Item 1.01. Entry into a Material Definitive Agreement.
Securities Purchase Agreement
On June 3, 2022, Energy Focus, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional accredited investors (the “Purchasers”), pursuant to which the Company agreed to issue and sell, in a private placement (the “Private Placement”), (i) an aggregate of 1,313,462 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 1,378,848 shares of Common Stock and (iii) warrants (the “Common Warrants” and, collectively with the Pre-Funded Warrants, the “Warrants”) to purchase up to an aggregate of 2,692,310 shares of Common Stock, in combinations of one Share or one Pre-Funded Warrant and one Common Warrant for a combined purchase price of $1.30 (less $0.0001 for any Pre-Funded Warrant). Subject to certain ownership limitations, the Warrants are exercisable upon issuance. Each Pre-Funded Warrant is exercisable into one share of Common Stock at a price per share of $0.0001 (as adjusted from time to time in accordance with the terms thereof) and does not expire. Each Common Warrant is exercisable into one share of Common Stock at a price per share of $1.30 (as adjusted from time to time in accordance with the terms thereof) and will expire on the fifth anniversary of the date of issuance.
Aggregate gross proceeds to the Company in respect of the Private Placement is approximately $3.5 million, before deducting fees payable to the placement agent and other estimated offering expenses payable by the Company. In connection with the Private Placement, the Company engaged H.C. Wainwright & Co., LLC (“Wainwright”) to serve as exclusive placement agent and agreed to pay Wainwright an aggregate cash fee equal to up to 8.0% of the gross proceeds received by the Company in the Private Placement. The Company also agreed to pay Wainwright $35,000 for non-accountable expenses and up to $15,950 for escrow expenses. The Private Placement is expected to close on or about June 7, 2022, subject to customary closing conditions.
The issuance and sale of the Shares and the Warrants pursuant to the Purchase Agreement and the issuance and sale of the Warrant Shares upon exercise of the Warrants are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder.
Registration Rights Agreement
In connection with the Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with each of the Purchasers. Pursuant to the Registration Rights Agreement, the Company has agreed to file a registration statement on Form S-3 (or other appropriate form if the Company is not then S-3 eligible) for the resale by the Purchasers of the Shares, the Warrant Shares issued and issuable upon exercise of the Warrants, and any securities issued or then issuable in respect of the Shares and the Warrant Shares, by June 18, 2022, and to have such registration statement declared effective by July 3, 2022, in the event the registration statement is not reviewed by the Securities and Exchange Commission (the “SEC”), or by August 2, 2022, in the event the registration statement is reviewed by the SEC. The Company will use commercially reasonable efforts to keep such registration statement effective at all times until all of the registrable securities covered by such registration statement (i) have been sold, thereunder or pursuant to Rule 144 under the Securities Act, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144. The Company will be obligated to pay certain liquidated damages to the Purchasers if the Company fails to file the Registration Statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, or if the Company fails to maintain the effectiveness of the Registration Statement.
The foregoing description of the Purchase Agreement, the Warrants and the Registration Rights Agreement are not complete and are qualified in their entirety by references to the full text of the Form of Purchase Agreement, the Form of Warrant and the Form of Registration Rights Agreement, which are filed as exhibits to this Current Report on Form 8-K and are incorporated by reference herein.