| Item 1.01. | Entry into a Material Definitive Agreement. |
On September 29, 2022, Aterian, Inc. (the “Company”) entered into securities purchase agreements (the “Purchase Agreements”) with certain accredited investors (collectively, the “Purchasers”), pursuant to which, among other things, the Company agreed to sell and issue, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 10,643,034 shares of its common stock (the “Shares”) and accompanying warrants to purchase an aggregate of 10,643,034 shares of its common stock (the “Warrants”). 10,526,368 of the Shares and the accompanying warrants to purchase 10,526,368 shares of common stock will be sold to certain accredited Purchasers that are not affiliated with the Company at a combined offering price of $1.90 per share and accompanying warrant to purchase one share of common stock. The remaining 116,666 of the Shares and the accompanying warrants to purchase 116,666 shares of common stock will be sold to certain insiders of the Company, comprised of the Company’s President and Chief Executive Officer, Chief Financial Officer, Chief Legal Officer and Global Head of M&A and Chief Technology Officer (collectively, the “Insiders”), at a combined offering price of $2.10 per share and accompanying warrant to purchase one share of common stock.
The Registered Direct Offering closed on October 4, 2022 and the Company issued and sold an aggregate of 10,643,034 shares of common stock to the Purchasers. The gross proceeds to the Company from the Registered Direct Offering were approximately $20.2 million, before deducting fees payable to the placement agent and other estimated offering expenses payable by the Company. The Company currently intends to use the net proceeds from the Registered Direct Offering for working capital purposes, the conduct of its business and other general corporate purposes, which may include acquisitions, investments in or licenses of complementary products, technologies or businesses.
The Purchase Agreements contain customary representations, warranties and agreements of the Company and the Purchasers, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties and termination provisions. Pursuant to the Purchase Agreements, the Company agreed that, subject to certain exceptions, until 60 days after the closing date of the Registered Direct Offering, it will not (i) issue, enter into an agreement to issue or announce the issuance or proposed issuance of shares of its common stock or any other securities convertible into, or exercisable or exchangeable for, shares of its common stock or (ii) file any registration statement or amendment or supplement thereto.
Each Warrant has an exercise price of $2.00 per share of common stock, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, will be exercisable commencing on April 4, 2023 and will expire on April 4, 2028. Each Warrant will be exercisable on a cash basis unless, at the time of such exercise, the shares of common stock underlying such Warrant (the “Warrant Shares”) cannot be immediately resold pursuant to an effective registration statement, in which case such Warrant shall also be exercisable on a cashless exercise basis.
Under the terms of the Warrants, the Company may not effect the exercise of any such Warrant, and a holder will not be entitled to exercise any portion of any such Warrant, if, upon giving effect to such exercise, the aggregate number of shares of common stock beneficially owned by the holder (together with its affiliates) would exceed 4.99% or 9.99% (at the election of the holder) of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of such Warrant, which percentage may be increased or decreased at the holder’s election upon 61 days’ notice to the Company, subject to the terms of such Warrants, provided that such percentage may in no event exceed 9.99%.
In addition, in certain circumstances, upon a fundamental transaction of the Company, the holders of the Warrants will have the right to require the Company to repurchase such Warrants at their fair value using a Black Scholes option pricing formula; provided, however, that if the fundamental transaction is not approved by the Board of Directors, and therefore not within the Company’s control, then the holder of the Warrants shall only be entitled to receive the same type or form of consideration (and in the same proportion), determined in accordance with the Black Scholes option pricing formula, that is being offered and paid to the holders of common stock in connection with such fundamental transaction.
Pursuant to a letter agreement dated as of September 27, 2022 (the “Engagement Letter”), the Company engaged Craig-Hallum Capital Group LLC (“Craig-Hallum”) to act as its exclusive placement agent in connection with the Registered Direct Offering. Pursuant to the Engagement Letter, the Company agreed to pay Craig-Hallum a placement agent fee equal to 6.0% of the aggregate gross proceeds received from the Purchasers that are not the Insiders in the Registered Direct Offering, which was paid solely in the form of 631,582 shares of common stock and accompanying warrants to purchase 631,582 shares of common stock (such shares and warrants, together with the shares of common stock issuable upon exercise of such warrants, the “Placement Agent Securities”). The warrants issued to Craig-Hallum are in the same form as the Warrants. The Company also agreed to reimburse Craig-Hallum for certain expenses in connection with the Registered Direct Offering in an aggregate amount up to $85,000.
