PROSPECTUS SUPPLEMENT NO. 3 | Filed Pursuant to Rule 424(b)(3) |
(to prospectus dated September 28, 2023) | File No. 333-274573 |
Surf Air Mobility Inc.
25,000,000 Shares of Common Stock
This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated September 28, 2023 (the “Prospectus”), related to the offer and sale, from time to time, of up to of 25,000,000 shares of our Common Stock.
On March 5, 2024, we filed a Current Report on Form 8-K with the Securities and Exchange Commission (the “Current Report”). Accordingly, we have attached the Current Report to this prospectus supplement to update and supplement the Prospectus with the information contained in the Current Report.
This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement. Terms used in this prospectus supplement but not defined herein shall have the meanings given to such terms in the Prospectus.
Our Common Stock trades on the New York Stock Exchange (the “NYSE”) under the symbol “SRFM.” On March 1, 2024, the last reported closing price of our common stock was $1.10 per share.
Investing in our Common Stock involves a high degree of risk. Before buying any shares of our Common Stock, you should carefully read the discussion of material risks of investing in our common stock in “Risk Factors” beginning on page 12 of the Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed upon the adequacy or accuracy of this prospectus supplement or the Prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is March 6, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 1, 2024
SURF AIR MOBILITY INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-41759 | 36-5025592 | ||
(State or other jurisdiction | (Commission File Number) | (IRS Employer Identification No.) |
12111 S. Crenshaw Blvd.
Hawthorne, CA 90250
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (424) 332-5480
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||
Common stock, par value $0.0001 per share | SRFM | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Definitive Material Agreement.
On March 1, 2024, Surf Air Mobility, Inc. (the “Company”) entered into a security purchase agreement (the “SPA”) with GEM Global Yield LLC SCS (“GEM”). Pursuant to the SPA, the Company has agreed to issue and sell to GEM, and GEM has agreed to purchase from the Company, a mandatory convertible security with a par amount of up to $35,200,000 (the “Mandatory Convertible Security”), which shall be convertible into a maximum of 8,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Shares”), subject to adjustment as described in the SPA. The transaction contemplated by the SPA is expected to close following the waiver or satisfaction of all closing conditions, which is currently expected to occur by the end of the second quarter of 2024 (the “Closing Date”).
The par amount of the Mandatory Convertible Security will be determined at the close of the trading day immediately prior to the Closing Date and will be equal to $35,200,000 less the product of (a) the number of Common Shares sold by GEM prior to the Closing Date, if any, and (b) the aggregate sale price for any such Common Shares; provided, however, that the sale price of any such Common Share that exceeds $4.45 will be deemed to be $4.45.
The Mandatory Convertible Security will mature on the fifth anniversary of the Closing Date (the “Maturity Date”), unless earlier converted or redeemed. On the Maturity Date, the Company will pay to GEM, at the Company’s option, cash or Common Shares in an amount equal to the then outstanding par amount of the Security divided by the lesser of (a) $4.45 (the “Fixed Conversion Price”) and (b) the average of the five lowest volume-weighted average prices for the Common Shares trading on the New York Stock Exchange during the thirty trading days immediately preceding the Maturity Date (the “Floating Conversion Price”).
Prior to the Maturity Date, GEM will have the option to convert any portion of the Mandatory Convertible Security into Common Shares at a conversion rate equal to the portion of the par amount to be converted into Common Shares divided by the lesser of (a) the Fixed Conversion Price and (b) the Floating Conversion Price. If, following the conversion by GEM of any portion of the Mandatory Convertible Security into 8,000,000 Common Shares at any time prior to the Maturity Date, any par amount of the Mandatory Convertible Security remains outstanding, the Company will have the option to (x) increase the maximum number of Common Shares into which the Security may convert, with such increase to be at the Company’s sole discretion, (y) pay to GEM an amount in cash equal to 115% of the remaining outstanding par amount or (z) increase the remaining outstanding par amount by 15% of the amount outstanding immediately after issuance of the 8,000,000 Common Shares. GEM may not convert any portion of the Security into Common Shares to the extent that GEM (together with its affiliates and any other parties whose holdings would be aggregated with those of GEM for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended) would beneficially own more than 4.99% of the Common Shares outstanding after such conversion; provided, however, that GEM may increase or decrease such maximum limitation percentage to not more than 9.99% upon 61 days’ notice to the Company.
The Company may, at its option, redeem the Mandatory Convertible Security, in whole or in part, in cash at a price equal to 115% of the outstanding par amount to be redeemed.
Pursuant to the terms of the SPA, GEM has agreed that, beginning March 1, 2024 and for so long as any Common Shares are beneficially owned by GEM (together with its affiliates and any entity managed by GEM, the “GEM Entities”), the GEM Entities will limit the daily volume of sales of Common Shares then beneficially owned by the GEM Entities to no more than 1/10th of the daily trading volume of Common Shares on the New York Stock Exchange on the trading day immediately preceding the applicable date of such sales. The SPA also contains customary representations, warranties and agreements by the Company and GEM, customary conditions to closing, indemnification obligations, registration rights and termination provisions.
As consideration for GEM’s purchase of the Mandatory Convertible Security, GEM will deliver to the Company 6,300,000 Common Shares previously purchased by GEM less any Common Shares sold by GEM before the Closing Date. In addition, the Company’s ability to take both regular drawdowns of up to $300 million and advance drawdowns of up to $100 million pursuant to the Company’s share subscription facility with GEM and GEM Yield Bahamas Limited, which provides the Company with the option from time to time to direct GEM to purchase a specified number of Common Shares for an aggregate purchase price of up to $400 million, will be restored to full capacity, subject to any drawdowns prior to the Closing Date.
The issuance and sale of the Mandatory Convertible Security will be exempt from the registration requirements of the Securities Act of 1933, as amended, in accordance with Section 4(a)(2) thereof. The Company has agreed to file, within ten business days of the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, a registration statement with the Securities and Exchange Commission for the resale by GEM of at least 8,000,000 Common Shares less any Common Shares sold by GEM before the Closing Date.
The foregoing description of the SPA and the Mandatory Convertible Security do not purport to be complete and are qualified in their entirety by reference to the full text of the SPA and the form of Mandatory Convertible Security, copies of which are attached to this Current Report on Form 8-K as Exhibit 4.1 and Exhibit 10.1, respectively, and incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts, including statements relating to the closing of the transaction contemplated by the SPA, are forward-looking statements. These statements are based on the beliefs of management as well as assumptions made using information currently available to management. As such, they are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among many others: the risk that the Company may not successfully consummate the transaction contemplated by the SPA; the risk that any projections, including earnings, revenues, expenses, synergies, margins or any other financial items that form the basis for management’s plans and assumptions will not be realized; the risks associated with the Company’s obligations to comply with applicable laws, government regulations and rules and standards of the New York Stock Exchange; and general economic conditions. These and other risks are discussed in detail in the periodic reports that the Company files with the SEC, and investors are urged to review those periodic reports and the Company’s other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, before making an investment decision. The Company assumes no obligation to update its forward-looking statements, except as required by law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number |
| Exhibit Title or Description |
4.1 |
| Form of Mandatory Convertible Security (included within Exhibit 10.1) |
10.1* | Security Purchase Agreement, dated March 1, 2024, between Surf Air Mobility, Inc. and GEM Global Yield LLC SCS | |
104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL) |
* Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
SURF AIR MOBILITY INC. | ||
Date: March 6, 2024 | By: | /s/ Stan Little |
Name: | Stan Little | |
Title: | Chief Executive Officer |
SECURITY PURCHASE AGREEMENT
dated as of March 1, 2024
by and between
SURF AIR MOBILITY INC.
and
GEM GLOBAL YIELD LLC SCS
1
This SECURITY PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of the date first above written (the “Effective Date”) by and between SURF AIR MOBILITY INC., a Delaware corporation having a principal place of business at 12111 Crenshaw Boulevard, Hawthorne, California 90250 (the “Company”) and GEM GLOBAL YIELD LLC SCS, a “société en commandite simple” formed under the laws of Luxembourg having LEI No. 213800CXBEHFXVLBZO92 having an address at 412F, Route d’Esch, L-2086 Luxembourg (the “Purchaser,” and together with the Company, the “Parties”).
RECITALS
WHEREAS, the Parties desire that, upon the terms and subject to the conditions contained herein, the Company will issue and sell to the Purchaser, and the Purchaser will purchase from the Company, the Security;
WHEREAS, such investment will be made in reliance upon the provisions of Section 4(a)(2) of the Securities Act (“Section 4(a)(2)”) promulgated by the Commission under the Securities Act, and upon such other exemption from the registration requirements of the Securities Act as may be available; and
NOW, THEREFORE, the Parties, intending to be legally bound, agree as follows:
Definitions.
2
3
4
PURCHASE AND SALE OF SHARES
REPRESENTATIONS AND WARRANTIES
5
6
7
8
9
10
(u) Insurance. The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company is engaged. The Company has not been refused any insurance coverage sought or applied for, and the Company has no reason to believe that it will be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.
11
12
13
COVENANTS
The Company covenants with the Purchaser, and the Purchaser covenants with the Company, as follows, which covenants of one Party are for the benefit of the other Party, during the period commencing on the date hereof until the date that the Purchaser informs the Company that it has sold its entire interest in the Security and the Underlying Shares (such date, the “End Date”).
14
15
16
CLOSING CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SECURITY
17
INDEMNIFICATION
18
19
TERMINATION
MISCELLANEOUS
20
If to the Company: Surf Air Mobility Inc.
Attn: Sudhin Shahani, Authorized Officer
Email: sudhin@surfair.com
With a copy (which shall
not constitute notice) to: Surf Air Mobility Inc.
Attn: General Counsel
Email: legalnotices@surfair.com
If to the Purchaser: GEM Global Yield LLC SCS
Attn: Christopher F. Brown, Manager
Email: cbrown@gemny.com
With a copy (which shall
not constitute notice) to: Gibson, Dunn & Crutcher LLP
Attn: Boris Dolgonos
Email: bdolgonos@gibsondunn.com
Either Party hereto may from time to time change its address for notices by giving at least ten (10) days’ advance written notice of such changed address to the other Party hereto.
21
22
[Signature Page Follows]
23
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.
SURF AIR MOBILITY INC.
By: /s/ Sudhin Shahani
Name: Sudhin Shahani
Title: Authorized Officer
GEM GLOBAL YIELD LLC SCS
By: /s/ Christopher F. Brown
Name: Christopher F. Brown
Title: Manager
[Signature Page to Security Purchase Agreement]
[See attached.]
Surf Air Mobility Inc.
Mandatory Convertible Security
Original Issuance Date: _________ ___, 2024 Maturity Date: _________ ___, 2029 | Original Par Amount: U.S.$35,200,000.00 |
FOR VALUE RECEIVED, Surf Air Mobility Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of GEM Global Yield LLC SCS (“GEM”) or its registered assigns (“Holder”) the amount set forth above as the Original Par Amount (as adjusted pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Par Amount”) when due, whether upon the Maturity Date, or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof). This Mandatory Convertible Security (including all Mandatory Convertible Securities issued in exchange, transfer or replacement hereof, each a “Security” and collectively, the “Securities”) has been issued pursuant to a Securities Purchase Agreement, dated __________ ___, 2024, between the Company and GEM. Certain capitalized terms used herein are defined in Section 29.
A-1
A-2
A-3
A-4
A-5
A-6
A-7
A-8
A-9
A-10
A-11
A-12
A-13
A-14
A-15
A-16
If to the Company: Surf Air Mobility Inc.
Attn: Sudhin Shahani, Authorized Officer
Email: sudhin@surfair.com
With a copy (which shall not constitute notice) to:
Surf Air Mobility Inc.
Attn: General Counsel
Email: legalnotices@surfair.com
If to GEM: GEM Global Yield LLC SCS
Attn: Christopher F. Brown, Manager
Email: cbrown@gemny.com
If to any other Holder: As specified in notice provided by such Holder to the Company
A-17
A-18
A-19
A-20
A-21
A-22
A-23
A-24
[signature page follows]
A-25
IN WITNESS WHEREOF, the Company has caused this Security to be duly executed as of the date set out above.
SURF AIR MOBILITY INC.
|
By: |
Name: |
Title: |
Senior Convertible Security - Signature Page
A-26
EXHIBIT I
SURF AIR MOBILITY INC.
CONVERSION NOTICE
Reference is made to the Senior Convertible Security (the “Security”) issued to the undersigned by Surf Air Mobility Inc., a Delaware corporation (the “Company”). In accordance with and pursuant to the Security, the undersigned hereby elects to convert the Conversion Amount (as defined in the Security) of the Security indicated below into shares of Common Stock, $0.001 par value per share (the “Common Stock”), of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set forth in the Security.
Date of Conversion: |
| ||
Aggregate Conversion Amount to be converted: |
| ||
Please confirm the following information: | |||
Conversion Price: |
| ||
Number of shares of Common Stock to be issued: |
| ||
Please issue the Common Stock into which the Security is being converted to Holder, or for its benefit, as follows: FORMCHECKBOX Check here if requesting delivery as a certificate to the following name and to the following address: | |||
Issue to: |
| ||
|
| ||
|
| ||
|
| ||
FORMCHECKBOX Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows: | |||
DTC Participant: |
| ||
DTC Number: |
| ||
Account Number: |
|
Date: _____________ __, |
A-27
|
By: Tax ID:_____________________ Facsimile:___________________ E-mail Address: |
|
A-28
Exhibit II
ACKNOWLEDGMENT
The Company hereby (a) acknowledges this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock [are][are not] eligible to be resold by the Holder either (i) pursuant to Rule 144 (subject to the Holder’s execution and delivery to the Company of a customary 144 representation letter) or (ii) an effective and available registration statement and (c) hereby directs _________________ to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged and agreed to by ________________________.
SURF AIR MOBILITY INC. |
By: |
Name: |
Title: |
A-29
[See attached.]
CLOSING CERTIFICATE
OF
SURF AIR MOBILITY INC.
_____________, 2024
Reference is made to the Security Purchase Agreement (the “Purchase Agreement”), dated as of _______ ___, 2024, by and among SURF AIR MOBILITY INC., a Delaware corporation and having a principal place of business at 12111 Crenshaw Boulevard, Hawthorne, California, 90250 (the “Company”), and GEM GLOBAL YIELD LLC SCS, a “société en commandite simple” formed under the laws of Luxembourg having LEI No. 213800CXBEHFXVLBZO92 having an address at 412F, Route d’Esch, L-2086 Luxembourg (“Purchaser”). Capitalized terms not defined herein shall have the meanings given them in the Purchase Agreement.
Pursuant to Section 5.01 of the Purchase Agreement, the undersigned hereby certifies that he is Authorized Officer of the Company, and that, as such, he is authorized to execute and deliver this certificate in the name and on behalf of the Company in connection with the execution and delivery of the Purchase Agreement by and among the Parties, in each case, as of even date herewith, as well as the transactions contemplated thereby (the “Transactions”), to which this certificate relates, and further certifies in his official capacity, in the name and on behalf of the Company, the items set forth below.
Attached hereto as Exhibit A is a true, correct and complete copy of action of the Board of Directors of the Company taken by written consent, dated _______, 2024 authorizing and ordering the Transactions and the Company’s performance thereof, as well as the execution and delivery of the Purchase Agreement, this certificate, and other instruments ancillary thereto. The resolutions contained in Exhibit A have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect.
The Company is validly existing and in good standing under the laws of the State of Delaware, and there are no pending winding up, liquidation or dissolution actions or proceedings by or against the Company.
Each person listed below has been duly elected or appointed to the position(s) indicated opposite his name and is duly authorized to sign the Purchase Agreement on behalf of the Company.
Name Position
Stan Little Chief Executive Officer
Sudhin Shahani Authorized Officer
All corporate proceedings of the Company necessary to be taken in connection with the authorization, execution and delivery by the Company of, and the performance by the Company of its obligations under, the Purchase Agreement has been duly taken, and all such authorizations are presently in effect.
B-1
The undersigned is duly authorized and empowered by all corporate action to make this certification on behalf and in the name of the Company.
The registered office of the Company is located at 12111 Crenshaw Boulevard, Hawthorne, California 90250.
B-2
IN WITNESS WHEREOF, the undersigned, being a duly appointed officer of the Company, has executed this certificate as of the date first set forth above.
SURF AIR MOBILITY INC.
By:
Name: Sudhin Shahani
Its: Authorized Officer
[Signature Page to Company Closing Certificate]
B-3
EXHIBIT A
RESOLUTIONS
[See attached.]
EXHIBIT C
[See attached.]
[PFG LETTERHEAD]
[•], 2024
Surf Air Mobility Inc.
12101 S. Crenshaw Blvd.
Hawthorne, California 90250
Attn: Mr. Stan Little, CEO
Re: Security Purchase Agreement dated as of June 21, 2023 (the “Agreement”) by and between Surf Air Mobility Inc. (the “Company”) and Partners for Growth V, L.P. (“PFG”)
Dear Stan:
Reference is made to that certain term sheet dated December 21, 2023 (the “GEM Term Sheet”), by and between the Company and GEM Global Yield LLC SCS (“GEM”), relating to the potential issuance of a mandatory convertible security (the “Security”) to GEM. A copy of the GEM Term Sheet is attached hereto as Exhibit A.
I am writing to confirm that, in accordance with Paragraph 8.9 of the Agreement, and notwithstanding that the Security is intended by the Company and GEM to be characterized as equity, not indebtedness, PFG hereby waives the covenant set forth in Section 4.6(b) of the Agreement with respect to the Company’s issuance of the Security to GEM pursuant to the Term Sheet (and any definitive agreements entered into between the Company and GEM in connection therewith).
In addition, also in accordance with Paragraph 8.9 of the Agreement, PFG hereby waives the Minimum Cash covenant set forth in Section 5 of the Schedule for the months of March 2024 through and including December 2024.
Except for the foregoing waivers, PFG makes no other waivers, and the parties hereby reaffirm all of the terms, conditions, covenants and obligations set forth in the Agreement.
Sincerely,
Andrew Kahn
C-1
Exhibit A
Term Sheet
C-2