock in the Offering was sold at a public offering price of $3.095 per share.

 

The common stock in the Offering was issued pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-239419). The underwriting agreement contained customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters. The Underwriters received discounts and commissions of six percent (6%) of the gross cash proceeds received by the Company from the sale of the common shares in the Offering and certain expenses.

 

Under the underwriting agreement, the Company and its officers and directors executed lock-up agreements whereby, (a) the Company has agreed not to engage in the following for a period of 90 days from the date of the pricing of the Offering, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the SEC relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (iii) complete any offering of debt securities of the Company, or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company.

 

Further, pursuant to the terms of the Purchase Agreement the Company has granted to the Investors, for a period of 12 months after the closing of the Offering, the right to participate in subsequent offerings by the Company of Common Stock and Common Stock equivalents in an amount up to 50% of the amount of each such subsequent offering, on the same terms, conditions and price provided for in such subsequent offering.

 

The Company received approximately $29,013,000 in net proceeds from the Offering after deducting the discounts, commissions, and other estimated offering expenses payable by the Company. As of March 31, 2021, all pre-funded warrants have been fully exercised. The Company plans to use the net proceeds from the Offering for working capital, product development, order fulfillment and for general corporate purposes.

 

Underwritten public offering - On February 1, 2021, the Company consummated an underwritten public offering (the “Offering”) of (i) 3,250,000 shares of common stock (”Shares”), (ii) pre-funded warrants to purchase up to 11,050,000 of Common Stock (the “Pre-Funded Warrants”), issuable to investors whose purchase of shares of Common Stock would otherwise result in such investor, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding Common Stock immediately following the consummation of the Registered Offering (“Pre-Funded Warrants”); and (iii) common stock purchase warrants (“Warrants”) to purchase up to an aggregate of 14,300,000 shares of Common Stock (the “Warrant Shares”), which are exercisable for a period of five years after issuance at an initial exercise price $3.25 per share, subject to certain adjustments, as provided in the Warrants. The Offering was conducted pursuant to an underwriting agreement, dated January 28, between the Company and Kingswood Capital Markets, division of Benchmark Investments, Inc. (the “Underwriters”), acted as the exclusive placement agent in connection with the Offering pursuant to a placement agency agreement. The common stock in the Offering was sold at a public offering price of $2.799 per share.

 

The common stock in the Offering was issued pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-239419). The underwriting agreement contained customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriters. The Underwriters received discounts and commissions of six percent (6%) of the gross cash proceeds received by the Company from the sale of the common shares in the Offering and certain expenses.

 

Under the underwriting agreement, the Company and its officers and directors executed lock-up agreements whereby, (a) the Company has agreed not to engage in the following for a period of 90 days from the date of the pricing of the Offering, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or cause to be filed any registration statement with the SEC relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (iii) complete any offering of debt securities of the Company, or (iv) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company.

 

Further, pursuant to the terms of the Purchase Agreement the Company has granted to the Investors, for a period of 12 months after the closing of the Offering, the right to participate in subsequent offerings by the Company of Common Stock and Common Stock equivalents in an amount up to 50% of the amount of each such subsequent offering, on the same terms, conditions and price provided for in such subsequent offering.

 

The Company received approximately $37,587,600 in net proceeds from the Offering after deducting the discounts, commissions, and other estimated offering expenses payable by the Company. As of March 31, 2021, all pre-funded warrants have been fully exercised. The Company plans to use the net proceeds from the Offering for working capital, product development, order fulfillment and for general corporate purposes.

 

American Rebel Holding, Inc. Secured Promissory Notes - On October 1, 2020, the Company advanced $250,000 to American Rebel Holdings, Inc. (AREB) under a secured promissory note and on October 21, 2020, the Company advanced an additional $250,000 to American Rebel Holdings, Inc. (AREB) under a second secured promissory note. Both notes are currently in default. On March 1, 2021, the Company advanced an additional $117,600 to AREB on terms similar to the previously issued notes. See “NOTE 16. RELATED PARTY TRANSACTIONS” for further information.

  

The parties have been negotiating the terms of a Forbearance Agreement regarding the following: (a) the secured promissory note dated October 1, 2020; (b) the secured promissory note dated October 21, 2020; and (c) an advance made by the Company on March 1, 2021. The parties are attempting to arrange for a series of payments that will liquidate the outstanding balances of the two delinquent notes and the advance by no later than June 30, 2021. Based on the terms being negotiated, if AREB timely and fully complies with all of its obligations under the Forbearance Agreement, the Company would agree that AREB’s obligations to the Company in connection with the defaults would be satisfied. However, there is no assurance that the parties will agree to the terms contained in the Forbearance Agreement, and whether AREB will be able to comply with such terms.

 

Purchase of Building - On February 24, 2021 the Company entered into a contract to purchase a 71,361 square foot building located in Lenexa Kansas which is intended to serve as the Company’s office and warehouse needs. The building contains approximately 30,000 square foot of office space and the remainder warehouse space. The total purchase price is approximately $5.3 million and is expected to close on or around May 1, 2021.