UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
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| Item 1.01. | Entry into a Material Definitive Agreement. |
On June 27, 2023, Beneficient, a Nevada corporation (“Beneficient”), entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”). Pursuant to the SEPA, the Company shall have the right, but not the obligation, to sell to Yorkville up to $250,000,000 of Class A common stock, par value $0.001 per share of the Company (the “Class A Common Stock”), at the Company’s request any time during the commitment period commencing on June 27, 2023 (the “Effective Date”) and terminating on the 36-month anniversary of the Effective Date. Each issuance and sale by the Company to Yorkville under the SEPA (an “Advance”) is subject to a maximum limit equal to the greater of: (i) an amount equal to 100% of the aggregate volume traded of the Company’s Class A Common Stock on the Nasdaq Stock Market (“Nasdaq”) for the five trading days immediately preceding an Advance notice, or (ii) $10,000,000, which amount may be increased upon mutual consent. The shares will be issued and sold to Yorkville at a per share price equal to, at the election of the Company as specified in the relevant Advance notice: (i) 95% of the Market Price (as defined below) for any period commencing on the receipt of the Advance notice by Yorkville and ending on 4:00 p.m. New York City time on the applicable Advance notice date (the “Option 1 Pricing Period”), and (ii) 97% of the Market Price for any three consecutive trading days commencing on the Advance notice date (the “Option 2 Pricing Period,” and each of the Option 1 Pricing Period and the Option 2 Pricing Period, a “Pricing Period”). “Market Price” is defined as, for any Option 1 Pricing Period, the daily volume weighted average price (“VWAP”) of the Class A Common Stock on Nasdaq, and for any Option 2 Pricing Period, the lowest VWAP of the Class A Common Stock on the Nasdaq during the Option 2 Pricing Period. The Advances are subject to certain limitations, including that Yorkville cannot purchase any shares that would result in it beneficially owning more than 9.99% of the Company’s outstanding Class A Common Stock at the time of an Advance (the “Ownership Limitation”) or acquiring since the Effective Date under the SEPA more than 19.99% of the Company’s outstanding Class A Common Stock and Class B Common Stock, par value $0.001, as of the date of the SEPA (the “Exchange Cap”). The Exchange Cap will not apply under certain circumstances, including, where the Company has obtained stockholder approval to issue in excess of the Exchange Cap in accordance with the rules of Nasdaq or such issuances do not require stockholder approval under Nasdaq’s “minimum price rule.” Additionally, if the total number of Class A Common Stock traded on Nasdaq during the applicable Pricing Period is less than the Volume Threshold (as defined below), then the number of Class A Common Stock issued and sold pursuant to such Advance notice will be reduced to the greater of (a) 30% of the trading volume of the Class A Common Stock on Nasdaq during the relevant Pricing Period as reported by Bloomberg L.P., or (b) the number of Class A Common Stock sold by Yorkville during such Pricing Period, but in each case not to exceed the amount requested in the Advance notice. “Volume Threshold” is defined as a number of Class A Common Stock equal to the quotient of (a) the number of shares in the Advance notice requested by the Company divided by (b) 0.30.
Pursuant to the SEPA, the Company is required to register all shares which Yorkville may acquire. The Company agreed to file with the United States Securities and Exchange Commission (the “SEC”) a Registration Statement (as defined in the SEPA) registering for resale all of the Class A Common Stock that are to be offered and sold to Yorkville pursuant to the SEPA. The Company is required to have a Registration Statement declared effective by the SEC before it can sell any shares to Yorkville pursuant to the SEPA.
The Company has paid YA Global II SPV, LLC, a subsidiary of Yorkville, a structuring fee in the amount of $25,000. In addition, no later than three trading days following entry into the SEPA, the Company will pay a commitment fee in an amount equal to $1,250,000 (the “Commitment Fee”) by the issuance to Yorkville of such number of Class A Common Stock that is equal to the Commitment Fee divided by the closing price of the Class A Common Stock on the Nasdaq on the date immediately preceding entry into the SEPA.
Yorkville has agreed that neither it nor any of its affiliates will engage in any short-selling or hedging of the Company’s Class A Common Stock during the term of the SEPA.
The foregoing is a summary description of certain terms of the SEPA. For a full description of all terms, please refer to the copy of the SEPA that is filed herewith as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. The Class A Common Stock are being issued and sold by the Company to Yorkville in reliance upon the exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. |
Description of Exhibit | |
| 10.1 | Standby Equity Purchase Agreement dated June 27, 2023. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BENEFICIENT | ||
| By: | /s/ James G. Silk | |
| Name: | James G. Silk | |
| Title: | Executive Vice President and Chief Legal Officer | |
| Dated: June 28, 2023 | ||