BranchOut Food Inc. (NASDAQ:BOF), a Nevada-based food manufacturing company, has entered into a sales agreement to offer shares via an at-the-market (ATM) issuance, according to a recent SEC filing. On Wednesday, the company disclosed the signing of an ATM Agreement with Alexander Capital, L.P., which allows the sale of common stock shares up to a total of $3 million.
The shares will be sold from time to time at prevailing market prices, as permitted by law, through Alexander Capital acting as the sales agent. The agreement specifies that Alexander Capital will use commercially reasonable efforts, consistent with its sales and trading practices, to sell the shares on behalf of BranchOut Food Inc.
This ATM offering will be conducted under the company's previously filed and SEC-effective Registration Statement on Form S-3 and a prospectus supplement dated October 23, 2024. The offering will continue until either all shares under the agreement are sold or the agreement is terminated by either party.
BranchOut Food Inc. has agreed to pay Alexander Capital a commission of 3.0% of the gross proceeds from each sale made under the ATM Agreement, in addition to reimbursing certain expenses. The company has also provided Alexander Capital with indemnification and contribution rights.
The ATM Agreement and the legal opinion of Pachulski Stang Ziehl & Jones LLP regarding the validity of the shares are included as exhibits to the SEC filing.
The move to set up an ATM offering allows BranchOut Food Inc. to raise capital flexibly by selling shares over time at market prices. The company's decision to enter into this agreement is based on a strategic approach to financing its operations and growth initiatives.
This information is based on the press release statement filed with the SEC.
In other recent news, BranchOut Food Inc. is contending with potential delisting from the Nasdaq Capital Market due to an equity shortfall. The company's stockholders' equity was reported to be below the required $2.5 million threshold, as identified in their 2023 annual report. Despite a compliance plan accepted by Nasdaq, BranchOut Food Inc. failed to meet the terms of the extension granted to regain compliance.
In response to this, the Oregon-based food manufacturer has requested a hearing with Nasdaq's Hearings Panel to determine its future on the exchange. In addition to these concerns, BranchOut Food Inc. recently held its 2024 Annual Meeting of Stockholders.
Key issues were voted on during the meeting, including the election of director nominees, approval of a convertible promissory note, exercise of warrants to purchase company stock, executive compensation, and frequency of advisory votes on executive compensation. The company also secured ratification for the appointment of M&K CPAS, PLLC as its independent registered public accountants.
These developments serve as recent highlights in the company's journey.
InvestingPro Insights
BranchOut Food Inc.'s decision to enter into an ATM agreement for up to $3 million in share sales comes at a time when the company is facing some financial challenges, as revealed by recent InvestingPro data. The company's market capitalization stands at $11.98 million, which puts the potential $3 million share offering into perspective as a significant capital raise relative to its size.
InvestingPro data shows that BranchOut Food is experiencing rapid revenue growth, with a 703.78% increase in the last twelve months as of Q2 2024. However, this growth comes with financial strain. An InvestingPro Tip indicates that the company is "quickly burning through cash," which may explain the need for this ATM offering. Additionally, the company is "not profitable over the last twelve months," with an operating income margin of -76.57%.
Despite these challenges, BranchOut Food has shown strong recent market performance, with a 73.89% price return over the last three months. This positive momentum might make the ATM offering more attractive to potential investors. However, potential investors should note that the stock "generally trades with high price volatility," according to another InvestingPro Tip.
For readers interested in a more comprehensive analysis, InvestingPro offers 8 additional tips for BranchOut Food, providing a deeper understanding of the company's financial position and market performance.
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