As
filed with the United States Securities and Exchange Commission on November 9, 2023
Registration
No. 333-274879
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment
No. 3
to
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
Applied
uv, inc.
(Exact
name of registrant as specified in its charter)
Nevada |
3648 |
84-4373308 |
(State
or Other Jurisdiction of Incorporation or Organization) |
(Primary
Standard Industrial Classification Code Number) |
(I.R.S.
Employer Identification No.) |
150
N. MacQuesten Parkway
Mount
Vernon, NY 10550
(914)
665-6100
(Address,
including zip code, and telephone number, including area code,
of
registrant’s principal executive offices)
Max
Munn
Chief
Executive Officer
Applied
UV, Inc.
150
N. MacQuesten Parkway
Mount
Vernon, NY 10550
(914)
665-6100
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Ross
D. Carmel, Esq. |
Anthony
W. Basch, Esq. |
Jeffrey
P. Wofford, Esq. |
J.
Britton Williston, Esq. |
Sichenzia
Ross Ference Carmel LLP |
Kaufman
& Canoles, P.C. |
1185
Avenue of the Americas, 31st Floor |
1021
E. Cary Street, Suite 1400 |
New
York, New York 10036 |
Two
James Center |
Telephone:
(212) 930-9700 |
Richmond,
VA 23219 |
|
Telephone:
(804) 771-5700 |
Approximate
date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Securities Exchange Act of 1934.
Large
accelerated filer ☐ |
Accelerated
filer ☐ |
Non-accelerated
filer ☒ |
Smaller
reporting company ☒ |
|
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 to Section 7(a)(2)(B) of the Securities Act. ☐
The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date
as the Commission acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting
an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.
Subject
to Completion, dated November 9, 2023
PRELIMINARY
PROSPECTUS
24,000,000 Units, Each Unit Consisting of One
Share of Common Stock or One Pre-Funded Warrant to Purchase One Share of Common Stock, one-tenth of a Series A Warrant to Purchase one
Share of Common Stock and one-tenth of a Series B Warrant to Purchase one Share of Common Stock
4,800,000 Shares of Common Stock Underlying the Series A
and Series B Warrants
Applied
UV, Inc.
Applied UV, Inc. is offering, on a firm commitment,
underwritten basis, 24,000,000 units (the “Units”), each Unit consisting of one share of our common stock, $0.0001 par value
per share (“Common Stock”), one-tenth (1/10) of a Series A warrant (“Series A Warrant”) to purchase one a share
of Common Stock and one-tenth (1/10) of a Series B Warrant (“Series B Warrant” and, together with the Series A Warrant, the
“Warrants”) to purchase one share of Common Stock, at an assumed offering price of $0.25 per Unit, which was the last reported
sale price of our Common Stock on The Nasdaq Capital Market on November 8, 2023.
The Units have no stand-alone rights and will
not be certificated or issued as stand-alone securities. Each Series A Warrant offered hereby is immediately exercisable on the date of
issuance at an exercise price of $2.50 (a multiple of 10 times the offering price per Unit, assuming an offering price of $0.25 per Unit)
per share of Common Stock underlying each Series A Warrant, and will expire five years from the closing date of this public offering. Each
Series B Warrant offered hereby is immediately exercisable on the date of issuance at an exercise price of $5.00 (a multiple of 20 times
the offering price per Unit, assuming an offering price of $0.25 per Unit) per share of Common Stock underlying each Series B Warrant,
and will expire five years from the closing date of this public offering.
We are also offering to each purchaser of Units
that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99% of our outstanding Common Stock immediately
following the consummation of this offering, the opportunity to purchase Units consisting of one pre-funded warrant (in lieu of one share
of Common Stock, each a “Pre-Funded Warrant”), one Series A Warrant and one Series B Warrant. Subject to limited exceptions,
a holder of Pre-Funded Warrants will not have the right to exercise any portion of its Pre-Funded Warrants if the holder, together with
its affiliates, would beneficially own in excess of 4.99% (or, at the election of the holder, such limit may be increased to up to 9.99%)
of the number of Common Stock outstanding immediately after giving effect to such exercise. Each Pre-Funded Warrant will be exercisable
for one share of Common Stock. The purchase price of each Unit including a Pre-Funded Warrant will be equal to the price per Unit including
one share of Common Stock, minus $0.00001, and the remaining exercise price of each Pre-Funded Warrant will equal $0.00001 per share.
The Pre-Funded Warrants will be immediately exercisable (subject to the beneficial ownership cap) and may be exercised at any time until
all of the Pre-Funded Warrants are exercised in full. For each Unit including a Pre-Funded Warrant we sell (without regard to any limitation
on exercise set forth therein), the number of Units including a share of Common Stock we are offering will be decreased on a one-for-one
basis.
Pursuant to the registration statement related
to this prospectus, we are also registering the shares of Common Stock issuable upon exercise of the Warrants and the Pre-Funded Warrants.
The Common Stock and Pre-Funded Warrants can each
be purchased in this offering only with the accompanying Warrants that are part of a Unit, but the components of the Units will be immediately
separable and will be issued separately in this offering. See “Description of Securities” in this prospectus for more
information.
Our Common Stock is listed on The Nasdaq Capital
Market under the symbol “AUVI.” The last reported sale price of our Common Stock on The Nasdaq Capital Market on November
8, 2023 was $0.25 per share. There is no established public trading market for the Warrants or the Pre-Funded Warrants, and we do not
intend to list the Warrants or the Pre-Funded Warrants on any national securities exchange or trading system. Without an active trading
market, the liquidity of the Warrants and the Pre-Funded Warrants will be limited.
The
final public offering price of the Units will be determined through negotiation between us and the underwriter, based upon a number of
factors, including our history and our prospects, the industry in which we operate, our past and present operating results, the previous
experience of our executive officers and the general condition of the securities markets at the time of this offering.
We have granted Aegis Capital Corp., as underwriter,
an option, exercisable for 45 days from the closing date of this offering, to purchase up to 3,600,000 additional shares of Common Stock,
representing 15% of the shares of Common Stock sold in the offering, and/or up to 3,600,000 Pre-Funded Warrants, representing 15% of the
Pre-funded Warrants sold in the offering, and/or up to 360,000 Series A Warrants, representing 15% of the Series A Warrants sold in the
offering, and/or up to 360,000 Series B Warrants, representing 15% of the Series B Warrants sold in the offering (the “Over-Allotment
Option”). The underwriter may exercise the over-allotment option with respect to shares of common stock only, Pre-Funded Warrants
only, Series A Warrants only, Series B Warrants only, or any combination thereof.
Max Munn, our founder and Chief Executive Officer,
has voting control over approximately 51.59% of our voting power of our outstanding voting stock and therefore we currently meet the definition
of a “controlled company” under the corporate governance standards for Nasdaq listed companies and for so long as we remain
a controlled company under this definition, we are eligible to utilize certain exemptions from the corporate governance requirements of
The Nasdaq Stock Market LLC (“Nasdaq”). Upon the closing of this offering, Mr. Munn will own approximately 23.52% of the voting
power of our outstanding voting stock and we will no longer be a controlled company.
We
intend to use the proceeds from this offering for general corporate purposes, including working capital. See “Use of Proceeds.”
Investing
in the Securities involves a high degree of risk. See “Risk Factors” beginning on page 14 of this prospectus for a
discussion of information that should be considered in connection with an investment in our Common Stock.
Neither
the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities
or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
We
are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012, and we have elected
to comply with certain reduced public company reporting requirements.
| |
(Per Unit) | |
Total |
Public offering price | |
$ | 0.25 | | |
$ | 6,000,000 | |
Underwriting discounts and commissions(1) | |
$ | 0.02 | | |
$ | 480,000 | |
Proceeds, before expenses, to us(2) | |
$ | 0.23 | | |
$ | 5,520,000 | |
(1) | | Represents
a cash fee equal to 8.0% of the aggregate purchase price paid by investors in this offering
and does not include a non-accountable expense allowance equal to 1% payable to Aegis Capital
Corp. See “Underwriting” beginning on page 31 of this prospectus for
a description of the compensation to be received by the underwriter. |
(2) | | The
amount of offering proceeds to us presented in this table does not give effect to any exercise
of the Warrants or the Pre-Funded Warrants. |
For additional information regarding our arrangement
with the underwriter, please see “Underwriting” beginning on page 31.
The
underwriter expects to deliver the shares against payment on ________________, 2023.
Aegis
Capital Corp.
The
date of this prospectus is ________________, 2023
Table
of Contents
You
should rely only on the information contained in this prospectus or any prospectus supplement or amendment. Neither we nor the underwriter
have authorized any other person to provide you with information that is different from, or adds to, that contained in this prospectus.
If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor the underwriter take responsibility
for, and can provide no assurance as to the reliability of, any other information that others may give you. You should assume that the
information contained in this prospectus or any free writing prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of the Securities. Our business, financial condition, results of operations
and prospects may have changed since that date. We are not making an offer of any securities in any jurisdiction in which such offer
is unlawful.
No
action is being taken in any jurisdiction outside the United States to permit a public offering of the Securities or possession or distribution
of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States
are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable
to that jurisdiction.
ABOUT
THIS PROSPECTUS
Throughout
this prospectus, unless otherwise designated or the context suggests otherwise:
• | | all
references to the “Company,” the “registrant,” “AUVI,”
“Applied UV,” “we,” “our,” or “us” in this
prospectus mean Applied UV, Inc., a Nevada corporation; |
• | | “year”
or “fiscal year” mean the year ending December 31st; and |
• | | all
dollar or $ references when used in this prospectus refer to United States dollars; |
The
industry and market data and other statistical information, if any, contained in this prospectus are based on our own estimates, independent
publications, government publications, reports by market research firms or other published independent sources, and, in each case, are
believed by us to be reasonable estimates. Although we believe these sources are reliable, we have not independently verified the information.
|
PROSPECTUS
SUMMARY
This
summary provides a brief overview of the key aspects of our business and our securities. The reader should read the entire prospectus
carefully, especially the risks of investing in the Securities, as discussed under “Risk Factors.” Some of the
statements contained in this prospectus, including statements under “Summary” and “Risk Factors” as well
as those noted in the documents incorporated herein by reference, are forward-looking statements and may involve a number of risks
and uncertainties. Our actual results and future events may differ significantly based upon a number of factors. The reader should
not put undue reliance on the forward-looking statements in this prospectus, which speak only as of the date on the cover of this
prospectus.
Corporate
Overview
Applied
UV, Inc. (“AUVI”) was incorporated in Delaware on February 26, 2019. On October 25, 2023, AUVI re-domesticated from the
State of Delaware to the State of Nevada pursuant to that certain Agreement and Plan of Merger dated as of September 1, 2023 (the
“Merger Agreement,” and such merger, the “Merger”), by and between the Company and Applied UV, Inc., a Nevada
corporation and a wholly owned subsidiary of the Company (“Applied UV, Inc. (Nevada)”). The Merger involved the Company
merging with and into Applied UV, Inc. (Nevada), with Applied UV, Inc. (Nevada) as the surviving corporation and the successor to
the Company.
AUVI
operates through two wholly owned subsidiaries, SteriLumen, Inc. (“SteriLumen”) and Munn Works, LLC (“MunnWorks”).
SteriLumen was incorporated in New York on December 8, 2016. MunnWorks was organized as a limited liability company in New York on
November 9, 2012.
Business
and Corporate History
AUVI
is a leading sales and marketing company that develops, acquires, markets and sells proprietary surface and air disinfection technology
focused on improving indoor air quality (IAQ), specialty LED lighting and luxury mirrors and commercial furnishings, all of which
serves clients globally in the healthcare, commercial and public venue, hospitality, food preservation, cannabis, education, and
winery vertical markets.
With
its established, strategic manufacturing partnerships and alliances, including Canon, Acuity, Johnson Controls, USHIO, Siemens, Grainger,
and a global network of 89 dealers and distributors in 52 countries, 47 manufacturing representatives, and 19 U.S.-based internal
sales representatives, AUVI offers a complete suite of products through SteriLumen and MunnWorks.
SteriLumen
owns, brands, and markets a portfolio of research-backed and clinically proven products utilizing advanced UVC Carbon, Broad Spectrum
UVC LED’s, and photo-catalytic oxidation (PCO) pathogen elimination technology, branded as Airocide ™, Scientific
Air™, Airoclean™ 420, Lumicide™, PUROAir, PUROHealth, PURONet, and LED Supply Company. Sterilumen’s proprietary
platform suite of patented surface and air technologies offers one of the most complete pathogen disinfection platforms including
mobile, fixed, and HVAC systems and software solutions interconnecting its entire portfolio suite into the IoT, allowing customers
to implement, manage and monitor IAQ measures recommended by the EPA across any enterprise. Additionally, the Lumicide™ platform
applies the power of ultraviolet light (UVC) to destroy pathogens automatically, addressing the challenge of healthcare-acquired
infections in several patented designs for infection control in healthcare. LED Supply Company is a
full-service, wholesale distributor of LED lighting and controls throughout North America.
MunnWorks
manufactures and sells custom luxury and backlit mirrors, conference room and living spaces furnishings.
Our
global list of Fortune 100 end users, including Kaiser Permanente, NY Health+Hospitals, MERCY Healthcare, University of Chicago Medical,
Baptist Health South Florida, New York City Transit, Samsung, JB Hunt, Boston Red Sox’s Fenway Park, JetBlue Park, France’s
Palace of Versailles, Whole Foods, Del Monte Foods, U.S. Department of Veterans Affairs, Marriott, Hilton, Four Seasons and Hyatt,
and more. For information on AUVI and its subsidiaries, please visit www.applieduvinc.com. The information on, or
that may be accessed through, our website is not a part of this prospectus.
Air
Disinfection Solutions & LED Lighting: Airocide, Scientific Air, PURO and LED Supply Co.
In
February of 2021, we acquired all the assets and assumed certain liabilities of Akida Holdings, LLC (“Akida”). At the
time of the acquisition, Akida owned the Airocide™ system of air purification technologies, originally developed for the National
Aeronautics and Space Administration (“NASA”) with assistance from the University of Wisconsin at Madison, that uses
a combination of UVC and a proprietary, titanium dioxide based photocatalyst that has helped to accelerate the reopening of the global
economy with applications in the hospitality, hotel, healthcare, nursing home, grocer, wine, commercial building and retail sectors.
The Airocide™ system has been used by brands such as NASA, Whole Foods, Dole, Chiquita, Opus One, Sub-Zero Refrigerators and
Robert Mondavi Wines. Akida had contracted KES Science & Technology, Inc. (“KES”) to manufacture, warehouse and distribute
the Airocide™ system and Akida’s contractual relationship with KES was assigned to and assumed by us as part of the acquisition.
On
September 28, 2021, we acquired all the assets and assumed certain liabilities of KES. At the time of the acquisition, KES was principally
engaged in the manufacturing and distribution of the Airocide™ system of air purification technologies and misting systems.
KES also had the exclusive right to the sale and distribution of the Airocide™ system in certain markets. This acquisition
consolidated all of manufacturing, sale and distribution of the Airocide™ system under the SteriLumen brand and expanded our
market presence in food distribution, post-harvest produce, wineries and retail sectors. We sell our products throughout the United
States, Canada and Europe. |
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|
The
Airocide™ system of air purification technologies, originally developed for the National
Aeronautics and Space Administration (“NASA”) with assistance from the University
of Wisconsin at Madison, uses a combination of UVC and a proprietary, titanium dioxide based
photocatalyst to eliminate airborne bacteria, mold, fungi, viruses, volatile organic compounds
and many odors. The core Airocide™ technology has been in use on the International
Space Station and is based on photo-catalytic oxidation (PCO), a bioconversion process that
continuously converts damaging molds, microorganisms, dangerous pathogens, destructive volatile
organic chemicals (VOCs) and biological gasses into harmless water vapor. Unlike other air
purification systems that provide “active” air cleaning, ozone producing systems,
ionization or “photo-electrochemical oxidation,” Airocide’s™ nanocoating
technology permanently bonds titanium dioxide to the surface of the catalytic bed. This permits
the perpetual generation of surface-bound (OH-) radicals over the large surface area created
by their advanced geometric design and prevents the generation and release of ozone and other
harmful byproducts. The proprietary formulation and methods for creating the catalyst are
the basis of Airocide’s™ competitive advantage, making it the only consistently
robust, highly effective, ozone free PCO technology on the market. Airocide™ has been
tested over the past 12 years by governmental agencies such as NASA, the National Renewable
Energy Laboratory, independent universities including the University of Wisconsin, Texas
Tech University, and Texas A&M, as well as air quality science laboratories. Airocide™
technology is listed as a FDA Class II Medical Device, making it a suitable for providing
medical grade air purification in critical hospital use cases. Airocide™ Product lines
include APS (consumer units), the GCS and HD lines (commercial units that will include the
Sterilumen App to bring connectivity, reporting and asset management to our suite of products).
The APS series provides true choice, low maintenance filter-less PCO or a filtered PCO air
purification option ideal for restaurants, conference rooms, residential and small business
or home office spaces. The GCS series is suitable for larger public spaces and enclosed rooms
that may have high occupancy such as offices, waiting rooms and hotel lobbies, and airport
gate areas. The HD series is the most powerful, providing two-stage purification for fast
sanitization of larger or industrial spaces such as sporting venues and locker rooms, airports,
museums, winery cellars, warehouses, and food-processing facilities. All Airocide™
products also extend the life of any perishables like fruit, produce or flowers.
On
October 13, 2021, we acquired substantially all of the assets of Old SAM Partners, LLC f/k/a Scientific Air Management, LLC, which
owned a line of air purification technologies (“Scientific Air”). The Scientific Air product line uses a combination
of UVC and a proprietary, patented system to eliminate airborne bacteria, mold, fungi, viruses, volatile organic compounds, and many
odors without producing any harmful by-products. Scientific Air’s products are well suited for larger spaces within a facility
due to the higher air flow of these units. The units are also mobile with industrial grade casters, allowing for movement throughout
a facility to address increased bio burden from larger meetings or increased human traffic. Both of these key items extend our Airocide
line, creating a comprehensive air disinfection portfolio that spans from small to large spaces and mobile applications. Scientific
Air’s products are currently sold predominantly in North America and into the healthcare market.
PURO
Lighting
On January
26, 2023, we acquired PURO Lighting LLC (“PURO”) and its operating subsidiaries (the “PURO Acquisition”)
pursuant to an agreement and plan of merger dated December 19, 2022 (the “PURO Merger Agreement”) for (i) $1,700,720
in the obligations to pay certain PURO debt and transaction costs, (ii) 2,497,220 shares of our Common Stock (iii) 251,108 shares
of our 5% Series C Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”)
and (iv) the payment to PURO former equity interest holders of earnout payments on the terms and conditions described in the PURO
Merger Agreement.
In
connection with our acquisition of PURO, we also entered into a Note Purchase and Cancellation Agreement dated as of January 5, 2023,
with PURO Lighting, LLC, and Acuity Brands Lighting, Inc., which provided for our purchase and cancellation of a $5 million promissory
note issued by PURO to Acuity Brands Lighting, Inc. in exchange for $2.5 million in cash and the issuance to Acuity Brands Lighting,
Inc. 1,250,000 shares of our 2% Series B Cumulative Perpetual Preferred Stock (the “Series B Preferred Stock”).
PURO
Lighting was founded in 2019 with the goal of using light technology to promote health and wellness within spaces. Today PURO provides
a suite of UV disinfection systems that have the ability to disinfect air and surfaces in commercial and industrial spaces. They
focus their sales efforts in three primary verticals: Education, Government, and Healthcare. The acquisition of Puro Lighting,
LLC adds PUROHealth and PURONet - a powerful suite of products used in education, government, and healthcare that incorporates UV
Lighting and a HVAC monitoring software platform. With its UL listed and patented portfolio of independently tested (Resinnova Labs)
synergistic surface and air disinfection technologies that help facility managers protect against multiple pathogens; PURO opens
new opportunities for cross marketing sales to existing distribution channels. Additionally, the potential to inter-connect our entire
portfolio of disinfection technology solutions into the IoT will provide our customers with both products and smart tools to manage
and monitor indoor air quality (IAQ) across any enterprise. PURO’s proprietary platform suite of patented technologies offers
the most complete pathogen disinfection platform including mobile, fixed and HVAC systems and solutions allowing companies to implement
the IAQ measures recommended by the EPA. PURO boast a strong domestic sales network with reps in 43 states, and distribution
in all 50 states. Their product offerings encompass a range of innovative solutions, including UVC systems for air handling,
in-room continuous disinfection using cutting-edge Far-UVC technology, and specialized surface disinfection solutions designed specifically
for the healthcare industry.
The
Puro Acquisition further positions the Company to address a growing air disinfection market trend that aligns with the White House
“Clean Air Initiatives” implemented during the height of the COVID 19 pandemic designed to protect consumers and businesses
against existing and future airborne pathogens allowing economies globally to remain open. The merged entities have proven applications
that can now be included in improving IAQ at the facility level, including HVAV systems in public, government, municipal, retail
spaces and buildings. The Puro Acquisition positions AUVI to be one of the only companies in the world to offer a complete air and
surface disinfection platform that includes consumer, fixed and mobile, and commercial applications that are research backed, clinically
tested and that are used by global Fortune 100 end users in multiple verticals. |
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LED
Supply Company
On
January 26, 2023, we acquired LED Supply Co. LLC (“LED Supply”) and its operating subsidiaries (the “LED Acquisition”)
pursuant to an agreement and plan of merger dated December 19, 2022 (the “LED Merger Agreement”) for (i) $3,179,672 in
the obligations to pay certain LED debt and transaction costs, (ii) 275,555 shares of our Common Stock, (iii) 148,888 shares of our
5% Series C Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”) and (iv)
the payment to LED former equity interest holders of earnout payments on the terms and conditions described in the LED Merger Agreement.
Founded
in 2009, LED Supply is a national, Colorado-based company that provides design, distribution and implementation services for lighting,
controls and smart building technologies. LED Supply continues to expand its market reach with a focus on new types of energy efficiency
and sustainable technologies. Along with its robust e-commerce component, LED Supply has recently taken the next step in revenue
growth by repositioning itself as a preferred supplier for not only the latest in LED technologies, but the source for emerging technologies
and product categories that the construction and retrofit market need; from electric vehicle charging to smart home technology, emergency
and safety equipment and much more.
We
see synergies across our entire air and surface disinfection portfolio. First, we look to leverage Airocide’s global distribution
capabilities to facilitate the sale of Scientific Air’s and PURO’s offerings internationally. Second, we look to leverage
PURO’s strength in healthcare to pull through existing Airocide™ units, creating a broad healthcare product line, from
small clinics, patient rooms and doctor’s offices to larger spaces such as nursing stations, waiting rooms and cafeterias.
Third, we look to leverage the national MunnWorks hospitality reach with leading luxury hotel chain operators to pull through our
entire air and surface disinfection portfolio (Airocide™ and Lumicide™) as well as PURO’s offerings into future
hotel, condo and other renovation, upgrade and remodeling projects. Fourth, we will look to work with Canon Virginia, Inc.’s
(“CVI”) extensive field support team to promote the sale of our products as well as service capabilities. Finally,
we look to incorporate PUROAir, PUROHealth and PURONet (a powerful suite of products used in healthcare that incorporates UV Lighting
and a HVAC monitoring software platform) into our IoT integration plans via the Sterilumen App across our entire platform connecting
all our units, thereby creating a leading smart asset management, reporting and control system tool that can be incorporated across
all enterprises.
Market
Opportunity
According
to Research and Markets, the UV disinfection market is expected to reach $9 billion by 2027 as technology continues to
improve and the focus on stopping the spread of contagious diseases increases. According to the Center for Disease Control (CDC)
states that 1 in 31 patients have at least one Hospital Associated Infection (HAI) annually1 and that
3 million serious infections occur every year in long-term care facilities. Losses from contagious infections, pathogens, and viruses
cost the U.S. economy more than $270 billion every year as per the CDC: $28 billion lost through HAIs; $225 billion in lost productivity
due to absenteeism; and $25 billion in losses due to student and teacher absenteeism. Scientists globally have been advocating improving
air quality post pandemic, significantly boosting global adoption to control airborne pathogen transmission. Governments globally are
mandating health agencies to address improving indoor air quality (IAQ) via grants and mechanisms to ease visitation and protect
facilities against future pathogen.
Indoor
air quality (IAQ) has become an even more important issue as world economies transition beyond the COVID 19 pandemic. In 2021, 39
scientists reiterated the need for a “paradigm shift” and called for improvements in, “how we view and address
the transmission of respiratory infections to protect against unnecessary suffering and economic losses.” In mid-2022,
the industry began to see this seismic shift from pandemic-related mobile apparatuses to complete systems within systems for facilities
designed to monitor, improve, and report on a more permanent basis. While there are opportunities for mobile systems, our emphasis
will be on this growing market trend.
In
addition to this, the global air purifier market size is set to grow exponentially. It was valued at $9.24 billion in 2021
and is predicted to grow to approximately $22.84 billion by 2030. According to Precedence Research, the immense demand for air purification
and sterilization in the US will be driven by the commercial sector. |
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1
“Health Topics – Health-care associated Infections (HAI), Center for Disease Prevention and Control,
https://www.cdc.gov/policy/polaris/healthtopics/hai/index.html#:~:text=On%20any%20given%20day%2C%201,lead%20to%20sepsis%20or%20death. |
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Sterilumen’s product portfolio is one
of the only research-backed, clinically proven pure-play air and surface disinfection technology companies with international distribution
and globally recognized end users, with product developed for NASA. In addition to the numerous recognized research institutions
and globally recognized names who published the reports that were completed by the acquired companies, Airocide was independently proven
to kill SARS, MERSA and Anthrax. Sterilumen’s air purification (Airocide, Scientific Air & PURO Lighting) and surface
disinfection (Lumicide) were independently tested and proven to kill both Candida Auris (Resinnova Laboratories) and SARS CoV-2 (COVID-19)
(MRIGlobal), MRSA (Resinnova Laboratories), Salmonella enterica (Resinnova Laboratories) and Escherichia coli (Resinnova Laboratories).
Our
goal is to build a company that successfully designs, develops, and markets our air and surface disinfection solutions that will
enable US and global economies to implement “Clean Air” initiatives aimed at improving indoor air quality (IAQ) as recommended
by the U.S. Environmental Protection Agency. We will seek to achieve this goal by having our products actively involved in the following
activities:
(a)
Focus on key target verticals that have proven business use cases, including:
•
Food Preservation
•
Healthcare
•
Winery
•
Hospitality
•
Schools
•
Cannabis
•
Correctional Facilities
•
Dental and Long-Term Care
(b)
In addition to further developing Airocide, Scientific Air, PURO, Lumicide and LED Supply specific sales efforts, we intend
to leverage the Company’s hospitality business (MunnWorks) for cross-selling opportunities of our air purification and surface
disinfectant solutions and products. Our initial research indicates that the key stakeholders in this market value the asset management
and reporting capabilities of our platform and provide key points of differentiation.
(c)
We aim to also expand our global distributor channels into new markets not currently served.
(d)
We will and continue scientific validation through lab testing and data from real world deployments, including publish case studies
in peer reviewed journals. |
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Manufacturing
In
an effort to improve operationally, after analyzing each of the points in our supply chain to tighten integration to optimize inventory,
improve quality control and mitigate against supply chain disruptions that were witnessed globally throughout the pandemic, on
December 18th, 2022, we announced that we signed a strategic manufacturing and related services agreement with CVI, a global manufacturing,
engineering and technical operation for the Canon family and a wholly owned subsidiary of Canon U.S.A, Inc. The agreement establishes
CVI’s status as the primary manufacturer, assembler and logistical authority for our entire suite of air purification solutions.
The Manufacturing Agreement, the first of a series of anticipated agreements, enables us to leverage the resources of CVI’s
two million-square-foot state-of-the-art engineering, manufacturing and distribution facility. We plan to leverage CVI’s
almost 40 years of innovative and efficient production methods to manufacture our patented, FDA Class II Listed Airocide PCO commercial
and consumer devices, as well as the patented advanced Activated Carbon UVC and HEPA Mobile disinfection Scientific Air portfolio. From
an R&D perspective, working closely with Canon, we are also beginning to formulate our new product roadmap and making substantial
improvements to our entire line of mobile and fixed air purification products, further differentiating our patented PCO and UVC Carbon
based solutions from that of our competition. We also plan to collaborate with Canon Financial Services, Inc. to enable better
cash flow management in regard to its growing supply chain requirements. Further, we will look to work with CVI’s extensive
field support team to promote the sale of our products, as well as service capabilities.
Recent
Developments
Reverse
Stock Split. On May 24, 2023, we held our annual meeting of stockholders, at which our stockholders approved the adoption
of an amendment to our Amended and Restated Certificate of Incorporation, as amended (the “Charter”), to effect a reverse
stock split of our issued and outstanding shares of Common Stock, at a specific ratio, ranging from one-for-two (1:2) to one-five
(1:5), with the exact ratio to be determined by our Chief Executive Officer without further approval or authorization of our board
of directors (“Board”) or stockholders (the “Reverse Stock Split”). On May 26, 2023, our Chief Executive
Officer determined that the Reverse Split would be completed as a 1-for-5 reverse stock split, reducing the aggregate number of outstanding
shares of Common Stock from 19,874,879 shares to a total of 3,974,971 shares outstanding and filed an amendment to our Charter
with the Secretary of State of Delaware for the 1-for-5 Reverse Stock Split, effective 12:01 a.m. on May 31, 2023. The number of
authorized shares of our Common Stock remained unchanged at 150,000,000 shares after the Reverse Stock Split. As a result of
the Reverse Stock Split, every five shares of our Common Stock, outstanding, immediately prior to the effectiveness of the amendment
to the Charter to effect the Reverse Stock Split, was automatically combined and converted (without any further act) into one share
of fully paid and nonassessable share of Common Stock. No fractional shares of Common Stock were issued in connection with the Reverse
Stock Split, and in lieu of any fractional shares to which a stockholder of record was otherwise entitled as a result of the Reverse
Stock Split, the registrant paid cash (without interest) equal to such fraction multiplied by the closing price of our Common Stock
on The Nasdaq Capital Market immediately preceding the effective date of the Reverse Stock Split (with such closing sales price being
adjusted to give effect to the Reverse Stock Split). Except for the number of authorized shares of Common Stock, all Common Stock
share numbers, option numbers, warrant numbers, other derivative security numbers and exercise prices appearing in this prospectus
have been adjusted to give effect to the 1-for-5 Reverse Stock Split.
June 2023 Public Offering.
On June 16, 2023, the Company entered into an underwriting agreement, pursuant to which the Company agreed to sell to the underwriters,
an aggregate of (i) 4,730,000 shares of Common Stock, at a public offering price of $1.00 per share and (ii) pre-funded warrants to purchase
270,000 shares of Common Stock at a price of $1.00 per share, minus $0.00001. In addition, the Company granted the underwriters a 45-day
over-allotment option to purchase up to an additional 750,000 shares of Common Stock at the public offering price per security, less
underwriting discounts, and commissions, of which 200,000 shares were purchased. As a result of the offering, the Company received gross
proceeds of $5,200,000 and incurred $816,000 of deal related costs. Each pre-funded warrant is exercisable for one share of Common Stock,
with an exercise price equal to $0.00001 per share, at any time that the pre-funded warrant is outstanding. There is no expiration date
for the pre-funded warrants. The holder of a pre-funded warrant will not be deemed a holder of our underlying Common Stock until the
pre-funded warrant is exercised.
Suspension
of Dividends for Preferred Stock. On June 19, 2023, the Board temporarily suspended the Company’s: (i) monthly $0.21875
dividend on its 10.5% Series A Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”), commencing with the
July dividend, that would have been paid on July 17, 2023; (ii) quarterly $0.03 dividend on its 2% Series B Cumulative Perpetual
Preferred Stock (“Series B Preferred Stock”), commencing with the dividend for the quarter ending June 30, 2023, that
would have been paid on July 17, 2023; and (iii) quarterly $0.0625 dividend on its 5% Series C Cumulative Perpetual Preferred Stock
(“Series C Preferred Stock”), commencing with the dividend for the quarter ending June 30, 2023, that that would have
been paid on July 17, 2023. The dividends on each Series cited above have been suspended by the Board for the next eleven (11) months,
or until the month of May 2024 for the Series A Preferred Stock or the quarter ending March 31, 2024 for the Series B and C Preferred
Stock but may be re-instated at any time in the Board’s discretion (the “Suspension Period”). The suspension of
these dividends will defer approximately $1.5 million in cash dividend payments until after the Suspension Period. Notwithstanding
anything contained herein to the contrary, dividends on the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock shall accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such
dividends, and whether or not such dividends are authorized or declared. No interest is payable in respect of any dividend payment
or payments on the Series A, B or C Preferred Stock which may be in arrears.
Nasdaq
Notice of Failure to Comply with Continued Listing Standards. On August 23, 2023, the Company received a letter from the Nasdaq
Listing Qualifications Staff of The Nasdaq Stock Market LLC therein stating that for the 30 consecutive business day period between July
12, 2023 through August 22, 2023, the Common Stock had not maintained a minimum closing bid price of $1.00 per share required for continued
listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). Pursuant to Nasdaq
Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar days, or until February 20, 2024 (the “Compliance
Period”), to regain compliance with the Bid Price Rule. If the Company does not regain compliance with the Bid Price Rule by February
20, 2024, the Company may be eligible for an additional 180-day period to regain compliance. If the Company cannot regain compliance
during the Compliance Period or any subsequently granted compliance period, the Common Stock will be subject to delisting. At that time,
the Company may appeal the delisting determination to a Nasdaq hearings panel. The notice from Nasdaq has no immediate effect on the
listing of the Common Stock and the Common Stock will continue to be listed on The Nasdaq Capital Market under the symbol “AUVI.”
The Company is currently evaluating its options for regaining compliance. There can be no assurance that the Company will regain compliance
with the Bid Price Rule or maintain compliance with any of the other Nasdaq continued listing requirements. |
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Approval
of 2023 Equity Incentive Plan. On August 24, 2023, our Board and stockholders approved
the Applied UV, Inc. 2023 Equity Incentive Plan (the “2023 Plan”). The 2023 Plan
governs equity awards to our employees, directors, officers, consultants and other eligible
participants. Initially, the maximum number of shares of our Common Stock that may be subject
to awards under the 2023 Plan is 2,500,000. Subject to adjustment upon changes in capitalization
of the Company as provided in Section 15 of the 2023 Plan, the number of shares available
for issuance under the 2023 Plan will be increased on the first day of each fiscal year beginning
with the 2024 fiscal year, in an amount equal to the least of (a) 500,000 shares, (b) a number
of shares equal to twenty percent (20%) of the total number of shares of all classes of our
Common Stock outstanding on the last day of the immediately preceding fiscal year less the
number of shares allocated to the 2023 Plan, and (c) such number of shares determined by
the administrator no later than the last day of the immediately preceding fiscal year. The
2023 Plan was deemed effective on October 22, 2023.
Re-domestication
from Delaware to Nevada. On September 1, 2023, the Company entered into the Agreement and Plan of Merger with Applied UV, Inc.,
a Nevada corporation (“Applied UV, Inc. (Nevada)”), in which the Company merged with and into Applied UV, Inc. (Nevada),
with Applied UV, Inc. (Nevada) as the surviving corporation and the successor to the Company (the “Re-Domestication”), on
October 25, 2023. The principal reason for the Re-Domestication is to eliminate our obligation to pay the annual Delaware franchise tax
that will result in significant savings to us in the future. Under Nevada law, there is no obligation to pay annual franchise taxes and
there are no capital stock taxes or inventory taxes. In addition, under Nevada law, there are minimal reporting and corporate disclosure
requirements and the identity of the corporate shareholders is not a part of the public record. Otherwise, the general corporation laws
of the States of Delaware and Nevada are quite similar as both states have liberal incorporation laws and favorable tax policies. The
provisions and terms of the Articles of Incorporation, Bylaws and Certificates of Designations of preferred stock of Applied UV, Inc.
(Nevada) are substantially similar to the Company’s. The Re-Domestication was not effected to prevent a change in control, nor
is it in response to any present attempt known to our Board to acquire control of the Company or obtain representation on our Board.
Nevertheless, certain effects of the proposed Re-Domestication may be considered to have anti-takeover implications simply by virtue
of being subject to Nevada law.
Arbitration
Summary
On
February 25, 2022, James Doyle, our former Chief Operating Officer, filed an arbitration claim against us for approximately $1.5 million
plus attorneys’ fees and other costs with the American Arbitration Association in the State of New York for severance pay and other
claims after being terminated by us for cause. The arbitration proceeding was initiated pursuant to the arbitration provision in Mr.
Doyle’s employment agreement with us. The evidentiary hearing was conducted at the American Arbitration Association’s midtown
offices on November 7, 8, 9, and 10, 2022. Afterwards, the parties submitted post-hearing briefs. On January 24, 2023, the arbitration
panel of the American Arbitration Association (the “Arbitration Panel”) issued a Partial Final Award, whereby the Arbitration
Panel denied five of the seven counts asserted by Mr. Doyle, and awarded him $100,000 in severance pay plus $21,153.84 in unused vacation
time plus 1,275 additional shares of our Common Stock pursuant to the terms of his Employment Agreement. These shares were issued on
June 1, 2023. In April 2023, the Arbitration Panel issued a Final Award further awarding Mr. Doyle $434,535.00 in legal fees and $39,628.03
in expenses.
Employees
As
of November 9, 2023, we had 143 employees.
Corporate
Information
Our
principal executive offices are located at 150 N. MacQuesten Parkway, Mount Vernon, NY 10550. Our website address is www.applieduvinc.com.
Implications
of Being an Emerging Growth Company
We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year following the fifth anniversary of
the date of the first sale of our Common Stock pursuant to an effective registration statement under the Securities Act of 1933, as amended
(the “Securities Act”); (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion
or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv)
the date on which we are deemed to be a large accelerated filer under applicable SEC rules. We expect that we will remain an emerging
growth company for the foreseeable future, but cannot retain our emerging growth company status indefinitely and will no longer qualify
as an emerging growth company on or before the last day of the fiscal year following the fifth anniversary of the date of the first sale
of our Common Stock pursuant to an effective registration statement under the Securities Act. For so long as we remain an emerging growth
company, we are permitted and intend to rely on exemptions from specified disclosure requirements that are applicable to other public
companies that are not emerging growth companies. |
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These
exemptions include:
•
being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial
statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” disclosure;
•
not being required to comply with the requirement of auditor attestation of our internal controls over financial reporting;
•
not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding
mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and
the financial statements;
•
reduced disclosure obligations regarding executive compensation; and
•
not being required to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute
payments not previously approved.
We
have taken advantage of certain reduced reporting requirements in this prospectus. Accordingly, the information contained herein
may be different than the information you receive from other public companies in which you hold stock.
An
emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act
for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this
extended transition period and, as a result, we will not be required to adopt new or revised accounting standards on the dates on
which adoption of such standards is required for other public reporting companies.
We
are also a “smaller reporting company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and have elected to take advantage of certain of the scaled disclosure available for smaller reporting
companies. |
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SUMMARY
OF THE OFFERING
The
following summary contains basic terms about this Offering and the Securities and is not intended to be complete. It may not contain
all of the information that is important to you. You should read the more detailed information contained in this prospectus, including
but not limited to, the risk factors beginning on page 14 and the other risks described in our annual and quarterly reports incorporated
by reference herein. For a more complete description of the terms of the Common Stock, see the section of this prospectus entitled
“Description of Securities.” |
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Issuer: |
Applied
UV, Inc., a Nevada corporation. |
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Units
Offered: |
24,000,000 Units on a firm commitment basis. Each Unit will consist of
one share of Common Stock (or Pre-Funded Warrant to purchase one share of our Common Stock in lieu thereof), one-tenth (1/10) of a Series
A Warrant to purchase one share of Common Stock and one-tenth (1/10) of a Series B Warrant to purchase one share of Common Stock. The
Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. The shares of Common Stock
and Pre-Funded Warrants, if any, can each be purchased in this offering only with the accompanying Warrants as part of Units (other than
pursuant to the underwriter’s option to purchase additional shares of Common Stock and/or Pre-Funded Warrants and/or Series
A Warrants and/or Series B Warrants), but the components of the Units will be immediately separable and will be issued separately in this
offering. |
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Series A and Series B Warrants Offered: |
Warrants to purchase an aggregate of up to 4,800,000 shares of our
Common Stock, subject to adjustment as set forth in the terms of the Warrant Agreement. Each Unit includes one share of Common Stock,
one-tenth (1/10) of a Series A Warrant and one-tenth (1/10) of a Series B Warrant. Each Series A Warrant is exercisable at a price of
$2.50 per share (a multiple of 10 times the offering price per Unit, assuming an offering price of $0.25 per Unit, and each Series B Warrant
is exercisable at a price of $5.00 per share (a multiple of 20 times the offering price per Unit. assuming an offering price of $0.25
per Unit). The Warrants will be immediately exercisable and will expire five years from the closing date of this public offering. See
“Description of Securities—Warrants and Pre-Funded Warrants Offered in this Offering.” |
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Pre-Funded
Warrants Offered: |
We are also offering to certain purchasers whose
purchase of Units in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties,
beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding Common Stock immediately following
the consummation of this offering, the opportunity to purchase, if such purchasers so choose, in lieu of Units including shares of Common
Stock, Units including Pre-Funded Warrants in lieu of shares of Common Stock that would otherwise result in any such purchaser’s
beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding Common Stock. The purchase price
of each Unit including a Pre-Funded Warrant will be equal to the price at which a Unit is sold to the public in this offering, minus $0.00001,
and the exercise price of each Pre-Funded Warrant will be $0.00001 per share.
Each Pre-Funded Warrant will be exercisable for one share of our Common
Stock and will be exercisable at any time after its original issuance until exercised in full, provided that the purchaser will be prohibited
from exercising Pre-Funded Warrants for shares of our Common Stock if, as a result of such exercise, the purchaser, together with its
affiliates and certain related parties, would own more than 4.99% of the total number of shares of our Common Stock then issued and outstanding.
However, any holder may increase such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage
shall not be effective until 61 days after such notice to us.
This prospectus also relates to the offering of the Common Stock issuable
upon exercise of the Pre-Funded Warrants. To better understand the terms of the Pre-Funded Warrants, you should carefully read the “Description
of Securities” section of this prospectus. You should also read the form of Pre-Funded Warrant, which is filed as an exhibit
to the registration statement that includes this prospectus.
See
“Description of Securities—Warrants and Pre-Funded Warrants Offered in this Offering.”
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Common
Stock outstanding prior to this Offering:(1) |
10,119,531
shares of Common Stock. |
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Common
Stock outstanding after this Offering: |
34,119,531
shares of Common Stock, assuming all of the Units offered hereby are sold and assuming no exercise of the Warrants and Over-Allotment
Option and no sale of Pre-Funded Warrants. |
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Over-Allotment
Option: |
The
underwriter has a 45-day option to purchase up to an additional 15% of the total number of shares of Common Stock and/or Pre-Funded
Warrants and/or Series A Warrants and/or Series B Warrants. |
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Use
of Proceeds: |
We
currently intend to use the net proceeds to us from this offering for the repayment of notes issued to Streeterville Capital, LLC,
and for general corporate purposes, including working capital. See the section of this prospectus titled “Use of
Proceeds” beginning on page 18. |
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Listing: |
Our
Common Stock is listed on The Nasdaq Capital Market under the symbol “AUVI.” There is no established public trading market
for the Warrants or Pre-Funded Warrants, and we do not intend to list the Warrants or the Pre-Funded Warrants on any national securities
exchange or trading system. |
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Risk
Factors: |
You
should carefully consider the information set forth in this prospectus and, in particular,
the specific factors set forth in the “Risk Factors” section beginning
on page 14 of this prospectus and the risk factors in our most recent Annual Report on Form
10-K before deciding whether or not to invest in the Securities. |
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Transfer
Agent and Registrar: |
VStock
Transfer, LLC |
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Firm
Underwritten Offering: |
The
underwriter is committed to purchase all of the securities other than those covered by the Over-Allotment Option. The obligations
of the underwriter may be terminated upon the occurrence of certain events specified in the Underwriting Agreement, and are subject
to certain customary conditions, representations and warranties specified thereunder. See “Underwriting” on page
31 of this prospectus. |
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(1) As of November 9, 2023, and excludes:
•
79,112 shares of our Common Stock issuable upon the exercise of vested and exercisable options
granted pursuant to the Applied UV, Inc. 2020 Omnibus Incentive Plan; and
•
38,484 shares of our Common Stock issuable upon the exercise of vested and exercisable warrants.
Unless
otherwise indicated, this prospectus reflects and assumes the following:
•
no exercise of outstanding options or warrants described above;
•
no exercise of the Warrants, and no sale of Pre-Funded Units including a Pre-Funded Warrant,
which, if sold, would reduce the number of Units that we are offering on a one-for-one basis;
and
•
no exercise by the underwriter of the Over-Allotment Option. |
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RISK
FACTORS
Investing
in the Securities involves a high degree of risk. You should carefully consider the risks described in Part I, Item 1A, Risk Factors
in our most recent Annual Report on Form 10-K, together with the other information set forth in this prospectus, and in the other documents
that we include or incorporate by reference into this prospectus, as updated by our Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and other filings we make with the SEC, the risk factors described under the caption “Risk Factors” in any applicable
prospectus supplement and any risk factors set forth in our other filings with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act, before making a decision about investing in the Securities. The risks and uncertainties we have described are not
the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect
our operations. If any risks actually occur, our business, financial condition and results of operations may be materially and adversely
affected. In such an event, the trading price of our Common Stock could decline and you could lose part or all of your investment.
Risks
Related to our Business
Geopolitical
tensions and conflicts in the Middle East, specifically the Israel-Palestinian war, may lead to global economic instability and adversely
affect supply chains, which may adversely impact our operations, financial conditions and business prospects.
While
we do not have any direct operations or significant sales in the Middle East, geopolitical tensions and ongoing conflicts in the region,
particularly between Israel and Palestine, may lead to global economic instability and fluctuating energy prices that could materially
affect our business. It is not possible to predict the broader consequences of the Israel-Palestinian war, including related geopolitical
tensions, and the measures and actions taken by other countries in respect thereof, which could materially adversely affect global trade,
currency exchange rates, regional economies and the global economy. While it is difficult to predict the impact of any of the foregoing,
the Israel-Palestinian war may increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise
additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results
of operations.
Risks
Related to this Offering
We
may not be able to maintain the listing of our Common Stock on Nasdaq, which could adversely affect our liquidity and the trading volume
and market price of our Common Stock and decrease or eliminate your investment.
On
August 23, 2023, we received a letter from Nasdaq notifying us that we were no longer in compliance with the $1.00 minimum bid price
requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(a)(2). Although Nasdaq has granted us 180 calendar days, or
until February 20, 2024, to regain compliance with the Bid Price Rule, there can be no assurance that we will regain such compliance
and Nasdaq could make a determination to delist our Common Stock.
Any
delisting determination by Nasdaq could seriously decrease or eliminate the value of an investment in our Common Stock and other securities
linked to our Common Stock. While a listing on an over-the-counter exchange could maintain some degree of a market in our Common Stock,
we could face substantial material adverse consequences, including, but not limited to, the following: limited availability for market
quotations for our Common Stock; reduced liquidity with respect to and decreased trading prices of our Common Stock; a determination
that shares of our Common Stock are “penny stock” under the Securities and Exchange Commission rules, subjecting brokers
trading our Common Stock to more stringent rules on disclosure and the class of investors to which the broker may sell the Common Stock;
limited news and analyst coverage for our Company, in part due to the “penny stock” rules; decreased ability to issue additional
securities or obtain additional financing in the future; and potential breaches under or terminations of our agreements with current
or prospective large stockholders, strategic investors and banks. The perception among investors that we are at heightened risk of delisting
could also negatively affect the market price of our securities and trading volume of our Common Stock.
Our
management team will have broad discretion over the use of any net proceeds from this offering and you may not agree with how we use
the proceeds, and the proceeds may not be invested successfully.
Our
management team will have broad discretion as to the use of any net proceeds from this offering and could use them for purposes other
than those contemplated at the time of this offering. Accordingly, you will be relying on the judgment of our management team with regard
to the use of any proceeds from the offering and you will not have the opportunity, as part of your investment decision, to assess whether
the proceeds are being used appropriately. It is possible that the proceeds will be invested in a way that is not effective or does not
yield a favorable, or any, return for you.
Investors
in this offering may experience future dilution as a result of this and future securities offerings.
In
order to raise additional capital, we may in the future offer additional shares of Common Stock or other securities convertible into
or exchangeable for our Common Stock. Investors purchasing other securities of ours in the future could obtain rights superior to those
of existing investors, and the price per share at which we sell additional shares of our Common Stock or other securities convertible
into or exchangeable for our Common Stock in future transactions may be higher or lower than the price of the Securities.
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price
and trading volume could decline.
The
trading market for our Common Stock will depend in part on the research and reports that securities or industry analysts publish about
us or our business. Several analysts cover our Common Stock. If one or more of those analysts downgrade our stock or publish inaccurate
or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of
our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading
volume to decline.
Risks
Relating to Ownership of the Securities
We
may not be able to maintain the listing of the Common Stock on Nasdaq, which could adversely affect our liquidity and the trading volume
and market price of the Common Stock and decrease or eliminate your investment.
On
August 23, 2023, we received a letter from Nasdaq notifying us that we were no longer in compliance with the $1.00 minimum bid price
requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(a)(2). Although Nasdaq has granted us 180 calendar days, or
until February 20, 2024, to regain compliance with the Bid Price Rule, there can be no assurance that we will regain such compliance
and Nasdaq could make a determination to delist our Common Stock.
Any
delisting determination by Nasdaq could seriously decrease or eliminate the value of an investment in the Common Stock and other securities
linked to the Common Stock. While a listing on an over-the-counter exchange could maintain some degree of a market in the Common Stock,
we could face substantial material adverse consequences, including, but not limited to, the following: limited availability for market
quotations for the Common Stock; reduced liquidity with respect to and decreased trading prices of the Common Stock; a determination
that shares of the Common Stock are “penny stock” under the SEC rules, subjecting brokers trading the Common Stock to more
stringent rules on disclosure and the class of investors to which the broker may sell the Common Stock; limited news and analyst coverage
for our Company, in part due to the “penny stock” rules; decreased ability to issue additional securities or obtain additional
financing in the future; and potential breaches under or terminations of our agreements with current or prospective large stockholders,
strategic investors and banks. The perception among investors that we are at heightened risk of delisting could also negatively affect
the market price of our securities and trading volume of the Common Stock.
Furthermore, on November 8, 2023, the closing
price of our Common Stock was $0.25. Pursuant to Nasdaq Rule 5810(c)(3)(A)(iii), if the closing price of our Common Stock is $0.10 or
less for 10 consecutive trading days, we will be issued a Staff Delisting Determination by Nasdaq. If we receive a Staff Delisting Determination
Letter resulting from our Common Stock trading at or below $0.10 for 10 consecutive trading days, we will have 7 calendar days to request
a hearing before a Nasdaq hearings panel to review the Staff Delisting Determination, which will stay the delisting of our Common Stock
by Nasdaq. A hearing would then take place within 45 days of the hearing request to determine whether or not our Common Stock would be
delisted. If in the future we receive a Staff Delisting Determination there can be no assurance that we would be successful in preventing
a determination by the Nasdaq hearing panel that our stock will be delisted.
There
is no public market for the Warrants or Pre-Funded Warrants.
There
is no public trading market for the Warrants or Pre-Funded Warrants being offered in this offering, and we do not expect a market to
develop. In addition, we do not intend to list the Warrants or Pre-Funded Warrants on The Nasdaq Capital Market or any other national
securities exchange or nationally recognized trading system. Without an active trading market, the liquidity of the Warrants or Pre-Funded
Warrants will be limited.
Since
the Warrants are executory contracts, they may have no value in a bankruptcy or reorganization proceeding.
In
the event a bankruptcy or reorganization proceeding is commenced by or against us, a bankruptcy court may hold that any unexercised warrants
are executory contracts that are subject to rejection by us with the approval of the bankruptcy court. As a result, holders of the Warrants
may, even if we have sufficient funds, not be entitled to receive any consideration for their Warrants or may receive an amount less
than they would be entitled to if they had exercised their warrants prior to the commencement of any such bankruptcy or reorganization
proceeding.
Provisions
of the Warrants offered pursuant to this prospectus could discourage an acquisition of us by a third-party.
Certain
provisions of the Warrants offered pursuant to this prospectus could make it more difficult or expensive for a third-party to acquire
us. The Warrants prohibit us from engaging in certain transactions constituting “fundamental transactions” unless, among
other things, the surviving entity assumes our obligations under the Warrants. These and other provisions of the Warrants could prevent
or deter a third-party from acquiring us even where the acquisition could be beneficial to you.
If
we do not file and maintain a current and effective prospectus relating to the Common Stock issuable upon exercise of the Warrants, holders
will only be able to exercise the Warrants on a “cashless basis.”
If
we do not file and maintain a current and effective registration statement relating to the Common Stock issuable upon exercise of the
Warrants at the time that holders wish to exercise such Warrants, such holders will only be able to exercise them on a “cashless
basis,” provided that an exemption from registration is available. As a result, the number of shares of Common Stock that holders
will receive upon exercise of the warrants will be fewer than it would have been had such holder exercised his, her or its warrants for
cash. Further, if an exemption from registration is not available, holders would not be able to exercise on a cashless basis and would
only be able to exercise their warrants for cash if a current and effective registration statement relating to the Common Stock issuable
upon exercise of the warrants is available. If we are unable to maintain a current and effective registration statement relating to the
Common Stock issuable upon exercise of the warrants, the potential “upside” of the holder’s investment in us may be
reduced or the warrants may expire worthless.
The
Warrants may have an adverse effect on the market price of our Common Stock and make it more difficult to effect a business combination.
To
the extent we issue shares of Common Stock to effect a future business combination, the potential for the issuance of a substantial number
of additional shares of Common Stock upon exercise of the Warrants could make us a less attractive acquisition vehicle in the eyes of
a target business. Such Warrants, when exercised, will increase the number of issued and outstanding shares of Common Stock and reduce
the value of the shares issued to complete the business combination. Accordingly, the Warrants may make it more difficult to effectuate
a business combination or increase the cost of acquiring a target business. Additionally, the sale, or even the possibility of a sale,
of the shares of Common Stock underlying the Warrants could have an adverse effect on the market price for our securities or on our ability
to obtain future financing. If and to the extent the Warrants are exercised, you may experience dilution to your holdings.
Holders
of the Warrants and Pre-Funded Warrants will have no rights as holders of Common Stock until they exercise their Warrants or Pre-Funded
Warrants and acquire Common Stock.
Until
holders of Warrants or Pre-Funded Warrants acquire shares of Common Stock upon exercise of the Warrants or Pre-Funded Warrants, holders
of Pre-Funded Warrants will have no rights with respect to the shares of our Common Stock issuable upon exercise of such Pre-Funded Warrants.
Upon exercise of the Warrants or Pre-Funded Warrants, the holders thereof will be entitled to exercise the rights of a holder of Common
Stock only as to matters for which the record date occurs after the exercise date.
We
will not receive any meaningful amount of additional funds upon the exercise of the Pre-Funded Warrants.
Each
Pre-Funded Warrant will be exercisable and will have no expiration date and by means of payment of the nominal cash purchase price upon
exercise. Accordingly, we will not receive any or any meaningful additional funds upon the exercise of the Pre-Funded Warrants.
You
should consult your own independent tax advisor regarding any tax matters arising with respect to the Securities offered in this offering.
Participation
in this offering could result in various tax-related consequences for investors. All prospective purchasers of the resold securities
are advised to consult their own independent tax advisors regarding the U.S. federal, state, local and non-U.S. tax consequences relevant
to the purchase, ownership and disposition of the resold securities in their particular situations.
IRS
CIRCULAR 230 DISCLOSURE: TO ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE INTERNAL REVENUE SERVICE, WE INFORM YOU THAT ANY U.S.
TAX ADVICE CONTAINED HEREIN (INCLUDING ANY ATTACHMENTS) IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF
AVOIDING PENALTIES UNDER THE INTERNAL REVENUE CODE. IN ADDITION, ANY U.S. TAX ADVICE CONTAINED HEREIN (INCLUDING ANY ATTACHMENTS) IS
WRITTEN TO SUPPORT THE “PROMOTION OR MARKETING” OF THE MATTER(S) ADDRESSED HEREIN. YOU SHOULD SEEK ADVICE BASED ON YOUR PARTICULAR
CIRCUMSTANCES FROM YOUR OWN INDEPENDENT TAX ADVISOR.
IN
ADDITION TO THE ABOVE RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS
FILING, POTENTIAL INVESTORS SHOULD KEEP IN MIND THAT OTHER POSSIBLE RISKS MAY ADVERSELY IMPACT THE COMPANY’S BUSINESS OPERATIONS
AND THE VALUE OF THE COMPANY’S SECURITIES.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains “forward-looking statements.” Forward-looking statements reflect the current view about future events.
When used in this prospectus, the words “anticipate,” “believe,” “estimate,” “expect,”
“future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate
to us or our management, identify forward-looking statements. Such statements, include, but are not limited to, statements contained
in this prospectus relating to our business strategy, our future operating results and liquidity and capital resources outlook. Forward-looking
statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because
forward–looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances
that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They
are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying
on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the
forward-looking statements include, without limitation:
1. | | Our
ability to effectively operate our business segments; |
2. | | Our
ability to manage our research, development, expansion, growth and operating expenses; |
3. | | Our
ability to evaluate and measure our business, prospects and performance metrics; |
4. | | Our
ability to compete, directly and indirectly, and succeed in the highly competitive and evolving
ridesharing industry; |
5. | | Our
ability to respond and adapt to changes in technology and customer behavior; |
6. | | Our
ability to protect our intellectual property and to develop, maintain and enhance a strong
brand; and |
7. | | Other
factors (including the risks contained in the section of this prospectus entitled “Risk
Factors”) relating to our industry, our operations and results of operations. |
Should
one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected, intended or planned.
Factors
or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of
them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including
the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements
to actual results.
USE
OF PROCEEDS
We estimate that the net proceeds to us from this offering, assuming
no exercise of the Over-Allotment Option and no sale of Pre-Funded Warrants, based on an
assumed public offering price of $0.25 per share (the last reported sale price of the Common Stock on The Nasdaq Capital Market on November
8, 2023), will be approximately $5,065,000 ($5,884,000 if the Over-Allotment Option is exercised in full), after deducting underwriter
discounts and commissions and other estimated offering expenses payable by us for this offering.
The
table below sets forth the manner in which we expect to use the net proceeds we receive from this offering. All amounts included in the
table below are estimates.
Description | |
Amount |
Repayment
of notes issued to Streeterville Capital LLC | |
$ | 4,250,000 | |
Working
capital and general corporate purposes | |
$ | 815,000 | |
Total | |
$ | 5,065,000 | |
CAPITALIZATION
The
following table sets forth our consolidated cash and capitalization, as of June 30, 2023:
• | | On a pro forma basis giving effect to the issuance of (i) 893,898 shares
of our Common Stock to Streeterville Capital LLC (“Streeterville”) pursuant to the conversion of part of convertible notes,
(ii) 50,000 shares of our Common Stock issued to Maxim Group LLC pursuant to a settlement and release agreement; and (iii) 270,000 shares
of our Common Stock to investors upon the exercise of Pre-Funded Warrants; and |
• | | On a pro forma as adjusted basis giving effect to the sale of 24,000,000
Units (assuming no sale of Units including a Pre-Funded Warrant) by us in this public offering at an assumed public offering price of
$0.25 per Unit (the last reported sale price of our Common Stock on The Nasdaq Capital Market on November 8, 2023), after deducting the
underwriter discount and commissions and offering expenses paid by us. |
You
should read the following table in conjunction with “Use of Proceeds,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included in or incorporated
by reference in this prospectus.
The
pro forma information set forth below is illustrative only and will be adjusted based on the actual public offering price and other terms
of this offering determined at pricing.
| |
Actual | |
Pro Forma(1)(2) | |
Pro Forma as Adjusted(1)(2) |
Cash | |
$ | 3,333,544 | | |
| 3,333,544 | | |
| 8,398,544 | |
Short term liabilities, including deferred revenue due within one year, and contingent consideration | |
$ | 40,006,373 | | |
| 39,456,373 | | |
| 39,456,373 | |
Long term liabilities including lease obligations - net of current portion, and contingent consideration | |
$ | 7,994,735 | | |
| 7,994,735 | | |
| 7,994,735 | |
Redeemable Preferred Stock | |
| | | |
| | | |
| | |
Preferred stock, 2% Series B Cumulative Perpetual, $0.0001 par value, 1,250,000 shares designated actual, 1,250,000 shares issued and outstanding actual and pro forma | |
| 3,712,500 | | |
| 3,712,500 | | |
| 3,712,500 | |
Preferred stock, 5% Series C Cumulative Perpetual, $0.0001 par value, 2,500,000 shares designated actual, 399,996 shares issued and outstanding actual and pro forma | |
| 1,063,989 | | |
| 1,063,989 | | |
| 1,063,989 | |
Stockholders’ Equity | |
| | | |
| | | |
| | |
Preferred stock, Series A Cumulative Preferred, $0.0001 par value, 1,250,000 shares designated actual, 552,000 shares issued and outstanding actual and pro forma | |
| 55 | | |
| 55 | | |
| 55 | |
Preferred stock, Series X, $0.0001 par value, 10,000 shares designated actual, 10,000 shares issued and outstanding actual and pro forma | |
| 1 | | |
| 1 | | |
| 1 | |
Common Stock, $0.0001 par value, 150,000,000 shares authorized, 8,928,330 shares issued and 8,905,633 shares outstanding actual, and 10,142,228 shares issued and 10,119,531 shares outstanding pro forma(3) and 34,142,228 shares issued and 34,119,531 shares outstanding, pro forma as adjusted | |
| 893 | | |
| 1,014 | | |
| 3,414 | |
Additional paid-in capital | |
| 56,883,253 | | |
| 57,472,132 | | |
| 62,534,732 | |
Treasury stock at cost, 22,697, actual and pro forma | |
| (149,686 | ) | |
| (149,686 | ) | |
| (149,686 | ) |
Accumulated deficit | |
| (36,540,057 | ) | |
| (36,579,057 | ) | |
| (36,579,057 | ) |
Total stockholders’ equity | |
| 20,194,459 | | |
| 20,744,459 | | |
| 25,809,459 | |
Total capitalization | |
| 72,972,056 | | |
| 72,972,056 | | |
| 78,037,056 | |
(1) | | Does not include shares issuable upon the exercise of the underwriter’s
option to purchase up to 3,600,000 additional shares of Common Stock (assuming no sale of a Unit including a Pre-Funded Warrant)
and/or up to 360,000 Series A Warrants and/or 360,000 Series B Warrants |
(2) | | Does
not include: (i) 79,112 shares of our Common Stock issuable upon exercise of outstanding
vested options and (ii) 38,484 shares of our Common Stock issuable upon exercise of other
outstanding warrants. |
(3) | | The
difference between issued and outstanding is 22,697 treasury shares that were bought back
from the market by the Company. |
DILUTION
Purchasers of our securities in this offering
will experience an immediate and substantial dilution in the net tangible book value of their shares of our Common Stock. Dilution in
net tangible book value represents the difference between the public offering price per share of Common Stock included in each Unit (attributing
no value to the Warrants and assuming no sale of a Unit including a Pre-Funded Warrant) and the pro forma as adjusted net tangible book
value per share of our Common Stock immediately after the offering.
The historical net tangible book value of our
Common Stock as of June 30, 2023, was ($20,838,888) or ($2.34) per share. Historical net tangible book value per share of our Common Stock
represents our total tangible assets (total assets less intangible assets) less total liabilities divided by the number of shares of our
Common Stock outstanding as of that date.
After giving effect to the issuance of (i) 893,898
shares to Streeterville pursuant to the conversion of convertible notes, (ii) 50,000 shares issued to Maxim Group LLC pursuant to a settlement
and release agreement and (iii) 270,000 shares to investors upon the exercise of Pre-Funded Warrants, our pro forma net tangible book
value as of June 30, 2023 would have been ($20,838,888) or approximately ($2.06) per share of our Common Stock.
After giving effect to the pro forma adjustments
set forth above and the sale of shares of Common Stock included in the Units sold in this offering at an assumed public offering price
of $0.25 per Unit (the last reported sale price of our Common Stock on The Nasdaq Capital Market on November 8, 2023) and assuming no
sale of a Unit including a Pre-Funded Warrant for net proceeds of approximately $5,065,000 as if such offering and such share issuances
had occurred on June 30, 2023, our pro forma net tangible book value as of June 30, 2023 would have been ($15,223,888) or approximately
($0.45) per share of our Common Stock. This represents an immediate increase in pro forma net tangible book value per share of $1.61 to
the existing stockholders and an immediate dilution in pro forma net tangible book value per share of $0.70 to new investors (attributing
no value to the Warrants and assuming no sale of a Unit including a Pre-Funded Warrant). We determine dilution by subtracting the pro
forma as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for a share of
Common Stock in this offering. The following table illustrates this per share dilution to new investors:
Public offering price per Unit | |
| | | |
$ | 0.25 | |
Historical net tangible book value per share as of June 30, 2023 | |
$ | (2.34 | ) | |
| | |
Increase in net tangible book value per share attributable to the pro forma adjustments described above | |
| 0.28 | | |
| | |
Pro forma net tangible book value per share as of June 30, 2023 | |
| (2.06 | ) | |
| | |
Increase in pro forma net tangible book value per share after giving effect to the offering | |
| 1.61 | | |
| | |
Pro forma as adjusted net tangible book value per share as of June 30, 2023 after the offering | |
| (0.45 | ) | |
| | |
Dilution per share to investors in this public offering | |
| | | |
$ | 0.70 | |
The dilution information discussed above is illustrative
only and will change based on the actual public offering price and other terms of this offering determined at pricing. A $0.10 decrease
in the assumed public offering price of $0.25 per Unit (the last reported sale price of our Common Stock on The Nasdaq Capital Market
on November 8, 2023), would decrease our pro forma as adjusted net tangible book value per share after this offering to ($0.51) and increase
dilution per share to new investors purchasing Units in this offering to $0.66, assuming that the number of Units offered by us, as set
forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us and assuming no sale of a Unit including a Pre-Funded Warrant. A $0.10 increase in the assumed
public offering price of $0.25 per Unit (the last reported sale price of our Common Stock on The Nasdaq Capital Market on November 8,
2023), would decrease our pro forma as adjusted net tangible book value per share after this offering to ($0.38) and increase dilution
per share to new investors purchasing Units in this offering to $0.73, assuming that the number of Units offered by us, as set forth on
the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated
offering expenses payable by us and assuming no sale of a Unit including a Pre-Funded Warrant.
After completion of this offering, our existing
stockholders would own approximately $29.7% and our new investors would own approximately $70.3% of the total number of shares of our
Common Stock outstanding after this offering.
If the underwriters exercise their option to purchase
additional shares of our Common Stock and/or Warrants in full and assuming no sale of a Unit including a Pre-Funded Warrant, the pro forma
as adjusted net tangible book value after this offering would be ($0.38) per share, the increase in pro forma as adjusted net tangible
book value per share would be $1.68 and dilution per share to new investors would be $0.63 per share.
The above
discussion and table are based on shares of our Common Stock outstanding as of June 30, 2023 and
excludes (i) 79,112 shares of our Common Stock issuable upon exercise of outstanding vested options and (ii) 38,484 shares of our
Common Stock issuable upon exercise of other outstanding warrants.
To the extent that outstanding options or warrants are exercised,
you will experience further dilution. In addition, we may choose to raise additional capital due to market conditions or strategic considerations
even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised
through the sale of equity or convertible debt securities, the issuance of these securities may result in further dilution to our stockholders.
Capitalization
Table
| |
Shares Purchased | |
Total Consideration | |
|
| |
Number | |
Percent | |
Amount | |
Percent | |
Per Share |
Existing stockholders | |
| 10,119,531 | | |
| 29.7 | % | |
$ | 45,051,075 | | |
| 89.9 | % | |
$ | 4.45 | |
New Investors | |
| 24,000,000 | | |
| 70.3 | % | |
$ | 5,065,000 | | |
| 10.1 | % | |
$ | 0.21 | |
| |
| 34,119,531 | | |
| 100.0 | % | |
$ | 50,116,075 | | |
| 100.0 | % | |
$ | 1.47 | |
DESCRIPTION
OF SECURITIES
For
a more detailed description of the Company’s Common Stock, reference is made to the Company’s Form 8-A filed with the SEC
on July 13, 2021; For a more detailed description of the Company’s Series A Preferred Stock and Series X Preferred Stock, reference
is made to the Company’s Registration Statement on Form S-1 (No. 333-257197, initially filed with the SEC on June 21, 2021; for
a more detailed description of the Company’s Series B Preferred Stock and Series C Preferred Stock, reference is made the Company’s
Current Report on Form 8-K filed with the SEC on February 1, 2023.
General
The Company is authorized to issue two classes
of stock. The total number of shares of stock which the Company is authorized to issue is 170,000,000 shares of capital stock, consisting
of 150,000,000 shares of Common Stock, of which as of November 9, 2023, there are 10,119,531 shares are issued and outstanding, and 20,000,000
shares of preferred stock, $0.0001 par value per share, of which 10,000 have been designated Series X Preferred Stock, all of which are
issued and outstanding; 1,250,000 have been designated Series A Preferred Stock, of which 522,000 shares are issued and outstanding; 1,250,000
have been designated Series B Preferred Stock, all of which are outstanding; 2,500,000 have been designated Series C Preferred Stock,
of which 399,996 shares are outstanding. There are 22 holders of record of our Common Stock as of November 9, 2023.
Warrants
Offered in this Offering
The
following summary of certain terms and provisions of the Warrants offered hereby is not complete and is subject to, and qualified in
its entirety by the provisions of the form of the Warrant Agreement, which is filed as Exhibit 4.3 to the registration statement of which
this prospectus is a part. Prospective investors should carefully review the terms and provisions set forth in the form of the Warrant
Agreement
Exercisability.
The Warrants are exercisable at any time after their original issuance up to five years from the closing date of this public offering.
Each of the Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise
notice accompanied by payment in full in immediately available funds for the number of shares of our Common Stock subscribed for upon
such exercise (except in the case of a cashless exercise as discussed below). If a registration statement registering the issuance of
the shares of our Common Stock underlying the Warrants under the Securities Act is not effective or available, the holder may, in its
sole discretion, elect to exercise the Warrants through a cashless exercise, in which case the holder would receive upon such exercise
the net number of shares of our Common Stock determined according to the formula set forth in the Warrants. No fractional shares of our
Common Stock will be issued in connection with the exercise of a Warrant. In lieu of fractional shares, we will pay the holder an amount
in cash equal to the fractional amount multiplied by the exercise price.
Exercise
Limitation. A holder will not have the right to exercise any portion of the Warrants if the holder (together with its affiliates)
would beneficially own in excess of 4.99% (or, upon election by a holder prior to the issuance of any warrants, 9.99%) of the number
of shares of our Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined
in accordance with the terms of the Warrants. However, any holder may increase or decrease such percentage to any other percentage not
in excess of 9.99%, upon at least 61 days’ prior notice from the holder to us with respect to any increase in such percentage.
Exercise Price. The exercise price of the Series
A Warrants is $2.50 per share (a multiple of 10 times the offering price per Unit, assuming an offering price of $0.25 per Unit). The
exercise price of the Series B Warrants is $5.00 per share (a multiple of 20 times the offering price per Unit, assuming an offering
price of $0.25 per Unit) . The exercise price and number of shares of Common Stock issuable upon exercise will adjust in the event of
certain stock dividends and distributions, stock splits, stock combinations, reclassifications, dilutive issuances or similar events.
Adjustments for Subsequent Offerings. Subject
to certain exemptions outlined in the Warrants, for the life of the Warrants, if the Company shall sell, enter into an agreement to sell,
or grant any option to purchase, or sell, enter into an agreement to sell, or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase or other disposition) any shares of Common Stock or convertible security
at an effective price per share less than the exercise price of the Warrants then in effect (such lower price, the “Base Share
Price” and such issuances collectively, a “Dilutive Issuance”), the exercise price of the Warrants shall be adjusted
to equal such lower price; provided that the Base Share Price shall not be less than (i) a specified amount or (ii) in the event of Shareholder
Approval, the price of the Dilutive Issuance (the “Floor Price”) (subject to adjustment for reverse and forward stock splits,
recapitalizations and similar transactions following the effective date of the Underwriting Agreement). Notwithstanding the foregoing,
(i) no adjustments shall be made, paid or issued under Section 3(b) of the Warrants in respect of an exempt issuance and (ii) if one
or more Dilutive Issuances occurred prior to the Shareholder Approval being obtained
and the reduction of the exercise price was limited by clause (i) of the definition of Floor Price, once the Shareholder Approval is
obtained, the exercise price will automatically be reduced to equal the greater of (x) the lowest Base Share Price with
respect to any Dilutive Issuance that occurred prior to the Shareholder
Approval being obtained, and (y) the price of the Dilutive Issuance in the event of Shareholder Approval.
Share
Combination Event Adjustments
If, at any time
while this Warrant is outstanding (such period, the “Adjustment Period”), the Company issues, sells, enters into an
agreement to sell, or grants any option to purchase, or sells, enters into an agreement to sell, or grants any right to reprice, or otherwise
disposes of or issues (or announces any offer, sale, grant or any option to purchase or other disposition), or, in accordance with this
Section 3(f), is deemed to have issued or sold, any shares of Common Stock or Common Share Equivalents (excluding any Excluded Securities
(as defined below) issued or sold or deemed to have been issued or sold) for a consideration per share less than a price equal to the
Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Exercise Price then in effect is referred
to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”), then simultaneously with the
consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount
equal to the lowest VWAP during the period commencing 5 consecutive Trading Days following the Dilutive Issuance (the “New Issuance
Price”) and the number of shares of Common Stock issuable upon exercise of this Warrant shall be proportionately adjusted such
that the aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then outstanding shall remain unchanged;
provided that the New Issuance Share Price shall not be less than (i) $[●] or (ii) in the event of Shareholder Approval, the price
of the Dilutive Issuance ((i) and (ii) together, the “Floor Price”) (subject to adjustment for reverse and forward
stock splits, recapitalizations and similar transactions following the date of the Underwriting Agreement). Notwithstanding the foregoing,
if one or more Dilutive Issuances occurred prior to the Shareholder Approval being obtained and the reduction of the Exercise Price was
limited by clause (i) of the definition of Floor Price, once the Shareholder Approval is obtained, the Exercise Price will automatically
be reduced to equal the greater of (x) the lowest New Issuance Price with respect to any Dilutive Issuance that occurred prior to the
Shareholder Approval being obtained, and (y) the price determined by reference to clause (ii) of the definition of Floor Price. If the
Company enters into a Variable Rate Transaction, the Company shall be deemed to have issued shares of Common Stock or share of Common
Stock Equivalents at the lowest possible price, conversion price or exercise price at which such securities may be issued, converted or
exercised. “Excluded Securities” means any issuance of shares of Common Stock, restricted share units, Options and/or
Convertible Securities (i) under the Company’s current or future equity incentive plans or issued to employees, directors,
consultants or officers as compensation or consideration in the ordinary course of business, including any issuance of Options (and the
underlying shares of Common Stock) in exchange for Options issued under the Company’s equity incentive plans; provided, that with
respect to consultants only, such issuances do not exceed 1 million shares of Common Stock (as adjusted for stock splits, reverse stock
splits, stock dividends, stock combinations and similar events) in any 12 month period, (ii) issued pursuant to agreements, Options,
restricted share units, Convertible Securities or Adjustment Rights (as defined below) existing as of the date hereof, (iii) issued
pursuant to acquisitions (whether by merger, consolidation, purchase of equity, purchase of assets, reorganization or otherwise), mergers,
consolidations, reorganizations or strategic transactions approved by a majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business complementary with the business of the Company and shall provide to the Company
additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, provided that such securities
are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the
filing of any registration statement in connection therewith or (iv) to which a majority-in-interest of Holders of the Warrants consent
in writing. “Adjustment Right” means any right granted with respect to any securities issued in connection with, or with respect
to, any issuance or sale (or deemed issuance or sale in accordance with this Section 3(f)) of shares of Common Stock (other than
rights of the type described in Sections 3(a) through (e)) that could result in a decrease in the net consideration received by the Company
in connection with, or with respect to, such securities (including, without limitation, any cash settlement rights, cash adjustment or
other similar rights). For all purposes of the foregoing, the following shall be applicable:
i. Issuance of Options. If, during
the Adjustment Period, the Company in any manner grants or sells any Options (other than Excluded Securities) and the lowest price per
share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option (such shares of Common Stock issuable upon such exercise of any Option or upon conversion,
exercise or exchange of any Convertible Securities, the “Convertible Securities Shares”) is less than the Applicable
Price, then such shares of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time
of the granting or sale of such Option for such price per share. For purposes of this Section 3(f)(i), the “lowest price per
share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option” shall be equal to (A) the sum of (1) the lowest amount of consideration
(if any) received or receivable by the Company with respect to any one Convertible Securities Share upon the granting or sale of such
Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of
such Option and (2) the lowest exercise price set forth in such Option for which one Convertible Securities Share is issuable upon
the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any
such Option, minus (B) the sum of all amounts paid or payable to the holder of such Option (or any other Person), with respect to
any one Convertible Securities Share, upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Option (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Convertible Securities
Share upon conversion, exercise or exchange of such Convertible Securities.
ii. Issuance
of Convertible Securities. If, during the Adjustment Period, the Company in any manner issues or sells any Convertible Securities
(other than Excluded Securities) and the lowest price per share for which one Convertible Securities Share is issuable upon the conversion,
exercise or exchange thereof is less than the Applicable Price, then such Convertible Securities Share shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per
share. For the purposes of this Section 3(e)(ii), the “lowest price per share for which one Convertible Securities Share is
issuable upon the conversion, exercise or exchange thereof” shall be equal to (A) the sum of (1) the lowest amount of
consideration (if any) received or receivable by the Company with respect to one Convertible Securities Share upon the issuance or sale
of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security and (2) the lowest conversion
price set forth in such Convertible Security for which one Convertible Securities Share is issuable upon conversion, exercise or exchange
thereof, minus (B) the sum of all amounts paid or payable to the holder of such Convertible Security (or any other Person), with
respect to any one Convertible Securities Share, upon the issuance or sale of such Convertible Security plus the value of any other consideration
received or receivable by, or benefit conferred on, the holder of such Convertible Security (or any other Person), with respect to any
one Convertible Securities Share. Except as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual
issuance of such Convertible Securities Share upon conversion, exercise or exchange of such Convertible Securities, and if any such issue
or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Exercise Price has been or is
to be made pursuant to other provisions of this Section 3(e), except as contemplated below, no further adjustment of the Exercise
Price shall be made by reason of such issue or sale.
iii. Change
in Option Price or Rate of Conversion. If, during the Adjustment Period, the purchase or exercise price provided for in any Options,
the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate
at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time (other than proportional changes in conversion or exercise prices, as applicable, in connection with an event referred to
in Section 3(a)), the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which
would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price,
additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold.
For purposes of this Section 3(f)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of
issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Convertible Securities Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(f) shall be made if such
adjustment would result in an increase of the Exercise Price then in effect.
iv. Calculation
of Consideration Received. If any Option or Convertible Security is issued in connection with the issuance or sale or deemed issuance
or sale of any other securities of the Company (the “Primary Security”, and such Option or Convertible Security, the
“Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising
one integrated transaction, the aggregate consideration per Common Share with respect to such Primary Security shall be deemed to be the
lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest
price per share for which one Common Share is at any time issuable upon the exercise or conversion of the Primary Security in accordance
with Section 3(f)(i) or 3(f)(ii) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the five
Trading Day period immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public
announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day
in such five Trading Day period). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of cash received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the
amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists
of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic
average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares
of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options
or Convertible Securities (as the case may be). The fair market value of any consideration other than cash or publicly traded securities
will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after
the occurrence of an event requiring valuation (the “Valuation Event”), the fair market value of such consideration
will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
v. Record Date. If, during the Adjustment
Period, the Company takes a record of the holders of the shares of Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for
or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue
or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or purchase (as the case may be)..
Reverse Stock Split. The Company shall effect a reverse stock split within seven (7) business
days after the date that is the earlier of (x) the date by which [*] million shares of Common Stock have been traded on
Nasdaq following the closing date or (y) [*], 2024 (the “First Reverse Split Date”). No reverse stock split shall be
effectuated before the First Reverse Split Date, except if (i) the Company is not in compliance with Nasdaq Rule 5810(c)(3)(A)(iii) or
(ii) consent has been obtained from a majority of purchasers of the Units.
Fundamental
Transactions. In the event of a fundamental transaction, as described in the Warrants and generally including, with certain exceptions,
any reorganization, recapitalization or reclassification of our shares of Common Stock, the sale, transfer or other disposition of all
or substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than
50% of our outstanding shares of Common Stock, or any person or group becoming the beneficial owner of 50% of the voting power represented
by our outstanding shares of Common Stock, the holders of the Warrants will be entitled to receive upon exercise thereof the kind and
amount of securities, cash or other property that the holders would have received had they exercised the warrants immediately prior to
such fundamental transaction. Additionally, as more fully described in the Warrant, in the event of such fundamental transaction, the
Company will at the option of the holder of the Warrant purchase the Warrant at a price equal to the Black Scholes value of the remaining
unexercised portion of the Warrants on the date of consummation of such fundamental transaction.
Variable Rate Transactions. The Company, at any
time while a majority-in-interest of holders of the Warrants are outstanding: shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents (or a combination
of units thereof) involving a Variable Rate Transaction. Notwithstanding the foregoing, this prohibition does not prohibit the Company
from entering into a transaction that includes features substantially similar to the adjustments described above under”—Adjustment
for Subsequent Offerings and “—Share Combination Event Adjustments;” provided such features are no more favorable to
any investor in such subsequent transaction than as set forth under such headings.
Rights
as a Shareholder. Except as otherwise provided in the Warrants or by virtue of such holder’s ownership of our shares
of Common Stock, the holder of a Warrant does not have the rights or privileges of a holder of our shares of Common Stock, including
any voting rights, until the holder exercises the Warrant.
Warrant Certificate. The
Warrants will issued in certificated form.
Transferability.
Subject to applicable laws, the Warrants may be offered for sale, sold, transferred or assigned without our consent.
Exchange
Listing. We do not intend to apply for listing of the Warrants on any exchange or market.
Governing
Law. The Warrants are governed by New York law.
Pre-Funded
Warrants Offered in this Offering
The
following summary of certain terms and provisions of the Pre-Funded Warrants offered hereby is not complete and is subject to, and qualified
in its entirety by the provisions of the form of Pre-Funded Warrant, which is filed as an exhibit to the registration statement of which
this prospectus is a part. Prospective investors should carefully review the terms and provisions set forth in the form of Pre-Funded
Warrant.
The term “pre-funded” refers to the fact that the
purchase price of our Common Stock in this offering includes almost the entire exercise price that will be paid under the Pre-Funded
Warrants, except for a nominal remaining exercise price of $0.00001. The purpose of the Pre-Funded Warrants is to enable investors that
may have restrictions on their ability to beneficially own more than 4.99% (or, upon election of the holder, 9.99%) of our outstanding
Common Stock following the consummation of this offering the opportunity to invest capital into our Company without triggering their
ownership restrictions, by receiving Pre-Funded Warrants in lieu of our Common Stock which would result in such ownership of more than
4.99% (or 9.99%), and receive the ability to exercise their option to purchase the shares underlying the Pre-Funded Warrants at such
nominal price at a later date.
Duration. The Pre-Funded Warrants
offered hereby will entitle the holders thereof to purchase shares of our Common Stock at a nominal exercise price of $0.00001 per share,
at any time after its original issuance until exercised in full.
Exercise Limitation. A holder
will not have the right to exercise any portion of the Pre-Funded Warrant if the holder (together with its affiliates and certain related
parties) would beneficially own in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of shares of our Common Stock
outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms
of the Pre-Funded Warrants. However, any holder may increase, but not in excess of 9.99%, or decrease such percentage, provided that
any increase will not be effective until the sixty-first (61st) day after such election
Exercise Price. The Pre-Funded
Warrants will have an exercise price of $0.00001 per share. The exercise price is subject to appropriate adjustment in the event of certain
stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our Common Stock and
also upon any distributions of assets, including cash, stock or other property to our stockholders.
Warrant Certificate. The Pre-Funded Warrants will be issued
in certificated form.
Transferability. Subject
to applicable laws, the Pre-Funded Warrants may be offered for sale, sold, transferred or assigned without our consent.
Exchange
Listing. There is no established public trading market for the Pre-Funded Warrants being offered in this offering, and we
do not expect a market to develop. In addition, we do not intend to apply to list the Pre-Funded Warrants on any national securities
exchange or other nationally recognized trading system, including the Nasdaq Capital Market. Without an active trading market, the liquidity
of Pre-Funded Warrants will be limited.
Fundamental
Transactions. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for us,
and may exercise every right and power that we may exercise and will assume all of our obligations under the Pre-Funded Warrants with
the same effect as if such successor entity had been named in the Pre-Funded Warrant itself. If holders of our Common Stock are given
a choice as to the securities, cash or property to be received in a fundamental transaction, then the holder shall be given the same
choice as to the consideration it receives upon any exercise of the Pre-Funded Warrant following such fundamental transaction.
Rights
as a Stockholder. Except as otherwise provided in the Pre-Funded Warrants or by virtue of such holder’s ownership
of shares of our Common Stock, the holder of a Pre-Funded Warrant does not have the rights or privileges of a holder of our Common Stock,
including any voting rights, until the holder exercises the Pre-Funded Warrant.
PRINCIPAL
STOCKHOLDERS
The table below sets forth information regarding
the beneficial ownership of the Common Stock by (i) our directors and named executive officers; (ii) all the named executives and directors
as a group and (iii) any other person or group that to our knowledge beneficially owns more than 5% of our outstanding shares of Common
Stock.
We have determined beneficial ownership in accordance
with the rules and regulations of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person
has or shares the power to vote or direct the voting thereof, or to dispose or direct the disposition thereof or has the right to acquire
such powers within 60 days. Shares of Common Stock subject to options that are currently exercisable or exercisable within 60 days of
November 9, 2023, are deemed to be outstanding and beneficially owned by the person holding the options. Shares issuable pursuant to stock
options or warrants are deemed outstanding for computing the percentage ownership of the person holding such options or warrants but are
not deemed outstanding for computing the percentage ownership of any other person. Except as indicated by the footnotes below, we believe,
based on the information furnished to us, that the persons and entities named in the table below will have sole voting and investment
power with respect to all shares of Common Stock that they will beneficially own, subject to applicable community property laws. Applicable
percentage ownership in the following table is based on 10,119,531 shares of Common Stock outstanding on November 9, 2023 and 34,119,531
shares of Common Stock outstanding after this offering, plus, for each individual, any Common Stock that individual has the right to acquire
within 60 days of November 9, 2023 (based upon the assumed sale of 24,000,000 Units in this offering and assuming no exercise of the Warrants
issued as part of the Units and no sale of Units including a Pre-Funded Warrant).
| |
Number of Shares Beneficially Owned | |
Beneficial Ownership Percentages Before Offering | |
Beneficial Ownership Percentages After Offering |
Name and Address of Beneficial Owner(1) | |
Common Stock | |
Series X Super Voting Preferred Stock(2) | |
Percent of Common Stock | |
Percent of Series X Super Voting Preferred Stock | |
Percent of Voting Stock(3) | |
Percent of Common Stock | |
Percent of Series X Super Voting Preferred Stock | |
Percent of Voting Stock(3) |
Officers and Directors | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
| | | |
| | |
Max Munn, Chief Executive Officer, President and Director | |
| 432,414 | (4) | |
| 10,000 | (5) | |
| 4.27 | % | |
| 100 | % | |
| 51.59 | % | |
| 1.27 | % |
|
| 100 | % | |
| 23.52 | % |
Michael Riccio, Chief Financial Officer | |
| 29,667 | | |
| — | | |
| * | | |
| — | | |
| * | | |
| * | |
|
| — | | |
| * | |
Brian Stern, Director(6) | |
| 365,105 | | |
| — | | |
| 3.61 | % | |
| — | | |
| 1.81 | % | |
| 1.07 | % |
|
| — | | |
| * | |
Eugene Burleson, Director | |
| 12,000 | | |
| — | | |
| * | | |
| — | | |
| * | | |
| * | |
|
| — | | |
| * | |
Dallas Hack, Director | |
| 8,000 | | |
| — | | |
| * | | |
| — | | |
| * | | |
| * | |
|
| — | | |
| * | |
Joseph Luhukay, Director | |
| 3,500 | | |
| — | | |
| * | | |
| — | | |
| * | | |
| * | |
|
| — | | |
| * | |
Officers and Directors as a Group | |
| 850,686 | | |
| 10,000 | | |
| 8.36 | % | |
| 100 | % | |
| 53.59 | % | |
| 2.49 | % |
|
| 100 | % | |
| 24.59 | % |
5%+ Stockholders | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
| | | |
| | |
The Munn Family 2020 Irrevocable Trust | |
| 375,000 | | |
| 10,000 | | |
| 3.71 | % | |
| 100 | % | |
| 51.57 | % | |
| 1.10 | % |
|
| 100 | % | |
| 23.52 | % |
Brian Stern, Director | |
| 365,105 | | |
| | | |
| 3.61 | % | |
| | | |
| 1.81 | % | |
| 1.07 | % |
|
| | | |
| * | |
Andrew Lawrence | |
| 309,994 | | |
| — | | |
| 3.06 | % | |
| N/A | | |
| 1.54 | % | |
| * | |
|
| N/A | | |
| * | |
*
Less than 1%
(1) | | The
principal address of the named officers, directors and 5% stockholders of the Company is
c/o Applied UV, Inc. 150 N. Macquesten Parkway, Mount Vernon, New York 10550. |
(2) | | Entitles
the holder to 1,000 votes per share and votes with the common as a single class. |
(3) | | Represents
total ownership percentage with respect to all shares of Common Stock and Series X Super
Voting Preferred Stock, as a single class. |
(4) | | Includes
(i) 375,000 shares which are held in the name of The Munn Family 2020 Irrevocable Trust,
for which the spouse of Max Munn is the trustee; (ii) 4,000 shares owned by Mr. Munn directly;
(iii) 16,000 shares underlying a warrant issued to Mr. Munn, which is exercisable at $25.00
per share; (iv) 200 vested shares underlying an option granted to Mr. Munn as director compensation,
which are exercisable at $25.00 per share; (v) 17,214 vested shares underlying an option
granted to Mr. Munn pursuant to his employment agreement, which are exercisable at $39.00
per share; (vi) 7,500 vested shares underlying an option granted to Mr. Munn on December
31, 2022; and (vii) 12,500 vested shares underlying an option granted to Mr. Munn on January
10, 2023. |
(5) | | Held
by The Munn Family 2020 Irrevocable Trust. |
(6) | | Mr.
Stern was appointed to the board of directors on February 1, 2023. |
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
The
following discussion is a summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition of
the shares of Common Stock, Pre-Funded Warrants and Warrants acquired pursuant to this offering but does not purport to be a complete
analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable
state, local or foreign tax laws are not discussed. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”),
Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the IRS,
in effect as of the date of this offering. These authorities may change or be subject to differing interpretations. Any such change or
differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. holder of our Common Stock, Pre-Funded
Warrants and Warrants. We have not sought and will not seek any rulings from the Internal Revenue Service (the “IRS”) regarding
the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position regarding the tax consequences
of the purchase, ownership and disposition of our Common Stock, Pre-Funded Warrants and Warrants.
We
assume in this discussion that each holder holds shares of our Common Stock, Pre-Funded Warrants and Warrants as “capital assets”
within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S.
federal income tax consequences that may be relevant to a particular holder’s individual circumstances, including the impact of
the alternative minimum tax or the unearned income Medicare contribution tax. In addition, it does not address consequences relevant
to holders subject to particular rules, including, without limitation:
• | | U.S.
expatriates and certain former citizens or long-term residents of the United States; |
• | | persons
holding our Common Stock, Warrants or Pre-Funded Warrants as part of a hedge, straddle or
other risk reduction strategy or as part of a conversion transaction or other integrated
investment; |
• | | banks,
insurance companies, and other financial institutions; |
• | | regulated
investment companies or real estate investment trusts; |
• | | brokers,
dealers or traders in securities or currencies; |
• | | controlled
foreign corporations, “passive foreign investment companies,” and corporations
that accumulate earnings to avoid U.S. federal income tax; |
• | | partnerships
or other entities or arrangements treated as partnerships for U.S. federal income tax purposes
(and investors therein); |
• | | tax-exempt
organizations or governmental organizations; |
• | | persons
deemed to sell our Common Stock, Warrants or Pre-Funded Warrants under the constructive sale
provisions of the Code; |
• | | persons
for whom our Common Stock, Warrants or Pre-Funded Warrants constitutes “qualified small
business stock” within the meaning of Section 1202 of the Code or as “Section
1244 stock” for purposes of Section 1244 of the Code; |
• | | persons
subject to special tax accounting rules as a result of any item of gross income with respect
to our Common Stock or Warrants being taken into account in an “applicable financial
statement” (as defined in the Code); |
• | | persons
who hold or receive our Common Stock, Warrants or Pre-Funded Warrants pursuant to the exercise
of any employee stock option or otherwise as compensation; |
• | | tax-qualified
retirement plans; and |
• | | “qualified
foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all
of the interest of which are held by qualified foreign pension funds. |
If
a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our Common Stock, Pre-Funded Warrants
or Warrants, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership
and certain determinations made at the partner level. Accordingly, partnerships holding our Common Stock, Pre-Funded Warrants or Warrants,
and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
THIS
DISCUSSION IS FOR INFORMATION PURPOSES ONLY AND IS NOT INTENDED AS LEGAL OR TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK, PRE-FUNDED WARRANTS, AND WARRANTS ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT
TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
For
purposes of this discussion, a “U.S. holder” is any beneficial owner of our Common Stock, Pre-Funded Warrants, or Warrants
that, for U.S. federal income tax purposes, is:
• | | an
individual who is a citizen or resident of the United States; |
• | | a
corporation (or other entity treated as a corporation for U.S. federal income tax purposes)
created or organized in or under the laws of the United States, any state thereof, or the
District of Columbia; |
• | | an
estate, the income of which is subject to U.S. federal income tax regardless of its source;
or |
• | | a
trust that (1) is subject to the primary supervision of a U.S. court and the control of one
or more United States persons (within the meaning of Section 7701(a)(30) of the Code), or
(2) has made a valid election under applicable Treasury Regulations to be treated as a United
States person for U.S. federal income tax purposes. |
The
term “non-U.S. holder” means any beneficial owner of our Common Stock, Pre-Funded Warrants or Warrants that is not a U.S.
holder and is not a partnership or other entity properly classified as a partnership for U.S. federal income tax purposes. For the purposes
of this discussion, U.S. holders and non-U.S. holders are referred to collectively as “holders.”
General
Treatment of Pre-Funded Warrants
Although
it is not entirely free from doubt, a Pre-Funded Warrant should be treated as a share of our Common Stock for U.S. federal income tax
purposes and a holder of Pre-Funded Warrants should generally be taxed in the same manner as a holder of Common Stock as described below.
Each holder should consult his, her or its own tax advisor regarding the risks associated with the acquisition of a Unit pursuant to
this offering (including potential alternative characterizations). The balance of this discussion generally assumes that the characterization
described above is respected for U.S. federal income tax purposes.
Allocation
of Purchase Price Between Share of Common Stock and Accompanying Warrant to Purchase Our Common Stock
For
U.S. federal income tax purposes, each Unit should be treated as an “investment unit” consisting of one share of Common Stock
or one Pre-Funded Warrant, as applicable, and a Warrant to acquire one share of our Common Stock. The purchase price for each investment
unit will be allocated between these two components in proportion to their relative fair market values at the time the unit is purchased
by the holder. This allocation of the purchase price for each investment unit will establish the holder’s initial tax basis for
U.S. federal income tax purposes in the share of Common Stock or Pre-Funded Warrant, as applicable, and the Warrant included in each
investment unit. The separation of the Common Stock or Pre-Funded Warrant, as applicable, and the Warrant included in each investment
unit should not be a taxable event for U.S. federal income tax purposes. Each holder should consult his, her or its own tax advisor regarding
the allocation of the purchase price for an investment unit.
U.S.
Holders
Exercise
or Expiration of Warrants
In
general, a U.S. holder will not recognize gain or loss for U.S. federal income tax purposes upon exercise of a Warrant, except to the
extent the U.S. holder receives a cash payment for any fractional share of Common Stock that would otherwise have been issuable upon
exercise of the Warrant, which will be treated as a sale subject to the rules described under “Disposition of Our Common
Stock, Pre-Funded Warrants or Warrants” below. The U.S. holder will take a tax basis in the shares acquired on the exercise of
a Warrant equal to the exercise price of the Warrant, increased by the U.S. holder’s adjusted tax basis in the Warrant exercised
(as determined pursuant to the rules discussed above) and decreased by the adjusted tax basis allocable to any fractional share that
would otherwise have been issuable upon exercise of the Warrant. The U.S. holder’s holding period in the shares of our Common Stock
acquired on exercise of the Warrant will begin on the date of exercise of the Warrant, and will not include any period for which the
U.S. holder held the Warrant.
In
certain limited circumstances, a U.S. holder may be permitted to undertake a cashless exercise of Warrants into our Common Stock. The
U.S. federal income tax treatment of a cashless exercise of Warrants into our Common Stock is unclear, and the tax consequences of a
cashless exercise could differ from the consequences upon the exercise of a Warrant described in the preceding paragraph. U.S. holders
should consult their own tax advisors regarding the U.S. federal income tax consequences of a cashless exercise of Warrants.
The
lapse or expiration of a Warrant will be treated as if the U.S. holder sold or exchanged the Warrant and recognized a capital loss equal
to the U.S. holder’s tax basis in the Warrant. The deductibility of capital losses is subject to limitations.
Certain
Adjustments to Warrants
Under
Section 305 of the Code, an adjustment to the number of shares of Common Stock issued on the exercise of the Warrants, or an adjustment
to the exercise price of the Warrants, may be treated as a constructive distribution to a U.S. holder of the Warrants if, and to the
extent that, such adjustment has the effect of increasing such U.S. holder’s proportionate interest in our “earnings and
profits” or assets, depending on the circumstances of such adjustment (for example, if such adjustment is to compensate for a distribution
of cash or other property to our shareholders). An adjustment made pursuant to a bona fide reasonable adjustment formula that
has the effect of preventing dilution should generally not be considered to result in a constructive distribution. Any such constructive
distribution would be taxable whether or not there is an actual distribution of cash or other property to the holders of Warrants. In
certain circumstances, if we were to make a distribution in cash or other property with respect to our Common Stock after the issuance
of the Warrants, then we may make a corresponding distribution to a Warrant holder. The taxation of a distribution received with respect
to a Warrant is unclear. It is possible such a distribution would be treated as a distribution (or constructive distribution), although
other treatments are possible. For more information regarding the tax considerations related to distributions, see the discussion below
in “Distributions.” U.S. holders should consult their tax advisors regarding the proper treatment of any adjustments
to the Warrants and any distributions with respect to the Warrants.
Distributions
We
do not anticipate declaring or paying dividends to holders of our Common Stock in the foreseeable future. However, if we do make distributions
on our Common Stock or Pre-Funded Warrants to a U.S. holder, such distributions of cash or property generally will constitute dividends
for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S.
federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of
capital that is applied against and reduces, but not below zero, a U.S. holder’s adjusted tax basis in our Common Stock or Pre-Funded
Warrant, as applicable. Any remaining excess will be treated as gain realized on the sale or exchange of our Common Stock or Pre-Funded
Warrant as described below under the subsection titled “Disposition of Our Common Stock, Pre-Funded Warrants or Warrants.”
Disposition
of Our Common Stock, Pre-Funded Warrants or Warrants
Upon
a sale or other taxable disposition of our Common Stock, Pre-Funded Warrants or Warrants, a U.S. holder generally will recognize capital
gain or loss in an amount equal to the difference between the amount realized and the U.S. holder’s adjusted tax basis in the Common
Stock, Pre-Funded Warrants or Warrants. Capital gain or loss will constitute long-term capital gain or loss if the U.S. holder’s
holding period for the Common Stock, Pre-Funded Warrants or Warrants exceeds one year. The deductibility of capital losses is subject
to certain limitations. U.S. holders who recognize losses with respect to a disposition of our Common Stock, Pre-Funded Warrants or Warrants
should consult their own tax advisors regarding the tax treatment of such losses.
Information
Reporting and Backup Reporting
Information
reporting requirements generally will apply to payments of dividends (including constructive dividends) on the Common Stock, Pre-Funded
Warrants and Warrants and to the proceeds of a sale or other disposition of Common Stock, Pre-Funded Warrants and Warrants paid by us
to a U.S. holder unless such U.S. holder is an exempt recipient, such as a corporation. Backup withholding will apply to those payments
if the U.S. holder fails to provide the holder’s taxpayer identification number, or certification of exempt status, or if the holder
otherwise fails to comply with applicable requirements to establish an exemption.
Backup
withholding is not an additional tax. Rather, any amounts withheld under the backup withholding rules will be allowed as a refund or
a credit against the U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the
IRS. U.S. holders should consult their own tax advisors regarding their qualification for exemption from information reporting and backup
withholding and the procedure for obtaining such exemption.
Non-U.S.
Holders
Exercise
and Expiration of Warrants
In
general, a non-U.S. holder will not recognize gain or loss for U.S. federal income tax purposes upon the exercise of Warrants into shares
of Common Stock, except to the extent the non-U.S. holder receives a cash payment for any fractional share of Common Stock that would
otherwise have been issuable upon exercise of the Warrant, which will be treated as a sale subject to the rules described under “Disposition
of Our Common Stock, Pre-Funded Warrants or Warrants” below. The U.S. federal income tax treatment of a cashless exercise of
Warrants into our Common Stock is unclear. A non-U.S. holder should consult his, her, or its own tax advisor regarding the U.S. federal
income tax consequences of a cashless exercise of Warrants.
The
expiration of a Warrant will be treated as if the non-U.S. holder sold or exchanged the Warrant and recognized a capital loss equal to
the non-U.S. holder’s tax basis in the Warrant. However, a non-U.S. holder will not be able to utilize a loss recognized upon expiration
of a Warrant against the non-U.S. holder’s U.S. federal income tax liability unless the loss is effectively connected with the
non-U.S. holder’s conduct of a trade or business within the United States (and, if an income tax treaty applies, is attributable
to a permanent establishment or fixed base in the United States) or is treated as a U.S.-source loss and the non-U.S. holder is present
183 days or more in the taxable year of disposition and certain other conditions are met.
Certain
Adjustments to Warrants
As
described under “U.S. Holders - Certain Adjustments to Warrants,” an adjustment to the Warrants could result in a
constructive distribution to a non-U.S. holder, which would be treated as described under “Distributions” below. Any
resulting withholding tax attributable to deemed dividends would be collected from other amounts payable or distributable to the non-U.S.
holder. Non-U.S. holders should consult their tax advisors regarding the proper treatment of any adjustments to and distributions on
the Warrants.
Distributions
As
discussed above, we do not anticipate declaring or paying dividends in the foreseeable future. However, if we do make distributions on
our Common Stock or Pre-Funded Warrants, such distributions of cash or property generally will constitute dividends for U.S. federal
income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income
tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and first be
applied against and reduce a non-U.S. holder’s adjusted tax basis in its Common Stock or Pre-Funded Warrants, but not below zero.
Any excess will be treated as capital gain and will be treated as described below in the section relating to the sale or disposition
of our Common Stock, Pre-Funded Warrants or Warrants. Because we may not know the extent to which a distribution is a dividend for U.S.
federal income tax purposes at the time it is made, for purposes of the withholding rules discussed below we or the applicable withholding
agent may treat the entire distribution as a dividend.
Subject
to the discussion below on backup withholding and the Foreign Account Tax Compliance Act and the rules and regulations promulgated thereunder
(collectively, “FACTA”), dividends paid to a non-U.S. holder of our Common Stock or Pre-Funded Warrants that are not effectively
connected with the non-U.S. holder’s conduct of a trade or business within the United States will be subject to U.S. federal
withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty).
In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate version
of IRS Form W-8 certifying qualification for the reduced rate.
If
dividends paid to a non-U.S. holder are effectively connected with the non-U.S. holder’s conduct of a trade or business within
the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment
in the United States to which such dividends are attributable), then, although exempt from U.S. federal withholding tax (provided
the non-U.S. holder provides appropriate certification, as described below), the non-U.S. holder will be subject to U.S. federal income
tax on such dividends on a net income basis at the regular graduated rates. In order to obtain this exemption, you must provide us with
an IRS Form W-8ECI or other applicable IRS Form W-8 properly certifying such exemption. In addition, a non-U.S. holder that is a corporation
may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on its effectively
connected earnings and profits for the taxable year that are attributable to such dividends, as adjusted for certain items. Non-U.S.
holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty and regarding
any applicable treaties that may provide for different rules.
If
you hold our Common Stock, Pre-Funded Warrants or Warrants through a financial institution or other agent acting on your behalf, you
will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or our
paying agent, either directly or through other intermediaries. You may be eligible to obtain a refund of any excess amounts withheld
by timely filing an appropriate claim for refund with the IRS.
Disposition
of Our Common Stock, Pre-Funded Warrants or Warrants
In
general, subject to the discussions below on backup withholding, information reporting and foreign accounts, a non-U.S. holder will not
be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our Common Stock, Pre-Funded
Warrants or Warrants unless:
• | | the
gain is effectively connected with the non-U.S. holder’s conduct of a trade or business
within the United States (and, if required by an applicable income tax treaty, the non-U.S.
holder maintains a permanent establishment or fixed base in the United States to which such
gain is attributable); |
• | | the
non-U.S. holder is a nonresident alien individual present in the United States for 183 days
or more during the taxable year of the disposition and certain other requirements are met;
or |
• | | our
Common Stock constitutes U.S. real property interests, or USRPIs, by reason of our status
as a U.S. real property holding corporation, or USRPHC, for U.S. federal income tax purposes
at any time within the shorter of the five-year period preceding the non-U.S. holder’s
disposition of, or their holding period for, our Common Stock or Warrants. |
Gain
described in the first bullet point above will generally be subject to U.S. federal income tax on a net income basis at the regular rates.
A non-U.S. holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by
an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.
A
non-U.S. holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower
rate specified by an applicable income tax treaty) on any gain derived from the disposition, which may be offset by certain U.S. source
capital losses of the non-U.S. holder (even though the individual non-U.S. holder is not considered a resident of the United States)
provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
With
respect to the third bullet point above, we believe we are not currently and do not anticipate becoming a USRPHC. However, because the
determination of whether we are a USRPHC depends on the fair market value of our USRPIs relative to the fair market value of our non-U.S.
real property interests and our other business assets, there can be no assurance we will not become a USRPHC in the future. Even if we
are determined to be or were to become a USRPHC, gain arising from the sale or other taxable disposition by a non-U.S. holder of our
Common Stock, Pre-Funded Warrants or Warrants will not be subject to U.S. federal income tax if our Common Stock is “regularly
traded,” as defined by applicable Treasury Regulations, on an established securities market, and such non-U.S. holder owned, actually
and constructively, 5% or less of our Common Stock throughout the shorter of the five-year period ending on the date of the sale or other
taxable disposition or the non-U.S. holder’s holding period. Special rules may apply to the determination of the 5% threshold in
the case of a holder of a Pre-Funded Warrant or Warrant. Non-U.S. holders are urged to consult their own tax advisors regarding the effect
of holding our Pre-Funded Warrants or Warrants on the calculation of such 5% threshold. If we are a USRPHC and either our Common Stock
is not regularly traded on an established securities market or a non-U.S. holder holds, or is treated as holding, more than 5% of our
outstanding common stock, directly or indirectly, during the applicable testing period, such non-U.S. holder’s gain on the disposition
of shares of our Common Stock, Pre-Funded or Warrants generally will be taxed in the same manner as gain that is effectively connected
with the conduct of a U.S. trade or business, except that the branch profits tax generally will not apply. If we are a USRPHC and our
Common Stock is not regularly traded on an established securities market, a non-U.S. holder’s proceeds received on the disposition
of shares will also generally be subject to withholding at a rate of 15%. No assurance can be provided that our Common Stock will be
regularly traded on an established securities market for purposes of the rules described above. Prospective investors are encouraged
to consult their tax advisors regarding the possible consequences to them if we are, or were to become, a USRPHC.
Non-U.S.
holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.
Information
Reporting and Backup Withholding
Generally,
we must report annually to the IRS the amount of distributions (including constructive distributions) on our Common Stock, Pre-Funded
Warrants or Warrants paid to each non-U.S. holder, their name and address, and the amount of tax withheld, if any. Copies of information
returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities
of the country in which the non-U.S. holder resides or is established.
Payments
of dividends (including constructive dividends) or of proceeds on the disposition of our Common Stock, Pre-Funded Warrants or Warrants
made to a non-U.S. holder may be subject to information reporting and backup withholding at a current rate of 24% unless the non-U.S.
holder establishes an exemption, for example, by properly certifying their non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E
or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may
apply if either we or our paying agent has actual knowledge, or reason to know, that a holder is a U.S. person.
Under
current U.S. federal income tax law, U.S. information reporting and backup withholding requirements generally will apply to the proceeds
of a disposition of our Common Stock, Pre-Funded Warrants or Warrants effected by or through a U.S. office of any broker, U.S. or foreign,
except that information reporting and such requirements may be avoided if the holder provides a properly executed and appropriate IRS Form W-8
or otherwise meets documentary evidence requirements for establishing non- U.S. holder status or otherwise establishes an exemption.
Generally, U.S. information reporting and backup withholding requirements will not apply to a payment of disposition proceeds to a non-U.S.
holder where the transaction is effected outside the U.S. through a non-U.S. office of a non-U.S. broker. Information reporting and backup
withholding requirements may, however, apply to a payment of disposition proceeds if the broker has actual knowledge, or reason to know,
that the holder is, in fact, a U.S. person. For information reporting purposes, certain brokers with substantial U.S. ownership or operations
will generally be treated in a manner similar to U.S. brokers.
Non-U.S.
holders should consult their tax advisors regarding the application of the information reporting and backup withholding rules to them.
Foreign
Account Tax Compliance Act
FATCA
generally imposes withholding tax at a rate of 30% on dividends (including constructive dividends) on our Common Stock, Pre-Funded Warrants
or Warrants, and certain other withholding payments, if paid to a non-U.S. entity unless (i) if the non-U.S. entity is a “foreign
financial institution,” the non-U.S. entity undertakes certain due diligence, reporting, withholding, and certification obligations,
(ii) if the non-U.S. entity is not a “foreign financial institution,” the non-U.S. entity identifies certain of its U.S.
investors, if any, or (iii) the non-U.S. entity is otherwise exempt under FATCA. While withholding under FATCA may apply to payments
of gross proceeds from a sale or other disposition of our Common Stock, Pre-Funded Warrants or Warrants, under proposed U.S. Treasury
Regulations withholding on payments of gross proceeds is not required. Although such regulations are not final, applicable withholding
agents may rely on the proposed regulations until final regulations are issued.
The
preceding discussion of material U.S. federal income tax considerations is for informational purposes only. It is not tax advice. Prospective
investors should consult their own tax advisors regarding the particular U.S. federal, state, local and non-U.S. tax consequences of
purchasing, holding and disposing of our Common Stock, Pre-Funded Warrants or Warrants, including the consequences of any proposed changes
in applicable laws.
UNDERWRITING
Aegis Capital Corp. is acting as the underwriter of the Offering.
We have entered into an underwriting agreement dated [*], 2023 with the underwriter (the “Underwriting Agreement”). Subject
to the terms and conditions of the Underwriting Agreement, we have agreed to sell to the underwriter, and the underwriter has agreed
to purchase, at the public offering price less the underwriting discounts, the number of Units including a share of Common Stock, a Series
A Warrant and Series B Warrant and the number of Units including a Pre-Funded Warrant, Series A Warrant and Series B Warrant listed next
to its name in the following table:
Underwriter | |
Number
of Units (including a share of Common Stock) | |
Number
of Units (including a Pre-Funded Warrant) |
Aegis
Capital Corp. | |
| [*] | | |
| [*] | |
The
underwriter is committed to purchase all of the Units offered by us other than those covered by the Over-Allotment Option. The obligations
of the underwriter may be terminated upon the occurrence of certain events specified in the Underwriting Agreement. Furthermore, pursuant
to the Underwriting Agreement, the underwriter’s obligations are subject to customary conditions, representations and warranties
contained in the Underwriting Agreement, such as receipt by the underwriter of officers’ certificates and legal opinions.
We
have been advised by the underwriter that it proposes to offer the securities directly to the public at the public offering price set
forth on the cover page of this prospectus. Any securities sold by the underwriter to securities dealers will be sold at the public offering
price less a selling concession not in excess of up to $[*] per share.
No
action has been taken by us or the underwriter that would permit a public offering of the securities in any jurisdiction outside the
United States where action for that purpose is required, including Canada. None of the securities included in this offering may be offered
or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer
and sales of any of the securities offering hereby be distributed or published in any jurisdiction except under circumstances that will
result in compliance with the applicable rules and regulations of that jurisdiction. Persons who receive this prospectus are advised
to inform themselves about and to observe any restrictions relating to this offering of securities and the distribution of this prospectus.
This prospectus is neither an offer to sell nor a solicitation of any offer to buy the securities in any jurisdiction where that would
not be permitted or legal. No sales of the securities under this prospectus will be made to a resident of Canada.
Underwriting
Discount and Expenses
The
following table summarizes the underwriting discount and commission to be paid to the underwriter by us.
| |
Per
Unit (including a share of Common Stock) | |
Per
Unit (including a Pre-Funded Warrant) | |
Total |
Public
offering price | |
$ | | | |
$ | | | |
$ | | |
Underwriting
discounts and commissions(1) | |
$ | | | |
$ | | | |
$ | | |
Proceeds,
before expenses, to us(2) | |
$ | | | |
$ | | | |
$ | | |
We estimate the total expenses payable by us for
this offering to be approximately $935,000, which amount includes (i) the underwriting discount of $480,000 (assuming no exercise of the
Over-Allotment Option) and (ii) a non-accountable expense allowance of $60,000 (assuming no exercise of the Over-Allotment Option), which
equals 1% of the gross proceeds of this offering, and (iii) reimbursement of the accountable expenses of the underwriter of $75,000, including
the legal fees of the underwriter and (iv) other estimated company expenses of approximately $320,000 which includes accounting, printing
costs and various fees associated with the registration and listing of the Common Stock.
The
securities we are offering are being offered by the underwriter subject to certain conditions specified in the Underwriting Agreement.
Lock-Up
Agreements
Our directors, executive officers, employees and
shareholders holding at least ten percent (10%) of the outstanding shares of Common Stock will enter into customary lock-up agreements
in favor of, and in form reasonably acceptable to, the underwriter and the investors for a period of two hundred and twenty (220) days
from the closing date of this offering; provided, however, that any sales by parties to the lock-ups shall be subject to the lock-up agreements
and provided further, that none of such shares shall be saleable in the public market until the expiration of the two hundred twenty
(220) day period described above.
We have agreed for a period of two hundred twenty
(220) days after the closing date, without the prior written consent of the underwriter, to not (a) offer, sell, issue or otherwise transfer
or dispose of, directly or indirectly, any equity of the Company or any securities convertible into or exercisable or exchangeable for
equity of the Company; (b) file or caused to be filed any registration statement with the SEC relating to the offering of any equity of
the Company or any securities convertible into or exercisable or exchangeable for equity of the Company; or (c) enter into any agreement
or announce the intention to effect any of the actions described in subsections (a) or (b) hereof (all of such matters, the “Standstill”).
So long as none of such equity securities shall be saleable in the public market until the expiration of the one hundred and eighty
(180) period described above, the following matters shall not be prohibited by the Standstill: (i) the adoption of an equity incentive
plan and the grant of awards or equity pursuant to any equity incentive plan, and the filing of a registration statement on Form S-8;
and (ii) the issuance of equity securities in connection with an acquisition or a strategic relationship, which may include
the sale of equity securities. In no event should any equity transaction during the Standstill period result in the sale of equity
at an offering price to the public less than the offering price of the Units.
The
underwriter may in its sole discretion and at any time without notice release some or all of the shares subject to lock-up agreements
prior to the expiration of the lock-up period. When determining whether or not to release shares from the lock-up agreements, the underwriter
will consider, among other factors, the security holder’s reasons for requesting the release, the number of shares for which the
release is being requested and market conditions at the time.
Over-allotment
Option
We have granted to the underwriter an Over-Allotment
Option exercisable not later than 45 days after the closing date of this offering to purchase up to a number of additional shares of Common
Stock and/or Pre-Funded Warrants and/or Series A Warrants and/or Series B Warrants equal to 15% of the number of securities sold in this
offering at the applicable public offering price listed on the cover of this prospectus, less the underwriting discounts and commissions.
The underwriter may exercise its Over-Allotment Option, if any, made in connection with this offering. If any additional shares of Common
Stock and/or Pre-Funded Warrants and/or Series A Warrants and/or Series B Warrants are purchased, the underwriter will offer these securities
on the same terms as those on which the other securities are being offered.
Certain
Relationships
The
underwriter and its affiliates have and may in the future provide, from time to time, investment banking and financial advisory services
to us in the ordinary course of business, for which they may receive customary fees and commissions.
Transfer
Agent and Registrar
The
transfer agent and registrar for our Common Stock is VStock Transfer, LLC, whose address
is 18 Lafayette Place, Woodmere, NY 11598.
Stabilization,
Short Positions and Penalty Bids
The
underwriter may engage in syndicate covering transactions stabilizing transactions and penalty bids or purchases for the purpose of pegging,
fixing or maintaining the price of our Common Stock:
• | | Syndicate
covering transactions involve purchases of securities in the open market after the distribution
has been completed in order to cover syndicate short positions. Such a naked short position
would be closed out by buying securities in the open market. A naked short position is more
likely to be created if the underwriter is concerned that there could be downward pressure
on the price of the securities in the open market after pricing that could adversely affect
investors who purchase in the Offering. |
• | | Stabilizing
transactions permit bids to purchase the underlying security so long as the stabilizing bids
do not exceed a specific maximum. |
• | | Penalty
bids permit the underwriter to reclaim a selling concession from a syndicate member when
the securities originally sold by the syndicate member are purchased in a stabilizing or
syndicate covering transaction to cover syndicate short positions. |
These
syndicate covering transactions, stabilizing transactions, and penalty bids may have the effect of raising or maintaining the market
prices of our securities or preventing or retarding a decline in the market prices of our securities. As a result, the price of our Common
Stock may be higher than the price that might otherwise exist in the open market. Neither we nor the underwriter make any representation
or prediction as to the effect that the transactions described above may have on the price of our Common Stock. These transactions may
be effected on The Nasdaq Capital Market, in the over-the-counter market or on any other trading market and, if commenced, may be discontinued
at any time.
In
connection with this offering, the underwriter also may engage in passive market making transactions in our Common Stock in accordance
with Regulation M during a period before the commencement of offers or sales of shares of our Common Stock in this offering and extending
through the completion of the distribution. In general, a passive market maker must display its bid at a price not in excess of the highest
independent bid for that security. However, if all independent bids are lowered below the passive market maker’s bid that bid must
then be lowered when specific purchase limits are exceeded. Passive market making may stabilize the market price of the securities at
a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.
Neither
we, nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described
above may have on the prices of our securities. In addition, neither we nor the underwriter make any representation that the underwriter
will engage in these transactions or that any transactions, once commenced will not be discontinued without notice.
Indemnification
We
have agreed to indemnify the underwriter against certain liabilities, including certain liabilities arising under the Securities Act
or to contribute to payments that the underwriter may be required to make for these liabilities.
Trading
Market
Our
Common Stock is listed on The Nasdaq Capital Market under the symbol “AUVI.”
EXPERTS
The
consolidated financial statements of Applied UV, Inc., and subsidiaries incorporated in this prospectus by reference to the Annual Report
on Form 10-K for the year ended December 31, 2022 have been so incorporated in reliance on the report of Mazars USA LLP, an independent
registered public accounting firm, as set forth in their report thereon, given on the authority of said firm as experts in auditing and
accounting. The combined financial statements of PURO Lighting, LLC and LED Supply Co. LLC for the fiscal years ended December 31, 2021
and 2020 incorporated in the prospectus by reference to our Current Report on Form 8-K filed with the SEC on February 1, 2023 as amended
by the Form 8-K/A filed with the SEC on February 2, 2023, the Form 8-K/A filed with the SEC on February 13, 2023 and the Form 8-K/A filed
with the SEC on April 10, 2023 and related to the Company’s acquisition of PURO and LED Supply have been so incorporated in reliance
on the report of Mazars USA LLP, an independent registered public accounting firm, as set forth in their report thereon, given on the
authority of said firm as experts in auditing and accounting.
LEGAL
MATTERS
Certain
legal matters with respect to the validity of the securities being offered by this prospectus will be passed upon by Sichenzia Ross Ference
Carmel LLP, New York, New York. Sichenzia Ross Ference Carmel LLP owns 161,794 shares of Common Stock. Kaufman & Canoles, P.C., is
acting as counsel for the underwriter with respect to this offering.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the securities that we are offering
under this prospectus. It is important for you to read and consider all of the information contained in the registration statement and
you should refer to our registration statement and its exhibits for further information.
We
file annual, quarterly, and current reports, proxy statements, and other information with the SEC. Our SEC filings are available to the
public over the internet at the SEC’s web site at www.sec.gov.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The
SEC allows us to incorporate by reference the information we file with it, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by reference is an important part of this prospectus. This prospectus
incorporates by reference: our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 31,
2023; our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, filed with the SEC on May 22, 2023; our Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2023, filed with the SEC on August 18, 2023; our Current Report on Form 8-K
(“Form 8-K”) filed with the SEC on February 1, 2023; our Form 8-K filed with the SEC on February 1, 2023; our Form 8-K/A
filed with the SEC on February 2, 2023; our Form 8-K/A filed with the SEC on February 13, 2023; our Form 8-K/A filed with the SEC on
April 10, 2023; our Form 8-K filed with the SEC on April 14, 2023; our Form 8-K filed with the SEC on May 30, 2023; our Form 8-K filed
with the SEC on June 23, 2023; our Form 8-K filed with the SEC on August 28, 2023; our Definitive Proxy Statement on Schedule 14A filed
with the SEC on April 18, 2023; our Schedule 14C Definitive Information Statement filed with the SEC on October 2, 2023; and any future
filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, until all of the securities are sold.
Any
statement contained in a document filed before the date of this prospectus and incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a statement contained herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
Notwithstanding the foregoing, we are not incorporating any document or portion thereof or information deemed to have been furnished
and not filed in accordance with SEC rule.
We
will provide you with a copy of any or all of the information that has been incorporated by reference in this prospectus, without charge,
upon written or oral request directed to Applied UV, Inc., 150 N. MacQuesten Parkway, Mount Vernon, NY 10550, telephone number (914)
665-6100. You may also access the documents incorporated by reference as described under “Where You Can Find More Information.”
24,000,000 Units, Each Unit Consisting of One
Share of Common Stock or One Pre-Funded Warrant to Purchase One Share of Common Stock, one-tenth of a Series A Warrant to Purchase one
Share of Common Stock and one-tenth of a Series B Warrant to Purchase one Share of Common Stock
4,800,000 Shares of Common Stock Underlying the Series A and
Series B Warrants
Applied
UV, Inc.
PRELIMINARY
PROSPECTUS
Aegis
Capital Corp.
________________,
2023
Part
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution.
The
following table indicates the expenses to be incurred in connection with this offering, other than the underwriter’s discount and
commissions and expenses, all of which will be paid by us. All amounts are estimated except the Securities and Exchange Commission registration
fee and the Financial Industry Regulatory Authority, Inc. (“FINRA”) filing.
| |
Amount |
SEC registration fee | |
$ | 2,036.88 | |
FINRA filing fee | |
$ | 2,570.00 | |
Accountants’ fees and expenses | |
$ | 5,000.00 | |
Legal fees and expenses | |
$ | 300,000.00 | |
Printing and engraving expenses | |
$ | 1,500.00 | |
Miscellaneous | |
$ | 8,893.12 | |
Total expenses | |
$ | 320,000.00 | |
Item
14. Indemnification of Directors and Officers.
As
a Nevada corporation, we are generally governed by Chapter 78 of the Nevada Revised Statutes (“NRS”).
Section
78.138 of the NRS provides that, unless the corporation’s articles of incorporation provide otherwise, a director or officer will
not be individually liable as a result of any act or failure to act unless it is proven that (i) the director’s or officer’s
acts or omissions constituted a breach of his or her fiduciary duties, and (ii) such breach involved intentional misconduct, fraud or
a knowing violation of the law.
Section
78.7502 of the NRS permits a Nevada corporation to indemnify its directors and officers against expenses, judgments, fines, and amounts
paid in settlement actually and reasonably incurred in connection with a threatened, pending, or completed action, suit, or proceeding,
except an action by or on behalf of the corporation, if the officer or director (i) is not liable pursuant to Section 78.138 of the NRS,
or (ii) acted in good faith and in a manner the officer or director reasonably believed to be in or not opposed to the best interests
of the corporation and, if a criminal action or proceeding, had no reasonable cause to believe the conduct of the officer or director
was unlawful. Section 78.7502 of the NRS also provides that a corporation may not indemnify a director or officer under this section
with respect to an action by or on behalf of the corporation if such person has been adjudged to be liable to the corporation or for
amounts paid to the corporation in settlement of such claim unless and only to the extent the court determines in view of all circumstances
of the case, the person is fairly and reasonably entitled to indemnification. Indemnification under Section 78.7502 of the NRS generally
may be made by the corporation only if determined to be proper under the circumstances. Such determination must be made by the stockholders,
directors not a party to the action, or legal counsel.
Section
78.751 of the NRS requires a corporation to indemnify its officers and directors if they have been successful on the merits or otherwise
in defense of any claim, issue, or matter resulting from their service as a director or officer. Section 78.751 of the NRS allows a corporation
to advance expenses as incurred upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is
ultimately determined by a court of competent jurisdiction that such officer or director is not entitled to be indemnified by the corporation
if so provided in the corporation’s articles of incorporation, bylaws or other agreement. Advancement of expenses as incurred may
be required under corporation’s articles of incorporation or bylaws or by agreement. Section 78.751 of the NRS further permits
the corporation to grant its directors and officers additional rights of indemnification under its articles of incorporation, bylaws
or other agreement.
Section
78.752 of the NRS provides that a Nevada corporation may purchase and maintain insurance or make other financial arrangements on behalf
of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, for any liability
asserted against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising
out of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.
Our
amended and restated certificate of incorporation provides that we will indemnify to the fullest extent permitted from time to time by
the NRS or any other applicable laws as presently or hereafter in effect, any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Company, by reason of his acting as a director or officer of the Company
or any of its subsidiaries (and the Company, in the discretion of the Board, may so indemnify a person by reason of the fact that he
is or was an employee or agent of the Company or any of its subsidiaries or is or was serving at the request of the Company in any other
capacity for or on behalf of the Company) against any liability or expense actually and reasonably incurred by such person in respect
thereof; provided, however, the Company shall be required to indemnify an officer
or director in connection with an action, suit or proceeding (or part thereof) initiated by such person only if (i) such action, suit
or proceeding (or part thereof) was authorized by the Board and (ii) the indemnification does not relate to any liability arising under
Section 16(b) of the Exchange Act, as amended, or any rules or regulations promulgated thereunder. Such indemnification is not exclusive
of any other right to indemnification provided by law or otherwise.
If
a claim is not paid in full by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where any undertaking required by the Bylaws of the Company has been tendered to the
Company) that the claimant has not met the standards of conduct which make it permissible under the NRS for the Company to indemnify
the claimant for the amount claimed, but the burden of proving such defense shall be on the Company. Neither the failure of the Company
(including its Board, legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth
in the NRS, nor an actual determination by the Company (including its Board, legal counsel, or its shareholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct. Indemnification shall include payment by the Company of expenses in defending an action or proceeding
in advance of the final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay such
payment if it is ultimately determined that such person is not entitled to indemnification.
In
any underwriting agreement, the underwriter agrees to indemnify, under certain conditions, us, our directors, our officers and persons
who control us within the meaning of the Securities Act against certain liabilities.
Item
15. Recent Sales of Unregistered Securities.
Set
forth below is information regarding shares of our common stock, par value $0.0001 per share (“Common Stock”), issued by
us since June 8, 2020.
(a)
Issuance of Capital Stock.
On
June 10, 2020, the Company issued 10,309 shares of Common Stock to Carmel, Milazzo & Feil LLP as part of compensation for legal services.
Only
July 9, 2020, the Company issued 8,000 unvested shares of Common Stock in the aggregate to four newly elected directors. The shares will
vest evenly on an annual basis over a period of four (4) years.
On
July 9, 2020, the Company issued 7,500 shares of unvested Common Stock to its non-employee directors, which vested on January 1, 2021.
On
July 9, 2020, the Company issued 2,000 unvested shares of Common Stock to the Chairman of the Board. The shares vested on January 1,
2021.
On
July 9, 2020, Company issued 3,000 unvested shares of Common Stock in the aggregate to the Chairman of the Audit Committee, the Chairman
of the Nominating and Corporate Governance Committee and the Chairman the Compensation Committee. The shares vested on January 1, 2021.
On
January 1, 2021, the Company issued in the aggregate 12,500 unvested shares of its Common Stock to its independent directors, which vested
on January 1, 2022.
On
January 14, 2021, the Company issued 664 shares of its Common Stock pursuant to the exercise of a common stock purchase warrant.
On
January 25, 2021, the Company issued 600 shares of its Common Stock to a consultant as payment for services.
On
February 8, 2021, the Company issued 275,000 shares of its Common Stock to the members of Akida Holdings LLC and one of its former employees
in connection with the purchase of substantially all of the assets of Akida Holdings LLC.
On
March 5, 2021, the Company issued 37 shares of its Common Stock pursuant to the exercise of a common stock purchase warrant.
On
March 12, 2021, the Company issued 2,726 shares of its Common Stock pursuant to the exercise of a common stock purchase warrant.
On
May 17, 2021, the Company issued 143 shares of its Common Stock pursuant to the exercise of a common stock purchase warrant.
On
May 28, 2021, the Company issued 2,400 shares of its Common Stock to a consultant as payment for services.
On
September 28, 2021, the Company issued 60,000 shares of its Common Stock to the members of Kes Science & Technology, Inc. in connection
with the purchase of substantially all of the assets of Kes Science & Technology, Inc.
On
October 13, 2021, the Company issued 80,000 shares of its Common Stock to the members of Old Sam Partners, LLC (SAM), formerly known
as Scientific Air Management, LLC, in connection with the purchase of substantially all of the assets of SAM. On March
31, 2022, there was a settlement of a dispute that arose during the first quarter of 2022 between both parties regarding certain representations
and warranties in the purchase agreement which resulted in a settlement and mutual release agreement whereby the seller agreed to relinquish
any right, title, and interest in the previously issued 80,000 shares.
On
January 1, 2022, the Company issued in the aggregate 12,500 unvested shares of its Common Stock to its independent directors, which vest
on January 1, 2023.
On
January 1, 2022, the Company issued 10,000 unvested shares to Michael Riccio, its Chief Financial Officer, pursuant to his employment
agreement with the Company. The shares vest evenly on a quarterly basis over three years.
On
April 11, 2022, the Company issued 15,000 unvested shares to John Andrews, its former Chief Executive Officer, pursuant to his employment
agreement with the Company. On December 19, 2022, pursuant to his separation agreement with the Company. 11,807 of the 15,000 shares
were cancelled. The balance of 3,193 shares vested immediately upon John Andrew’s departure.
On
May 17, 2022, the Company issued in the aggregate 4,000 unvested shares of its Common Stock to two new independent directors, which vest
evenly on an annual basis over four years, beginning January 1, 2023.
On
May 17, 2022, a total of 10,500 shares of Common Stock were cancelled due to the resignation and/or non-election of three previous board
members.
On
January 1, 2023, the Company issued in the aggregate 7,000 unvested shares of its Common Stock to its independent directors, which vest
on January 1, 2024.
On
January 26, 2023, the Company issued 774,999 shares of Common Stock and 399,996 shares of its Series C Preferred Stock to the equity
holders of PURO and LED Supply in connection with the acquisitions of those entities.
On
January 26, 2023, the Company issued 1,250,000 shares of its Series B Preferred Stock to one of PURO’s vendors in connection with
the settlement of a $5 million promissory note.
On
March 3, 2023, the Company issued in the aggregate 4,000 unvested shares of its Common Stock to its independent directors, which vest
on January 1, 2024.
The
issuance of the capital stock listed above was deemed exempt from registration under Section 4(a)(2) of the Securities Act or Regulation
D promulgated thereunder in that the issuance of securities were made to an accredited investor and did not involve a public offering.
The recipient of such securities represented its intention to acquire the securities for investment purposes only and not with a view
to or for sale in connection with any distribution thereof.
(b)
Warrants.
On
September 2, 2020, the Company issued warrants to purchase 16,000 shares of its Common Stock to and at the direction of the underwriter
of its initial public offering.
On
November 13, 2020, the Company issued warrants to purchase 14,019 shares of its Common Stock to the underwriter of its public offering.
The
issuance of the warrant listed above was deemed exempt from registration under Section 4(a)(2) of the Securities Act or Regulation D
promulgated thereunder in that the issuance of securities were made to an accredited investor and did not involve a public offering.
The recipient of such securities represented its intention to acquire the securities for investment purposes only and not with a view
to or for sale in connection with any distribution thereof.
(c)
Option Grants.
On
March 4, 2021, the Company granted an unvested option to purchase 61,967 shares of its Common Stock at an exercise price of $39.00 per
share to Max Munn, its President, pursuant to his employment agreement with the Company. The option vests monthly over a three-year period.
On April
5, 2021, the Company granted an option to purchase 14,000 shares of its Common Stock at an exercise price of $48.30 per share to Michael
Riccio, its Chief Financial Officer, pursuant to his employment offer from the Company. These options were cancelled and reissued on
September 28, 2021 at an exercise price of $32.65 per share.
On
June 22, 2021, the Company granted options to purchase 17,600 shares of Common Stock at an exercise price of $48.95 per share to certain
of its employees pursuant to the Company’s stock option plan.
On
September 23, 2021, the Company granted options to purchase 2,000 shares of Common Stock at an exercise price of $33.70 per share to
certain of its employees pursuant to the Company’s stock option plan.
On
January 1, 2022, the Company granted an option to purchase 14,000 shares of its Common Stock at an exercise price of $13.50 per share
to Michael Riccio, its Chief Financial Officer, pursuant to his employment agreement with the Company.
On
February 18, 2022, the Company granted options to purchase 5,000 shares of Common Stock at an exercise price of $8.30 per share to certain
of its employees pursuant to the Company’s stock option plan.
On
March 2, 2022, the Company granted options to purchase 18,800 shares of Common Stock at an exercise price of $7.70 per share to certain
of its employees pursuant to the Company’s stock option plan.
On
June 3, 2022, the Company granted options to purchase 16,000 shares of Common Stock at an exercise price of $5.35 per share to certain
of its employees pursuant to the Company’s stock option plan.
On
April 11, 2022, the Company granted an option to purchase 35,000 shares of its Common Stock at an exercise price of $7.10 per share to
John Andrews, its former Chief Executive Officer, pursuant to his employment agreement with the Company. All 35,000 options have expired
since his departure from the Company on December 19, 2022.
On
August 25, 2022, the Company granted options to purchase 5,000 shares of Common Stock at an exercise price of $10.00 per share to certain
of its employees pursuant to the Company’s stock option plan.
On
September 12, 2022, the Company granted options to purchase 12,000 shares of Common Stock at an exercise price of $8.50 per share to
certain of its employees pursuant to the Company’s stock option plan.
On
December 12, 2022, the Company granted options to purchase 12,000 shares of Common Stock at an exercise price of $8.50 per share to certain
of its employees pursuant to the Company’s stock option plan.
On
December 31, 2022, the Company granted options to purchase 10,000 shares of Common Stock at an exercise price of $10.00 per share to
certain of its employees pursuant to the Company’s stock option plan.
On
January 9, 2023, the Company granted options to purchase 81,000 shares of Common Stock at an exercise price of $10.00 per share to certain
of its employees pursuant to the Company’s stock option plan.
On
January 26, 2023, the Company granted options to purchase 15,000 shares of Common Stock at an exercise price of $10.00 per share to certain
of its employees pursuant to the Company’s stock option plan.
The
options described above were deemed exempt from registration in reliance on Section 4(a)(2) of the Securities Act or Regulation D promulgated
thereunder in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipients
of such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for sale
in connection with any distribution thereof.
(d)
Issuance of Notes.
The
Company has not issued any notes.
Item
16. Exhibits and Financial Statement Schedules.
EXHIBIT
INDEX
1.1** |
Form of Underwriting Agreement. |
3.1* |
Articles of Incorporation of the Registrant. |
3.2* |
Bylaws of the Registrant. |
3.3* |
Certificate of Designation, Preferences and Rights of Series X Preferred Stock. |
3.4* |
Certificate of Designation, Preferences and Rights of 10.5% Series A Cumulative Perpetual Preferred Stock. |
3.5* |
Certificate of Designations, Rights, and Preferences of 2% Series B Cumulative Perpetual Preferred Stock. |
3.6* |
Certificate of Designations, Rights, and Preferences of 5% Series C Cumulative Perpetual Preferred Stock. |
4.1** |
Form of Series A Warrant |
4.2** |
Form of Series B Warrant |
4.3** |
Form of Pre-Funded Warrant |
5.1** |
Opinion of counsel to the Registrant. |
10.1* |
Agreement and Plan of Merger dated as of September 1, 2023, by and between the Registrant and Applied UV, Inc. (Delaware). |
10.2* |
Warrant, dated April 1, 2020 issued to Max Munn (incorporated by reference to Exhibit 10.4 of the Company’s Registration Statement on Form S-1 (File No. 333-239892) filed with the SEC as of July 16, 2020). |
10.3* |
The Company’s 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 of the Company’s Registration Statement on Form S-1 (333-239892) filed with the SEC as of July 16, 2020). |
10.4* |
Form of Option Agreement and Grant issued under February 18, 2020 Board Approval (incorporated by reference to Exhibit 10.6 of the Company’s Registration Statement on Form S-1 (File No. 333-239892) filed with the SEC as of July 16, 2020). |
10.5* |
Agreement, dated April 20, 2020 between Icahn School of Medicine at Mount Sinai and SteriLumen, Inc. (incorporated by reference to Exhibit 10.7 of the Company’s Registration Statement on Form S-1 (File No. 333-239892) filed with the SEC as of July 16, 2020). |
10.6* |
Common Stock Purchase Warrant, dated July 1, 2020 (incorporated by reference to Exhibit 10.10 of the Company’s Registration Statement on Form S-1 (File No. 333-239892) filed with the SEC as of July 16, 2020). |
10.7* |
Common Stock Purchase Warrant, dated July 1, 2020 (incorporated by reference to Exhibit 10.11 of the Company’s Registration Statement on Form S-1 (File No. 333-239892) filed with the SEC as of July 16, 2020). |
10.8* |
Form of Option issued to Medical Advisory Board members (incorporated by reference to Exhibit 10.12 of the Company’s Registration Statement on Form S-1 (File No. 333-239892) filed with the SEC as of July 16, 2020). |
10.9* |
Employment Agreement, dated June 30, 2020 between the Company and Max Munn (incorporated by reference to Exhibit 10.9 of the Company’s Registration Statement on Form S-1 (File No. 333-239892) filed with the SEC as of July 16, 2020). |
10.10* |
Employment Agreement, dated January 1, 2022 between the Company and Michael Ricco (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 3, 2022) |
10.11* |
Agreement and Plan of Merger dated as of December 19, 2022, by and among the Company, PURO Acquisition Sub I, Inc., PURO Acquisition Sub II, LLC, PURO Lighting, LLC, Brian Stern, Andrew Lawrence, and the Member Representative (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on February 1, 2023) |
10.12* |
Agreement and Plan of Merger dated as of December 19, 2022, by and among the Company, LED Supply Acquisition Sub I, Inc., LED Supply Acquisition Sub II, LLC, LED Supply Co. LLC, Brian Stern, Andrew Lawrence, and the Member Representative (incorporated by reference Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 1, 2023) |
10.13* |
Amendment to Agreement and Plan of Merger dated as of January 26, 2023, by and among the Company, PURO Acquisition Sub I, Inc., PURO Acquisition Sub II, LLC, PURO Lighting, LLC, Brian Stern, Andrew Lawrence, and the Member Representative (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on February 1, 2023) |
10.14* |
Amendment to Agreement and Plan of Merger dated as of January 26, 2023, by and among the Company, LED Supply Acquisition Sub I, Inc., LED Supply Acquisition Sub II, LLC, LED Supply Co. LLC, Brian Stern, Andrew Lawrence, and the Member Representative (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on February 1, 2023) |
10.15* |
Securities Purchase Agreement dated October 7, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 14, 2022) |
10.16* |
Note dated October 7, 2022 in the principal amount of $2,807,500 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on October 14, 2022) |
10.17* |
Loan and Security Agreement dated as of December 9, 2022, by and between the Company, SteriLumen, Inc., Munn Works, LLC and Pinnacle Bank (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2022) |
10.18* |
First Modification to Loan and Security Agreement and Loan Documents dated as of December 9, 2022, by and between the Company, SteriLumen, Inc., Munn Works, LLC and Pinnacle Bank (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2022) |
10.19* |
Note Purchase and Cancellation Agreement dated as of January 5, 2023, by and between the Company, PURO Lighting, LLC, and Acuity Brands Lighting, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 11, 2023) |
10.20* |
Securities Purchase Agreement dated January 25, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2023) |
10.21* |
Amendment to Securities Purchase Agreement dated January 25, 2023 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2023) |
10.22* |
Note dated January 25, 2023 in the principal amount of $2,807,500 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2023) |
10.23*# |
Applied UV, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 of the Registrant’s Registration Statement on Form S-1 (333-239892) filed with the SEC on July 16, 2020). |
10.24*# |
Applied UV, Inc. 2023 Equity Incentive Plan |
23.1** |
Consent of Mazars USA LLP. |
23.2** |
Consent of Counsel to the Registrant (included in Exhibit 5.1). |
24.1* |
Power of Attorney (included on the signature page hereto). |
107** |
Fee table |
*Previously filed.
**Filed herewith.
#
Management contract or compensatory plan.
Item
17. Undertakings.
The
undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act;
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation
of Registration Fee” table in the effective registration statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii)
above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports
filed with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule
424(b) that is part of the registration statement.
(2)
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3)
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4)
That, for the purpose of determining liability under the Securities Act to any purchaser:
(i)
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration statement; and
(ii)
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of
sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part
of the registration statement or made in any such document immediately prior to such date of first use.
(5)
That for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution
of securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to such purchaser:
(2)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule
424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(3)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
(4)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to any charter provision, by law or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The
undersigned registrant hereby undertakes that:
(5)
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared
effective.
(2)
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Mount Vernon, State of New York on the 9th day of November,
2023.
|
APPLIED
UV, INC. |
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By: |
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/s/
Max Munn |
|
|
Max
Munn
Chief
Executive Officer
(Principal
Executive Officer) |
POWER
OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Max Munn and Michael Riccio, or
either of them, as his true and lawful attorneys-in-fact and agents, with full powers of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective
amendments and any related registration statements filed pursuant to Rule 462 and otherwise), and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents and full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection
therewith, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming that said attorney-in-fact
and agent, or any substitute or resubstitute, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and
on the dates indicated.
Name |
|
Capacity in Which Signed |
|
Date |
|
|
|
|
|
/s/
Max Munn |
|
Chief
Executive Officer and Director (Principal Executive Officer) |
|
November
9, 2023 |
Max
Munn |
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|
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|
|
|
|
/s/
Michael Riccio |
|
Chief
Financial Officer (Principal Financial and Accounting officer) |
|
November
9, 2023 |
Michael
Riccio |
|
|
|
|
|
|
|
|
|
/s/
Eugene Burleson |
|
Chairman
of the Board |
|
November
9, 2023 |
Eugene
Burleson |
|
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|
|
|
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|
|
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/s/
Joseph Luhukay |
|
Director |
|
November
9, 2023 |
Joseph
Luhukay |
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|
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|
|
|
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/s/
Brian Stern |
|
Director |
|
November
9, 2023 |
Brian
Stern |
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|
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|
|
/s/
Dr. Dallas Hack |
|
Director |
|
November
9, 2023 |
Dr.
Dallas Hack |
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|
|
|
Underwriting
Agreement
November [●], 2023
Aegis Capital Corp.
1345 Avenue of the Americas, 27th Floor
New York, NY 10105
Ladies and Gentlemen:
The undersigned, Applied UV, Inc., a Nevada corporation
(the “Company”), hereby confirms its agreement (this “Agreement”) with Aegis Capital Corp. (hereinafter
referred to as “you” (including its correlatives) or the “Underwriter”) as follows:
1. Purchase and Sale of Securities.
1.1 Firm Securities.
1.1.1. Nature and Purchase of Firm Securities.
(i) On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriter, an aggregate of [●] units (the “Units”), each consisting of (i) one (1) share of
the Company’s common stock (each, a “Firm Share” and collectively, the “Firm Shares”), par value $0.0001
per share (the “Common Stock”) or a pre-funded warrant to purchase one share of Common Stock (each a “Pre-funded Warrant”
and collectively, the “Pre-funded Warrants”) in lieu thereof, (ii) one-tenth (1/10) of a Series A common warrant to purchase
one (1) share of Common Stock (the “Series A Warrant”) and (iii) one-tenth (1/10) of a Series B common warrant to purchase
one (1) share of Common Stock (the “Series B Warrant” and, each of the Series A Warrant and Series B Warrant, a “Common
Warrant,” and collectively, the “Common Warrants”). The Firm Shares, the Pre-funded Warrants, and the Common Warrants
are referred to as the “Firm Securities.”
(ii) The Units are to be offered to
the public at the offering price as set forth on Schedule 2-A hereto (the “Public Purchase Price”).
The Underwriter agrees to purchase from the Company the number of Units set forth on Schedule 1 attached hereto and made
a part hereof at the purchase price of (i) $[●] (or 92.0% of the Public Purchase Price for one (1) Unit) for each
Unit including a Firm Share or (ii) $[●] (or 92.0% of the Public Purchase Price for one Unit, less the exercise price per Pre-funded
Warrant of $0.001) for each Unit including a Pre-funded Warrant.
1.1.2. Firm Securities Payment and Delivery.
(i) Delivery and payment for the Units shall be
made at 10:00 a.m., Eastern time, on the second (2nd) Business Day following the signing of this Agreement (the “Effective Date”)
(or the third (3rd) Business Day following the Effective Date if this Agreement is signed after 4:01 p.m., Eastern time) or at such earlier
time as shall be agreed upon by the Underwriter and the Company, at the offices of Kaufman & Canoles, P.C., 1021 E. Cary Street, Suite
1400, Two James Center, Richmond, VA 23219 (“Underwriter’s Counsel”), or at such other place (or remotely by
facsimile or other electronic transmission) as shall be agreed upon by the Underwriter and the Company. The hour and date of delivery
and payment for the Firm Securities is called the “Closing Date.”
(ii) Payment for the Firm Securities shall be
made on the Closing Date by wire transfer in Federal (same day) funds, payable to the order of the Company upon delivery of the certificates
(in form and substance satisfactory to the Underwriter) representing the Firm Securities (or through the facilities of The Depository
Trust Company (“DTC”)) for the account of the Underwriter. The Firm Securities shall be registered in such name or
names and in such authorized denominations as the Underwriter may request in writing at least one (1) full Business Day prior to the Closing
Date. The Company shall not be obligated to sell or deliver the Firm Securities except upon tender of payment by the Underwriter for all
of the Firm Securities. The term “Business Day” means any day other than a Saturday, a Sunday or a legal holiday or
a day on which banking institutions are authorized or obligated by law to close in New York, New York; provided that
banks shall not be deemed to be authorized or obligated to be closed due to a “shelter in place,” “non-essential employee,”
or similar closure of physical branch locations at the direction of any governmental authority if such banks’ electronic funds transfer
systems (including for wire transfers) are open for use by customers on such day.
1.2. Over-allotment Option.
1.2.1. Option Securities. For
the purposes of covering any over-allotments in connection with the distribution and sale of the Units, the Company hereby grants to the
Underwriter an option (the “Over-allotment Option”) to purchase up to [●] additional shares
of Common Stock representing fifteen percent (15%) of the shares of Common Stock sold in the offering (the “Option Shares,”
and along with the Firm Shares, the “Shares”), and/or up to [●] Pre-funded Warrants representing
fifteen percent (15%) of the Pre-funded Warrants sold in the offering (the “Option Pre-funded Warrants”), and/or up
to [●] Series A Warrants representing fifteen percent (15%) of the Sereis A Warrants sold in the offering (the “Option
Series A Warrants” ), and/or up to [●] Series B Warrants representing fifteen percent (15%) of the Sereis
B Warrants sold in the offering (the “Option Series B Common Warrants,” together with the Option Shares, the Option
Pre-funded Warrants, and the Option Series A Warrants, the “Option Securities”), from the Company. The purchase price
to be paid per Option Share, Option Pre-funded Warrant, per Option Series A Warrant and per Option Series B Warrant shall be as set forth
on Schedule 2-A hereto. The Shares shall be issued directly by the Company and shall have the rights and privileges described
in the Registration Statement, the Pricing Disclosure Package, and the Prospectus referred to below. The Pre-funded Warrants, the Common
Warrants, the Option Pre-funded Warrants, the Option Series A Warrants, and the Option Series B Warrant are hereinafter referred to together
as the “Warrants.” The Firm Securities, the Option Securities, and the shares of Common Stock underlying the Warrants,
are hereinafter referred to together as the “Public Securities.” The offering and sale of the Firm Securities and the
Option Securities, if any, is herein referred to as the “Offering.”
1.2.2. Exercise of Option. The Over-allotment
Option granted pursuant to Section 1.2.1 hereof may be exercised by the Underwriter as to all (at any time) or any part
(from time to time) of the Option Securities within forty-five (45) days after the Closing Date. The Underwriter shall not be under any
obligation to purchase any of the Option Securities prior to the exercise of the Over-allotment Option. The Over-allotment Option granted
hereby may be exercised by the giving of written notice to the Company from the Underwriter, setting forth the number of the Option Securities
to be purchased and the date and time for delivery of and payment for the Option Securities (the “Option Closing Date”),
which shall not be later than five (5) full Business Days after the date of the notice or such other time as shall be agreed upon by the
Company and the Underwriter, at the offices of Underwriter’s Counsel or at such other place (including remotely by facsimile or
other electronic transmission) as shall be agreed upon by the Company and the Underwriter. If such delivery and payment for the Option
Securities does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment
Option with respect to all or any portion of the Option Securities subject to the terms and conditions set forth herein, the Company shall
become obligated to sell to the Underwriter the number of the Option Securities specified in such notice and (ii) the Underwriter shall
purchase the number of Option Securities as set forth in the notice.
1.2.3. Payment and Delivery. Payment
for the Option Securities shall be made on the Option Closing Date by wire transfer in Federal (same day) funds, payable to the order
of the Company upon delivery to you of certificates (in form and substance satisfactory to the Underwriter) representing the Option Securities
(or through the facilities of DTC or via Deposit/Withdrawal At Custodian transfer) for the account of the Underwriter. The Option Securities
shall be registered in such name or names and in such authorized denominations as the Underwriter may request in writing at least one
(1) full Business Day prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Option Securities except
upon tender of payment by the Underwriter for applicable Option Securities. The Option Closing Date may be simultaneous with, but not
earlier than, the Closing Date; and in the event that such time and date are simultaneous with the Closing Date, the term “Closing
Date” shall refer to the time and date of delivery of the Firm Securities and Option Securities.
2. Representations and Warranties of the
Company. The Company represents and warrants to the Underwriter as of the Applicable Time (as defined below), as of the Closing Date
and as of the Option Closing Date, if any, as follows:
2.1. Filing of Registration Statement.
2.1.1. Pursuant to the Securities Act.
The Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) a registration statement,
and an amendment or amendments thereto, on Form S-1 (File No. 333-274879), including any related prospectus or prospectuses, which registration
statement was declared effective on [●], 2023, for the registration of the Public Securities under the Securities Act of 1933, as
amended (the “Securities Act”), which registration statement and amendment or amendments have been prepared by the
Company in all material respects in conformity with the requirements of the Securities Act and the rules and regulations of the Commission
under the Securities Act (the “Securities Act Regulations”) and will contain all material statements that are required
to be stated therein in accordance with the Securities Act and the Securities Act Regulations. Except as the context may otherwise require,
such registration statement, as amended, on file with the Commission at the time the registration statement became effective (including
the Preliminary Prospectus included in the registration statement, financial statements, schedules, exhibits and all other documents filed
as a part thereof or incorporated therein and all information deemed to be a part thereof as of the Effective Date pursuant to paragraph
(b) of Rule 430A of the Securities Act Regulations (the “Rule 430A Information”)), is referred to herein as the “Registration
Statement.” If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Regulations, then
after such filing, the term “Registration Statement” shall include such registration statement filed pursuant to Rule
462(b).
Each prospectus used prior to the effectiveness
of the Registration Statement, and each prospectus that omitted the Rule 430A Information that was used after such effectiveness and prior
to the execution and delivery of this Agreement, is herein called a “Preliminary Prospectus.” The Preliminary Prospectus,
subject to completion, dated [●], 2023, that was included in the Registration Statement immediately prior to the Applicable Time
is hereinafter called the “Pricing Prospectus.” The final prospectus in the form first furnished to the Underwriter
for use in the Offering is hereinafter called the “Prospectus.” Any reference to the “most recent Preliminary
Prospectus” shall be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement.
“Applicable Time” means 8:00 p.m., Eastern time,
on the date of this Agreement.
“Issuer Free Writing Prospectus”
means any “issuer free writing prospectus,” as defined in Rule 433 of the Securities Act Regulations (“Rule 433”),
including without limitation any “free writing prospectus” (as defined in Rule 405 of the Securities Act Regulations) relating
to the Public Securities that is (i) required to be filed with the Commission by the Company, (ii) a “road show that is a written
communication” within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt
from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Public Securities or of the Offering
that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required
to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).
“Issuer General Use Free Writing Prospectus”
means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a “bona
fide electronic road show,” as defined in Rule 433), as evidenced by its being specified in Schedule 2-B hereto.
“Issuer Limited Use Free Writing Prospectus”
means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.
“Pricing Disclosure Package”
means any Issuer General Use Free Writing Prospectus issued at or prior to the Applicable Time, the Pricing Prospectus and the information
included on Schedule 2-A hereto, all considered together.
2.1.2. Pursuant to the Exchange Act.
The Company has filed with the Commission a Form 8-A (File Number 001-39480) providing for the registration pursuant to Section 12(b)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the Common Stock. The registration of
the Common Stock under the Exchange Act has become effective on or prior to the date hereof. The Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act, nor has the Company received
any notification that the Commission is contemplating terminating such registration.
2.2. Stock Exchange Listing. The
Shares and the shares of Common Stock underlying the Warrants have been approved for listing on The Nasdaq Capital Market (the “Exchange”),
and the Company has taken no action designed to, or likely to have the effect of, delisting of the Shares or the shares of Common Stock
underlying the Warrants from the Exchange, nor has the Company received any notification that the Exchange is contemplating terminating
such listing.
2.3. No Stop Orders, etc. Neither
the Commission nor, to the Company’s knowledge, any state regulatory authority has issued any order preventing or suspending the
use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted or, to the Company’s knowledge,
threatened to institute, any proceedings with respect to such an order. The Company has complied with each request (if any) from the Commission
for additional information.
2.4. Disclosures in Registration Statement.
2.4.1. Compliance with Securities Act
and 10b-5 Representation.
(i) Each of the Registration Statement and any
post-effective amendment thereto, at the time it became effective, complied in all material respects with the requirements of the Securities
Act and the Securities Act Regulations. Each Preliminary Prospectus, including the prospectus filed as part of the Registration Statement
as originally filed or as part of any amendment or supplement thereto, and the Prospectus, at the time each was filed with the Commission,
complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus
delivered to the Underwriter for use in connection with this Offering and the Prospectus was or will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”),
except to the extent permitted by Regulation S-T.
(ii) Neither the Registration Statement nor any
amendment thereto, at its effective time, as of the Applicable Time, at the Closing Date or at any Option Closing Date (if any), contained,
contains or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
(iii) The Pricing Disclosure Package, as of the
Applicable Time, at the Closing Date or at any Option Closing Date (if any), did not, does not and will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; and each Issuer Limited Use Free Writing Prospectus hereto does not conflict with the information
contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus, or the Prospectus, and each such Issuer Limited
Use Free Writing Prospectus, as supplemented by and taken together with Pricing Prospectus as of the Applicable Time, did not include
an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however, that this representation and
warranty shall not apply to statements made in reliance upon and in conformity with written information furnished to the Company in writing
with respect to the Underwriter by the Underwriter expressly for use in the Registration Statement, the Preliminary Prospectus, or the
Prospectus or any amendment thereof or supplement thereto. The parties hereto acknowledge and agree that such information provided by
or on behalf of the Underwriter consists solely of the disclosure contained in the “Underwriting” subsections “Stabilization,
Short Positions and Penalty Bids” and “Certain Relationships” of the Prospectus (the “Underwriter’s Information”);
and
(iv) Neither the Prospectus nor any amendment
or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing with the Commission pursuant
to Rule 424(b), at the Closing Date or at any Option Closing Date, included, includes or will include an untrue statement of a material
fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that this representation and warranty shall not
apply to the Underwriter’s Information.
2.4.2. Disclosure of Agreements. The
agreements and documents described in the Registration Statement, the Pricing Disclosure Package, and the Prospectus conform in all material
respects to the descriptions thereof contained or incorporated by reference therein and there are no agreements or other documents required
by the Securities Act and the Securities Act Regulations to be described in the Registration Statement, the Pricing Disclosure Package,
and the Prospectus or to be filed with the Commission as exhibits to the Registration Statement or to be incorporated by reference in
the Registration Statement, the Pricing Disclosure Package, or the Prospectus, that have not been so described or filed or incorporated
by reference. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is
or may be bound or affected and (i) that is referred to or incorporated by reference in the Registration Statement, the Pricing Disclosure
Package, and the Prospectus, or (ii) is material to the Company’s business, has been duly authorized and validly executed by the
Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company’s knowledge,
the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization,
or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision may
be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may
be brought. None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company’s
knowledge, any other party is in default thereunder and, to the Company’s knowledge, no event has occurred that, with the lapse
of time or the giving of notice, or both, would constitute a default thereunder, except for any default or event which would not reasonably
be expected to result in a Material Adverse Change. To the Company’s knowledge, performance by the Company of the material provisions
of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order, or
decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses
(each, a “Governmental Entity”), including, without limitation, those relating to environmental laws and regulations,
except for any violation which would not reasonably be expected to result in a Material Adverse Change.
2.4.3. Prior Securities Transactions.
During the past three (3) years from the date of this Agreement, no securities of the Company have been sold by the Company or by or on
behalf of, or for the benefit of, any person or persons controlling, controlled by, or under common control with the Company, except as
disclosed in the Registration Statement, the Pricing Disclosure Package, and any Preliminary Prospectus.
2.4.4. Regulations. The disclosures
in the Registration Statement, the Pricing Disclosure Package, and the Prospectus concerning the effects of federal, state, local, and
all foreign regulation on the Offering and the Company’s business as currently contemplated are correct in all material respects
and no other such regulations are required to be disclosed in the Registration Statement, the Pricing Disclosure Package, and the Prospectus
which are not so disclosed.
2.5. Changes after Dates in Registration
Statement.
2.5.1. No Material Adverse Change.
Since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package, and the Prospectus,
except as otherwise specifically stated therein: (i) there has been no material adverse change in the financial position or results of
operations of the Company or its Subsidiaries taken as a whole, nor any change or development that, singularly or in the aggregate, would
involve a material adverse change in or affecting the condition (financial or otherwise), results of operations, business, or assets of
the Company or its Subsidiaries taken as a whole (a “Material Adverse Change”); (ii) there have been no material transactions
entered into by the Company or its Subsidiaries, other than as contemplated pursuant to this Agreement; and (iii) no officer or director
of the Company has resigned from any position with the Company.
2.5.2. Recent Securities Transactions,
etc. Subsequent to the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package,
and the Prospectus, and except as may otherwise be indicated or contemplated herein or disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, the Company has not: (i) issued any securities or incurred any liability or obligation, direct
or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital
share.
2.6. Independent Accountants.
To the knowledge of the Company, Mazars USA LLP (the “Auditor”), whose reports are filed with the Commission as part
of the Registration Statement, the Pricing Disclosure Package, and the Prospectus, is an independent registered public accounting firm
as required by the Securities Act and the Securities Act Regulations and the Public Company Accounting Oversight Board. The Auditor has
not, during the periods covered by the financial statements included in the Registration Statement, the Pricing Disclosure Package, and
the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act, except for
permitted tax services to the Company and certain of its Subsidiaries.
2.7. Financial Statements, etc. The
financial statements, including the notes thereto and supporting schedules included or incorporated by reference in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, fairly present in all material respects the financial position and the results of operations
of the Company at the dates and for the periods to which they apply; and such financial statements have been prepared in conformity with
U.S. generally accepted accounting principles (“GAAP”), consistently applied throughout the periods involved (provided
that unaudited interim financial statements are subject to year-end audit adjustments that are not expected to be material in the aggregate
and do not contain all footnotes required by GAAP); and the supporting schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein. Except as included therein, no other historical or pro forma financial
statements or supporting schedules are required to be included in the Registration Statement, the Pricing Disclosure Package, or the Prospectus
by the Securities Act or the Securities Act Regulations. The pro forma and pro forma as adjusted financial statements and the related
notes, if any, included or incorporated by reference in the Registration Statement, the Pricing Disclosure Package, and the Prospectus
have been properly compiled and prepared in accordance with the applicable requirements of the Securities Act, the Securities Act Regulations,
the Exchange Act or the Exchange Act Regulations and present fairly the information shown therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred
to therein. All disclosures contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus, or incorporated
or deemed incorporated by reference therein, regarding “non-GAAP financial measures” (as such term is defined by the rules
and regulations of the Commission), if any, comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation
S-K of the Securities Act, to the extent applicable. Each of the Registration Statement, the Pricing Disclosure Package and the Prospectus
discloses all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships
of the Company with unconsolidated entities or other persons that may have a material current or future effect on the Company’s
financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
(a) neither the Company nor any of its direct and indirect subsidiaries, including each entity disclosed or described in the Registration
Statement, the Pricing Disclosure Package, and the Prospectus as being a subsidiary of the Company (each, a “Subsidiary”
and, collectively, the “Subsidiaries”), has incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions other than in the ordinary course of business, (b) the Company has not declared or paid any
dividends or made any distribution of any kind with respect to its capital stock, (c) there has not been any change in the capital stock
of the Company or any of its Subsidiaries, or, other than in the course of business or any grants under any stock compensation plan, and
(d) there has not been any Material Adverse Change in the Company’s long-term or short-term debt.
2.8. Authorized Capital; Options, etc.
The Company had, at the date or dates indicated in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, the
duly authorized, issued and outstanding capitalization as set forth therein. Based on the assumptions stated in the Registration Statement,
the Pricing Disclosure Package, and the Prospectus, the Company will have on the Closing Date the adjusted capitalization set forth therein.
Except as set forth in, or contemplated by, the Registration Statement, the Pricing Disclosure Package and the Prospectus, on the Effective
Date, as of the Applicable Time and on the Closing Date and any Option Closing Date, there will be no options, warrants, or other rights
to purchase or otherwise acquire any authorized, but unissued Common Stock or any security convertible or exercisable into Common Stock,
or any contracts or commitments to issue or sell Common Stock or any such options, warrants, rights, or convertible securities.
2.9. Valid Issuance of Securities,
etc.
2.9.1. Outstanding Securities. All
issued and outstanding securities of the Company issued prior to the transactions contemplated by this Agreement have been duly authorized
and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission with respect thereto, and are
not subject to personal liability by reason of being such holders; and none of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company or similar contractual rights granted by the Company. The Common Stock, preferred
stock, and any other securities outstanding or to be outstanding upon consummation of the Offering conform in all material respects to
all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package, and the Prospectus. The offers
and sales of the outstanding Common Stock were at all relevant times either registered under the Securities Act and the applicable state
securities or “blue sky” laws or, based in part on the representations and warranties of the purchasers of such shares, exempt
from such registration requirements.
2.9.2. Securities Sold Pursuant to this
Agreement. The Public Securities have been duly authorized for issuance and sale and, when issued and paid for, will be validly issued,
fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders;
the Public Securities are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance, and sale of
the Public Securities has been duly and validly taken; the Common Stock issuable upon exercise of the Warrants have been duly authorized
and reserved for issuance by all necessary corporate action on the part of the Company and when issued in accordance with the Warrants,
as the case may be, such Common Stock will be validly issued, fully paid, and non-assessable. The Shares and the Warrants conform in all
material respects to all statements with respect thereto contained in the Registration Statement, the Pricing Disclosure Package, and
the Prospectus.
2.10. Registration Rights of Third
Parties. Except as set forth in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, no holders of
any securities of the Company or any rights exercisable for or convertible or exchangeable into securities of the Company have the right
to require the Company to register any such securities of the Company under the Securities Act or to include any such securities in a
registration statement to be filed by the Company.
2.11. Validity and Binding Effect of
Agreements. This Agreement and the Warrants have been duly and validly authorized by the Company, and, when executed and
delivered, will constitute, the valid and binding agreements of the Company, enforceable against the Company in accordance with their
respective terms, except: (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization, or similar laws affecting
creditors’ rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under the federal
and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
2.12. No Conflicts, etc. The
execution, delivery, and performance by the Company of this Agreement, the Warrants and all ancillary documents, the consummation by the
Company of the transactions herein and therein contemplated and the compliance by the Company with the terms hereof and thereof do not
and will not, with or without the giving of notice or the lapse of time or both: (i) result in a material breach of, or conflict with
any of the terms and provisions of, or constitute a material default under, or result in the creation, modification, termination, or imposition
of any lien, charge, or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement or instrument to
which the Company is a party; (ii) result in any violation of the provisions of the Company’s Articles of Incorporation (as the
same may be amended or restated from time to time, the “Charter”) or the Bylaws of the Company; or (iii) violate any
existing applicable law, rule, regulation, judgment, order, or decree of any Governmental Entity as of the date hereof.
2.13. No Defaults; Violations. No
material default exists in the due performance and observance of any term, covenant, or condition of any material license, contract, indenture,
mortgage, deed of trust, note, loan, or credit agreement, or any other agreement or instrument evidencing an obligation for borrowed money,
or any other material agreement or instrument to which the Company is a party or by which the Company may be bound or to which any of
the properties or assets of the Company is subject. The Company is not (i) in violation of any term or provision of its Charter or Bylaws,
or (ii) in violation of any franchise, license, permit, applicable law, rule, regulation, judgment, or decree of any Governmental Entity,
except in the cases of clause (ii) for such violations which would not reasonably be expected to cause a Material Adverse Change.
2.14. Corporate Power; Licenses; Consents.
2.14.1. Conduct of Business. Except
as described in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, the Company has all requisite corporate
power and authority, and has all necessary authorizations, approvals, orders, licenses, certificates, and permits of and from all governmental
regulatory officials and bodies that it needs as of the date hereof to conduct its business purpose as described in the Registration Statement,
the Pricing Disclosure Package, and the Prospectus, except for the absence of which would not reasonably be expected to have a Material
Adverse Change.
2.14.2. Transactions Contemplated Herein.
The Company has all corporate power and authority to enter into this Agreement and the Warrants, and to carry out the provisions and conditions
hereof, and all consents, authorizations, approvals, and orders required in connection therewith have been obtained. No consent, authorization
or order of, and no filing with, any court, government agency, the Exchange, or other body is required for the valid issuance, sale, and
delivery of the Public Securities and the consummation of the transactions and agreements contemplated by this Agreement and the delivery
of the Warrants and as contemplated by the Registration Statement, the Pricing Disclosure Package, and the Prospectus, except with respect
to applicable Securities Act Regulations, state securities laws, and the rules and regulations of the Financial Industry Regulatory Authority,
Inc. (“FINRA”).
2.15. D&O Questionnaires. To
the Company’s knowledge, all information contained in the questionnaires (the “Questionnaires”) completed by
each of the Company’s directors and officers and beneficial holders of five percent (5%) or more of the Common Stock immediately
prior to the Offering (the “Insiders”) as supplemented by all information concerning the Company’s directors,
officers, and principal shareholders as described in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, as
well as in the Lock-Up Agreement (as defined in Section 2.24 below), provided to the Underwriter, is true and correct
in all material respects and the Company has not become aware of any information which would cause the information disclosed in the Questionnaires
to become materially inaccurate and incorrect.
2.16. Litigation; Governmental Proceedings. There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation, or governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company or, to the Company’s knowledge, any executive officer or director which
has not been disclosed in the Registration Statement, the Pricing Disclosure Package, and the Prospectus.
2.17. Good Standing. The
Company has been duly organized and is validly existing as a corporation and is in good standing under the laws of the State of Nevada
as of the date hereof, and is duly qualified to do business and is in good standing in each other jurisdiction in which its ownership
or lease of property or the conduct of business requires such qualification, except where the failure to qualify, singularly or in the
aggregate, would not have or reasonably be expected to result in a Material Adverse Change.
2.18. Insurance. The Company
carries or is entitled to the benefits of insurance (including, without limitation, as to directors and officers insurance coverage),
with, to the Company’s knowledge, reputable insurers, in the amount of directors and officers insurance coverage at a level commensurate
with policies obtained by similarly situated companies in similar situations. The Company has no reason to believe that it will not be
able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material
Adverse Change.
2.19. Transactions Affecting Disclosure
to FINRA.
2.19.1. Finder’s Fees. Except
as described in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, there are no claims, payments, arrangements,
agreements, or understandings relating to the payment of a finder’s, consulting, or origination fee by the Company or any Insider
with respect to the sale of the Public Securities hereunder or any other arrangements, agreements, or understandings of the Company or,
to the Company’s knowledge, any of its shareholders that may affect the Underwriter’s compensation, as determined by FINRA.
2.19.2. Payments within Six (6) Months.
Except as described in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, the Company has not made any direct
or indirect payments (in cash, securities, or otherwise) to: (i) any person, as a finder’s fee, consulting fee, or otherwise, in
consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the
Company; (ii) any FINRA member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA
member, within the six (6) months immediately prior to the original filing of the Registration Statement, other than the payment to the
Underwriter as provided hereunder in connection with the Offering.
2.19.3. Use of Proceeds. None of the
net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized
herein.
2.19.4. FINRA Affiliation. To the
Company’s knowledge, and except as may otherwise be disclosed in FINRA questionnaires provided to the Underwriter’s Counsel,
there is no (i) officer or director of the Company, (ii) beneficial owner of five percent (5%) or more of any class of the Company’s
securities, or (iii) beneficial owner of the Company’s unregistered equity securities which were acquired during the one hundred
eighty (180)-day period immediately preceding the filing of the Registration Statement that is an affiliate or associated person of a
FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).
2.19.5. Information. All information
provided by the Company in its FINRA questionnaire to Underwriter’s Counsel specifically for use by Underwriter’s Counsel
in connection with its Public Offering System filings (and related disclosure) with FINRA is true, correct, and complete in all material
respects.
2.20. Foreign Corrupt Practices Act. None
of the Company and its Subsidiaries or, to the Company’s knowledge, any director, officer, agent, employee, or affiliate of the
Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, has, directly or indirectly, given
or agreed to give any money, gift, or similar benefit (other than legal price concessions to customers in the ordinary course of business)
to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction)
that (i) might subject the Company to any damage or penalty in any civil, criminal, or governmental litigation or proceeding, (ii) if
not given in the past, might have had a Material Adverse Change, or (iii) if not continued in the future, might adversely affect the assets,
business, operations, or prospects of the Company. The Company has taken reasonable steps to ensure that its accounting controls and procedures
are sufficient to cause the Company to comply in all material respects with the Foreign Corrupt Practices Act of 1977, as amended.
2.21. Compliance with OFAC. None
of the Company and its Subsidiaries or, to the Company’s knowledge, any director, officer, agent, employee, or affiliate of the
Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), and
the Company will not, directly or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner, or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.
2.22. Money Laundering Laws. The
operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping
and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations, or guidelines, issued, administered,
or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”); and no action, suit, or proceeding
by or before any Governmental Entity involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of
the Company, threatened.
2.23. Officers’ Certificate. Any
certificate signed by any duly authorized officer of the Company and delivered to you or to Underwriter’s Counsel shall be deemed
a representation and warranty by the Company to the Underwriter as to the matters covered thereby.
2.24. Lock-Up Agreements. Schedule
3 hereto contains a complete and accurate list of the Company’s officers, directors, and 10% and over shareholders (collectively,
the “Lock-Up Parties”). The Company has caused each of the Lock-Up Parties to deliver to the Underwriter an executed
Lock-Up Agreement, in a form substantially similar to that attached hereto as Exhibit A (the “Lock-Up Agreement”),
prior to the execution of this Agreement.
2.25. Subsidiaries. All Subsidiaries
of the Company are duly organized and in good standing under the laws of the place of organization or incorporation, and each Subsidiary
is in good standing in each jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification,
except where the failure to qualify would not have a Material Adverse Change. The Company’s ownership and control of each Subsidiary
is as described in the Registration Statement, the Pricing Disclosure Package, and the Prospectus.
2.26. Related Party Transactions. There
are no business relationships or related party transactions involving the Company or any other person required to be described in the
Registration Statement, the Pricing Disclosure Package, and the Prospectus that have not been described as required by the Securities
Act Regulations.
2.27. Board of Directors. The
Board of Directors of the Company (“Board”) comprises the persons set forth under the heading of “Directors,
Executive Officers and Corporate Governance” of the Form 10-K for the year ended December 31, 2022, filed with the Commission on
March 31, 2023. The qualifications of the persons serving as board members and the overall composition of the board comply with the Exchange
Act, the Exchange Act Regulations and the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the “Sarbanes-Oxley
Act”) applicable to the Company and the listing rules of the Exchange. At least one (1) member of the Audit Committee of the
Board qualifies as an “audit committee financial expert,” as such term is defined under Regulation S-K and the listing rules
of the Exchange. In addition, at least a majority of the persons serving on the Board qualify as “independent,” as defined
under the listing rules of the Exchange.
2.28. Sarbanes-Oxley Compliance.
2.28.1. Disclosure Controls. Except
as disclosed in the Registration Statement, Pricing Disclosure Package, and the Prospectus, the Company has developed and currently maintains
disclosure controls and procedures that will comply with Rule 13a-15 or 15d-15 under the Exchange Act Regulations, and such controls and
procedures are effective to ensure that all material information concerning the Company will be made known on a timely basis to the individuals
responsible for the preparation of the Company’s Exchange Act filings and other public disclosure documents.
2.28.2. Compliance. The Company is,
or at the Applicable Time and on the Closing Date will be, in material compliance with the provisions of the Sarbanes-Oxley Act applicable
to it, and has implemented or will implement such programs and has taken reasonable steps to ensure the Company’s future compliance
(not later than the relevant statutory and regulatory deadlines therefor) with all of the material provisions of the Sarbanes-Oxley Act.
2.29. Accounting Controls.
Except as disclosed in the Registration Statement, Pricing Disclosure Package, and the Prospectus, the Company maintains systems of “internal
control over financial reporting” (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that comply in all
material respects with the requirements of the Exchange Act and have been designed by, or under the supervision of, its respective principal
executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited
to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general
or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure
Package, and the Prospectus, the Company is not aware of any material weaknesses in its internal control over financial reporting, and
with respect to such remedial actions disclosed in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, the
Company represents that it has taken all remedial actions set forth in such disclosure. The Auditor and the Audit Committee of the Board
have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are known to the Company’s management and that have adversely affected or are reasonably likely to adversely affect
the Company’ ability to record, process, summarize, and report financial information; and (ii) any fraud known to the Company’s
management, whether or not material, that involves management or other employees who have a significant role in the Company’s internal
controls over financial reporting.
2.30. No Investment Company Status.
The Company is not and, after giving effect to the Offering and the application of the proceeds thereof as described in the Registration
Statement, the Pricing Disclosure Package, and the Prospectus, will not be, required to register as an “investment company,”
as defined in the Investment Company Act of 1940, as amended.
2.31. No Labor Disputes. No
labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is imminent.
2.32. Intellectual Property Rights.
The Company and each of its Subsidiaries owns or possesses or has valid rights to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets, and similar
rights (“Intellectual Property Rights”) necessary for the conduct of the business of the Company and its Subsidiaries
as currently carried on and as described in the Registration Statement, the Pricing Disclosure Package, and the Prospectus. To the knowledge
of the Company, no action or use by the Company or any of its Subsidiaries necessary for the conduct of its business as currently carried
on and as described in the Registration Statement and the Prospectus will involve or give rise to any infringement of, or license or similar
fees for, any Intellectual Property Rights of others. Neither the Company nor any of its Subsidiaries has received any written notice
alleging any such infringement, fee, or conflict with asserted Intellectual Property Rights of others. Except as would not reasonably
be expected to result, individually or in the aggregate, in a Material Adverse Change (i) to the knowledge of the Company, there is no
infringement, misappropriation, or violation by third parties of any of the Intellectual Property Rights owned by the Company; (ii) there
is no pending or, to the knowledge of the Company, threatened action, suit, proceeding, or claim by others challenging the rights of the
Company in or to any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for
any such claim, that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably
be expected to result in a Material Adverse Change; (iii) the Intellectual Property Rights owned by the Company and, to the knowledge
of the Company, the Intellectual Property Rights licensed to the Company have not been adjudged by a court of competent jurisdiction invalid
or unenforceable, in whole or in part, and there is no pending or, to the Company’s knowledge, threatened action, suit, proceeding,
or claim by others challenging the validity or scope of any such Intellectual Property Rights, and the Company is unaware of any facts
which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in
this Section 2.32, reasonably be expected to result in a Material Adverse Change; (iv) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding, or claim by others that the Company infringes, misappropriates, or otherwise violates
any Intellectual Property Rights or other proprietary rights of others, the Company has not received any written notice of such claim
and the Company is unaware of any other facts which would form a reasonable basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change;
and (v) to the Company’s knowledge, no employee of the Company is in or has ever been in violation in any material respect of any
term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation
agreement, nondisclosure agreement, or any restrictive covenant to or with a former employer where the basis of such violation relates
to such employee’s employment with the Company, or actions undertaken by the employee while employed with the Company and could
reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change. To the Company’s knowledge, all
material technical information developed by and belonging to the Company which has not been patented has been kept confidential. The Company
is not a party to or bound by any options, licenses, or agreements with respect to the Intellectual Property Rights of any other person
or entity that are required to be set forth in the Registration Statement, the Pricing Disclosure Package, and the Prospectus and are
not described therein. The Registration Statement, the Pricing Disclosure Package, and the Prospectus contain in all material respects
the same description of the matters set forth in the preceding sentence. None of the technology employed by the Company has been obtained
or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company’s knowledge,
any of its officers, directors, or employees, or otherwise in violation of the rights of any persons.
2.33. Taxes. Each of the Company
and its Subsidiaries has filed all returns (as hereinafter defined) required to be filed with taxing authorities prior to the date hereof
or has duly obtained extensions of time for the filing thereof, except in any case in which the failure so to file would not reasonably
be expected to cause a Material Adverse Change. Each of the Company and its Subsidiaries has paid all taxes (as hereinafter defined) shown
as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company or such respective Subsidiary,
except for any such taxes that are currently being contested in good faith or as would not reasonably be expected to cause a Material
Adverse Change. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration
Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of
such consolidated financial statements. Except as disclosed in writing to the Underwriter, (i) no issues have been raised (and are currently
pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company or its Subsidiaries,
and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from
the Company or its Subsidiaries. The term “taxes” means all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties, or other taxes, fees, assessments,
or charges of any kind whatever, together with any interest and any penalties, additions to tax, or additional amounts with respect thereto.
The term “returns” means all returns, declarations, reports, statements, and other documents required to be filed in
respect to taxes.
2.34. ERISA Compliance. The
Company is not subject to the Employee Retirement Income Security Act of 1974, as amended, or the regulations and published interpretations
thereunder.
2.35. Compliance with Laws.
Except as otherwise disclosed in the Registration Statement, Pricing Disclosure Package, and Prospectus and as could not, individually
or in the aggregate, be expected to result in a Material Adverse Change, each of the Company and each Subsidiary, the Company: (i) is
and at all times has been in compliance with all statutes, rules, or regulations applicable to the services provided by the Company (“Applicable
Laws”), except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (ii)
has not received any warning letter, untitled letter, or other correspondence or notice from any other governmental authority alleging
or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits, and
supplements or amendments thereto required by any such Applicable Laws (“Authorizations”); (iii) possesses all material
Authorizations and such material Authorizations are valid and in full force and effect and are not in material violation of any term of
any such Authorizations; (iv) has not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation,
arbitration, or other action from any governmental authority or third party alleging that any product operation or activity is in violation
of any Applicable Laws or Authorizations and has no knowledge that any such governmental authority or third party is considering any such
claim, litigation, arbitration, action, suit, investigation, or proceeding that if brought would result in a Material Adverse Change;
(v) has not received written notice that any governmental authority has taken, is taking or intends to take action to limit, suspend,
modify, or revoke any Authorizations and has no knowledge that any such governmental authority is considering such action; (vi) has filed,
obtained, maintained, or submitted all material reports, documents, forms, notices, applications, records, claims, submissions, and supplements
or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications,
records, claims, submissions, and supplements or amendments were complete and correct in all material respects on the date filed (or were
corrected or supplemented by a subsequent submission); and (vii) has not, either voluntarily or involuntarily, initiated, conducted, or
issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning,
or other notice or action relating to the alleged lack of safety of any product or any alleged product defect or violation and, to the
Company’s knowledge, no third party has initiated, conducted or intends to initiate any such notice or action.
2.36. Ineligible Issuer. At
the time of filing the Registration Statement and any post-effective amendment thereto, at the time of effectiveness of the Registration
Statement and any amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) of the Securities Act Regulations) of the Shares and at the date hereof, the Company was not
and is not an “ineligible issuer,” as defined in Rule 405, without taking account of any determination by the Commission pursuant
to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.
2.37. Real Property. Except
as set forth in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, the Company and its Subsidiaries have
good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real or personal property which
are material to the business of the Company and its Subsidiaries taken as a whole, in each case free and clear of all liens, encumbrances,
security interests, claims, and defects that do not, singly or in the aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the Company or its Subsidiaries; and all of the leases and subleases
material to the business of the Company and its Subsidiaries, considered as one enterprise, and under which the Company or any of its
Subsidiaries holds properties described in the Registration Statement, the Pricing Disclosure Package, and the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary has received any written notice of any material claim of any sort that has
been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such Subsidiary to the continued possession of the leased or subleased premises
under any such lease or sublease, which would result in a Material Adverse Change.
2.38. Contracts Affecting Capital.
There are no transactions, arrangements, or other relationships between and/or among the Company, any of its affiliates (as such term
is defined in Rule 405 of the Securities Act Regulations) and any unconsolidated entity, including, but not limited to, any structured
finance, special purpose, or limited purpose entity that could reasonably be expected to materially affect the Company’s or its
Subsidiaries’ liquidity or the availability of or requirements for their capital resources required to be described or incorporated
by reference in the Registration Statement, the Pricing Disclosure Package, and the Prospectus which have not been described or incorporated
by reference as required.
2.39. Loans to Directors or Officers. There
are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business), or guarantees or
indebtedness by the Company or its Subsidiaries to or for the benefit of any of the officers or directors of the Company, its Subsidiaries,
or any of their respective family members, except as disclosed in the Registration Statement, the Pricing Disclosure Package, and the
Prospectus.
2.40. Industry Data; Forward-looking
statements. The statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure
Package, and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable and
accurate or represent the Company’s good faith estimates that are made on the basis of data derived from such sources. No forward-looking
statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Prospectus has
been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
2.41. Testing-the-Waters Communications. The
Company has not (i) alone engaged in any Testing-the-Waters Communications, other than Testing-the-Waters Communications with the written
consent of the Underwriter and with entities that are qualified institutional buyers within the meaning of Rule 144A under the Securities
Act or institutions that are accredited investors within the meaning of Rule 501 under the Securities Act and (ii) authorized anyone other
than the Underwriter to engage in Testing-the-Waters Communications. The Company confirms that the Underwriter has been authorized to
act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications
other than those listed on Schedule 2-C hereto. “Written Testing-the-Waters Communication” means any
Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act; “Testing-the-Waters
Communication” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the
Securities Act.
2.42. Margin Securities. The
Company owns no “margin securities” as that term is defined in Regulation U of the Board of Governors of the Federal Reserve
System (the “Federal Reserve Board”), and none of the proceeds of Offering will be used, directly or indirectly, for
the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which might cause any of the Common Stock to be considered
a “purpose credit” within the meanings of Regulation T, U, or X of the Federal Reserve Board.
2.43. Dividends and Distributions.
Except as disclosed in the Pricing Disclosure Package, Registration Statement, and the Prospectus, no Subsidiary of the Company is currently
prohibited or restricted, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such
Subsidiary’s capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary’s property or assets to the Company or any other Subsidiary of the Company.
2.44. Lending Relationships.
Except as disclosed in the Pricing Disclosure Package, Registration Statement, and the Prospectus, the Company (i) does not have any material
lending or other relationship with any bank or lending affiliate of the Underwriter and (ii) does not intend to use any of the proceeds
from the sale of the Public Securities hereunder to repay any outstanding debt owed to any affiliate of the Underwriter.
2.45 As used in this Agreement, references to
matters being “material” with respect to the Company shall mean a material event, change, condition, status, or effect
related to the condition (financial or otherwise), properties, assets (including intangible assets), liabilities, business, prospects,
operations, or results of operations of the Company either individually or taken as a whole, as the context requires.
2.46 As used in this Agreement, the term “knowledge
of the Company” (or similar language) shall mean the knowledge of the officers and directors of the Company.
3. Covenants of the Company. The Company
covenants and agrees as follows:
3.1. Amendments to Registration Statement. The
Company shall deliver to the Underwriter, prior to filing, any amendment or supplement to the Registration Statement or Prospectus proposed
to be filed after the Effective Date and not file any such amendment or supplement to which the Underwriter shall reasonably object in
writing.
3.2. Federal Securities Laws.
3.2.1. Compliance. The Company, subject
to Section 3.2.2, shall comply with the requirements of Rule 430A of the Securities Act Regulations, and will notify the Underwriter
promptly, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective
or any amendment or supplement to the Prospectus shall have been filed; (ii) of the receipt of any comments from the Commission; (iii)
of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for
additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, or of
the suspension of the qualification of the Public Securities for offering or sale in any jurisdiction, or of the initiation or threatening
of any proceedings for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning the
Registration Statement; and (v) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection
with the Offering of the Public Securities. The Company shall effect all filings required under Rule 424(b) of the Securities Act Regulations,
in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take such steps as it
deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing
by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company shall use its best efforts to
prevent the issuance of any stop order, prevention, or suspension and, if any such order is issued, to obtain the lifting thereof at the
earliest possible moment.
3.2.2. Continued Compliance. The Company
shall comply with the Securities Act, the Securities Act Regulations, the Exchange Act, and the Exchange Act Regulations so as to permit
the completion of the distribution of the Public Securities as contemplated in this Agreement and in the Registration Statement, the Pricing
Disclosure Package, and the Prospectus. If at any time when a prospectus relating to the Public Securities is (or, but for the exception
afforded by Rule 172 of the Securities Act Regulations, would be) required by the Securities Act to be delivered in connection with sales
of the Public Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel
for the Underwriter or for the Company, to (i) amend the Registration Statement in order that the Registration Statement will not include
an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) amend or supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure
Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the circumstances existing at the time it is delivered to
a purchaser, or (iii) amend the Registration Statement or amend or supplement the Pricing Disclosure Package or the Prospectus, as the
case may be, in order to comply with the requirements of the Securities Act or the Securities Act Regulations, the Company will promptly
(A) give the Underwriter notice of such event; (B) prepare any amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement, the Pricing Disclosure Package, or the Prospectus comply with such requirements and, a
reasonable amount of time prior to any proposed filing or use, furnish the Underwriter with copies of any such amendment or supplement;
and (C) file with the Commission any such amendment or supplement; provided that the Company shall not file or use any
such amendment or supplement to which the Underwriter or Underwriter’s Counsel shall reasonably object. The Company will furnish
to the Underwriter such number of copies of such amendment or supplement as the Underwriter may reasonably request. The Company has given
the Underwriter notice of any filings made pursuant to the Exchange Act or the Exchange Act Regulations within forty-eight (48) hours
prior to the Applicable Time. The Company shall give the Underwriter notice of its intention to make any such filing from the Applicable
Time until the later of the Closing Date and the exercise in full or expiration of the Over-allotment Option specified in Section
1.2 hereof and will furnish the Underwriter with copies of the related document(s) a reasonable amount of time prior to such
proposed filing, as the case may be, and will not file or use any such document to which the Underwriter or counsel for the Underwriter
shall reasonably object.
3.2.3. Exchange Act Registration.
Until three (3) years after the date of this Agreement, the Company shall use its commercially reasonable efforts to maintain the registration
of the Common Stock under the Exchange Act.
3.2.4. Free Writing Prospectuses.
The Company agrees that, unless it obtains the prior written consent of the Underwriter, it shall not make any offer relating to the Public
Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a “free writing prospectus,”
or a portion thereof, required to be filed by the Company with the Commission or retained by the Company under Rule 433; provided that
the Underwriter shall be deemed to have consented to each Issuer General Use Free Writing Prospectus set forth in Schedule 2-B.
The Company represents that it has treated or agrees that it will treat each such free writing prospectus consented to, or deemed consented
to, by the Underwriter as an “issuer free writing prospectus,” as defined in Rule 433, and that it has complied and will comply
with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending,
and record keeping. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development
as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration
Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances existing at that subsequent time, not misleading, the Company will
promptly notify the Underwriter and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement, or omission.
3.2.5. Testing-the-Waters Communications.
If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development
as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or
omitted or would omit to state a material fact necessary in order to make the statements therein, in light of the circumstances existing
at that subsequent time, not misleading, the Company shall promptly notify the Underwriter and shall promptly amend or supplement, at
its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.
3.3. Delivery to the Underwriter of
Registration Statements. The Company has delivered or made available or shall deliver or make available to the Underwriter and
Underwriter’s Counsel, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto
(including exhibits filed therewith) and signed copies of all consents and certificates of experts, and upon request will also deliver
to the Underwriter, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without
exhibits) for each of the Underwriter. The copies of the Registration Statement and each amendment thereto furnished to the Underwriter
will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
3.4. Delivery to the Underwriter of
Prospectuses. The Company has delivered or made available or will deliver or make available to the Underwriter, without charge,
as many copies of each Preliminary Prospectus as the Underwriter reasonably requested, and the Company hereby consents to the use of such
copies for purposes permitted by the Securities Act. The Company will furnish to the Underwriter, without charge, during the period when
a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities
Act, such number of copies of the Prospectus (as amended or supplemented) as the Underwriter may reasonably request. The Prospectus and
any amendments or supplements thereto furnished to the Underwriter will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
3.5. Effectiveness and Events Requiring
Notice to the Underwriter. The Company shall use its commercially reasonable efforts to cause the Registration Statement
to remain effective with a current prospectus for at least nine (9) months after the Applicable Time, and shall notify the Underwriter
immediately and confirm the notice in writing: (i) of the cessation of the effectiveness of the Registration Statement and any amendment
thereto; (ii) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceeding for that
purpose; (iii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification of the Public
Securities for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for that purpose; (iv)
of the mailing and delivery to the Commission for filing of any amendment or supplement to the Registration Statement or Prospectus; (v)
of the receipt of any comments or request for any additional information from the Commission; and (vi) of the happening of any event during
the period described in this Section 3.5 that, in the judgment of the Company, makes any statement of a material fact
made in the Registration Statement, the Pricing Disclosure Package, or the Prospectus untrue or that requires the making of any changes
in (A) the Registration Statement in order to make the statements therein not misleading, or (B) in the Pricing Disclosure Package or
the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If the
Commission or any state securities commission shall enter a stop order or suspend such qualification at any time, the Company shall make
every reasonable effort to obtain promptly the lifting of such order.
3.6. Review of Financial Statements. For
a period of three (3) years after the date of this Agreement, the Company, at its expense, shall cause its regularly engaged independent
registered public accounting firm to review (but not audit) the Company’s financial statements for each of the three (3) fiscal
quarters immediately preceding the announcement of any quarterly financial information.
3.7. Listing. The Company
shall use its commercially reasonable efforts to maintain the listing of the shares of Common Stock on the Exchange for at least three
(3) years from the date of this Agreement; provided, however, that this Section 3.7 shall not
apply in the event the Company’s stockholders approve a transaction that results in the delisting of the shares of Common Stock
from the Exchange.
3.8. Reports to the Underwriter.
3.8.1. Periodic Reports, etc. For
a period of three (3) years after the date of this Agreement, the Company shall furnish or make available to the Underwriter copies of
such financial statements and other periodic and special reports as the Company from time to time furnishes generally to holders of any
class of its securities and also furnish or make available to the Underwriter: (i) a copy of each periodic report the Company shall be
required to file with the Commission under the Exchange Act and the Exchange Act Regulations; (ii) a copy of every press release and every
news item and article with respect to the Company or its affairs which was released by the Company; (iii) a copy of each Current Report
on Form 8-K prepared and filed by the Company; (iv) a copy of each registration statement filed by the Company under the Securities Act;
and (v) such additional documents and information with respect to the Company and the affairs of any future subsidiaries of the Company
as the Underwriter may from time to time reasonably request; provided the Underwriter shall sign, if requested by the
Company, a Regulation FD compliant confidentiality agreement which is reasonably acceptable to the Underwriter and Underwriter’s
Counsel in connection with the Underwriter’s receipt of such information. Documents filed with the Commission pursuant to EDGAR
shall be deemed to have been delivered to the Underwriter pursuant to this Section 3.8.1.
3.8.2. Transfer Agent; Transfer Sheets.
For a period of three (3) years after the date of this Agreement, the Company shall retain a transfer agent and registrar acceptable to
the Underwriter (the “Transfer Agent”) and shall furnish to the Underwriter at the Company’s sole cost and expense
such transfer sheets of the Company’s securities as the Underwriter may reasonably request, including the daily and monthly consolidated
transfer sheets of the Transfer Agent and DTC. Vstock Transfer, LLC (“Vstock”) is acceptable to the Underwriter to
act as Transfer Agent for the Common Stock.
3.8.3. Reserved.
3.8.4. Trading Reports. For a period
of six (6) months after the date hereof, during such time as the Shares are listed on the Exchange, the Company shall provide to the Underwriter,
at the Company’s expense, such reports published by the Exchange relating to price trading of the Shares, as the Underwriter shall
reasonably request.
3.9. Payment of Expenses
3.9.1. General Expenses Related to the
Offering. The Company hereby agrees to pay on each of the Closing Date and the Option Closing Date, if any, to the extent not paid
at the Closing Date, all expenses incident to the performance of the obligations of the Company under this Agreement, including, but not
limited to: (i) all filing fees and expenses relating to the registration of the Public Securities with the Commission; (ii) all FINRA
Offering filing fees; (iii) all fees and expenses relating to the listing of the Company’s equity or equity-linked securities on
the Exchange; (iv) all fees, expenses, and disbursements relating to the registration or qualification of the Securities under the “blue
sky” securities laws of such states and other jurisdictions as the Underwriter may reasonably designate (including, without limitation,
all filing and registration fees, and the reasonable fees and disbursements of the Company’s “blue sky” counsel, which
will be the Underwriter’s counsel) unless such filings are not required in connection with the Company’s proposed Exchange
listing; (v) all fees, expenses, and disbursements relating to the registration, qualification, or exemption of the Public Securities
under the securities laws of such foreign jurisdictions as the Underwriter may reasonably designate; (vi) the costs of all mailing and
printing of the Offering documents; (vii) transfer and/or stamp taxes, if any, payable upon the transfer of the Public Securities from
the Company to the Underwriter; (viii) the fees and expenses of the Company’s accountants; and (ix) Seventy-Five Thousand Dollars
($75,000) for legal fees and disbursements for the Underwriter’s counsel. The Underwriter may deduct from the net proceeds of the
Offering payable to the Company on the Closing Date, or the Option Closing Date, if any, the expenses set forth herein to be paid by the
Company to the Underwriter.
3.9.2. Non-accountable Expenses. The
Company further agrees that, in addition to the expenses payable pursuant to Section 3.9.1, on the Closing Date it shall pay
to the Underwriter, by deduction from the net proceeds of the Offering contemplated herein, a non-accountable expense allowance equal
to one percent (1.0%) of the gross proceeds received by the Company from the sale of the Public Securities.
3.10. Application of Net Proceeds. The
Company shall apply the net proceeds from the Offering received by it in a manner consistent with the application thereof described under
the caption “Use of Proceeds” in the Registration Statement, the Pricing Disclosure Package, and the Prospectus.
3.11. Delivery of Earnings Statements
to Security Holders. The Company shall make generally available to its security holders as soon as practicable, but not later
than the first (1st) day of the fifteenth (15th) full calendar month following the date of this Agreement, an earnings statement (which
need not be certified by independent registered public accounting firm unless required by the Securities Act or the Securities Act Regulations,
but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at least twelve
(12) consecutive months beginning after the date of this Agreement.
3.12. Stabilization. Neither
the Company nor, to its knowledge, any of its employees, directors, or shareholders has taken or shall take, directly or indirectly, any
action designed to or that has constituted or that might reasonably be expected to cause or result in, under Regulation M of the Exchange
Act, or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.
3.13. Internal Controls. Except
to the extent disclosed in the Registration Statement, Pricing Disclosure Package, and Prospectus, the Company shall use commercially
reasonable efforts to maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions
are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary in order
to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
3.14. Accountants. As of the
date of this Agreement, the Company has retained an independent registered public accounting firm reasonably acceptable to the Underwriter,
and the Company shall continue to retain a nationally recognized independent registered public accounting firm for a period of at least
three (3) years after the date of this Agreement. The Underwriter acknowledges that the Auditor is acceptable to the Underwriter.
3.15. FINRA. For a period of
ninety (90) days from the later of the Closing Date and the Option Closing Date, the Company shall advise the Underwriter (who shall make
an appropriate filing with FINRA) if it is or becomes aware that (i) any officer or director of the Company, (ii) any beneficial owner
of five percent (5%) or more of any class of the Company’s securities, or (iii) any beneficial owner of the Company’s unregistered
equity securities which were acquired during the one hundred eighty (180) days immediately preceding the filing of the original Registration
Statement is or becomes an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance
with the rules and regulations of FINRA).
3.16. No Fiduciary Duties.
The Company acknowledges and agrees that the Underwriter’s responsibility to the Company is solely contractual in nature and that
none of the Underwriter or their affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes
any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by
this Agreement.
3.17. Standstill. The Company,
on behalf of itself and any successor entity, agrees that, without the prior written consent of the Underwriter, it will not, for a period
the greater of 1) two hundred and twenty (220) days from the date of the Offering, or 2) until Shareholder Approval has been granted for
all items specified in Section 3.21 of this Agreement, (i) offer, sell, issue, or otherwise transfer or dispose of, directly or indirectly,
any equity of the Company, including the issuance of equity in connection with the redemption of any of the Company’s outstanding
indebtedness, or any securities convertible into or exercisable or exchangeable for equity of the Company; (ii) file or caused to be filed
any registration statement with the Commission relating to the offering of any equity of the Company or any securities convertible into
or exercisable or exchangeable for equity of the Company; or (iii) enter into any agreement or announce the intention to effect any of
the actions described in subsections (i) or (ii) hereof (all of such matters, the “Standstill”). So long as none of
such equity securities shall be saleable in the public market until the expiration of the one hundred and eighty (180) days period described
above, the following matters shall not be prohibited by the Standstill: (i) the adoption of an equity incentive plan and the grant of
awards or equity pursuant to any equity incentive plan, and the filing of a registration statement on Form S-8; (ii) the issuance of equity
securities in connection with an acquisition or a strategic relationship, which may include the sale of equity securities; and (iii) the
issuance of securities to affiliates and subsidiaries of the Company, as long as the affiliates and subsidiaries agree to not sell the
shares during the Standstill period, however, in no instance shall registration rights be granted for any non-prohibited shares issued
hereunder. In no event should any equity transaction during the Standstill period result in the sale of equity at an offering price to
the public less than that of the Offering referred herein.
From the date hereof until one (1) year from the
date of the Offering, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company
or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities
that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either
(A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of
or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security
or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for
the Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity line of
credit or an “at-the-market offering”, whereby the Company may issue securities at a future determined price regardless of
whether shares pursuant to such agreement have actually been issued and regardless of whether such agreement is subsequently canceled.
Any Underwriter shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be
in addition to any right to collect damages.
3.18. Release of D&O Lock-up Period.
The Underwriter may, with shareholder approval, agrees to release or waive the restrictions set forth in the Lock-Up Agreements described
in Section 2.24 hereof for an officer, director, or 10% shareholder of the Company and provides the Company with notice
of the impending release or waiver at least three (3) Business Days before the effective date of the release or waiver, the Company agrees
to announce the impending release or waiver by a press release substantially in the form of Exhibit B hereto through
a major news service at least two (2) Business Days before the effective date of the release or waiver.
3.19. Blue Sky Qualifications. The
Company shall use its best efforts, in cooperation with the Underwriter, if necessary, to qualify the Public Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Underwriter may designate
and to maintain such qualifications in effect so long as required to complete the distribution of the Public Securities; provided, however,
that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as
a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject.
3.20. Reporting Requirements. The
Company, during the period when a prospectus relating to the Public Securities is (or, but for the exception afforded by Rule 172, would
be) required to be delivered under the Securities Act, will file all documents required to be filed with the Commission pursuant to the
Exchange Act within the time periods required by the Exchange Act and Exchange Act Regulations. Additionally, the Company shall report
the use of proceeds from the issuance of the Public Securities as may be required under Rule 463 under the Securities Act Regulations.
3.21. Shareholder Approval. The
Company shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) at the earliest practicable
date after the date hereof, but in no event later than forty (40) days after the Closing Date for the purpose of obtaining Shareholder
Approval (as defined below), if required to effect the purpose thereof, with the recommendation of the Board that such proposal be approved,
and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals
in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall
use its reasonable best efforts to obtain such Shareholder Approval, and officers, directors, and shareholders subject to the Lock-Up
Agreement shall cast their proxies in favor of such proposal. If the Company does not obtain Shareholder Approval at the first meeting,
the Company shall call a meeting every three (3) months thereafter to seek Shareholder Approval until the earlier of the date Shareholder
Approval is obtained or the Common Warrants are no longer outstanding. Notwithstanding the foregoing, the Company may, in lieu of holding
a special meeting of shareholders as aforesaid, obtain the written consent of a majority of its shareholders covering the Shareholder
Approval so long as prior to thirty (30) days after the Closing Date, such written consents are obtained and in accordance with Exchange
Act Rule 14c-2 at least twenty (20) days shall have transpired from the date on which a written information statement containing the information
specified in Schedule 14C detailing such Shareholder Approval shall have been filed with the SEC and delivered to shareholders of the
Company.
“Shareholder Approval”
means such approval as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC (or any successor entity)
from the shareholders of the Company (i) to render inapplicable the definition of the Floor Price in Section 3(b) of the Common Warrants,
(ii) to consent to any adjustment to the exercise price or number of shares of Common Stock underlying the Common Warrants in the event
of a Share Combination Event (as defined in the Common Warrants), (iii) to consent to the voluntary adjustment, from time to time, of
the exercise price of any and all currently outstanding warrants pursuant to Section 3(i) of the Common Warrants, and (iv) to approve
the reverse stock split pursuant to Section 3.22 of this Agreement.
3.22. Reverse Stock Split. The Company
shall effect a reverse stock split within seven (7) business days after the date that is the earlier of (x) the date by which [*] million
shares of Common Stock have been traded on The Nasdaq Stock Market LLC following the closing date or (y) [*], 2024 (the “First
Reverse Split Date”). No reverse stock split shall be effectuated before the First Reverse Split Date, except if (i) the Company
is not in compliance with Rule 5810(c)(3)(A)(iii) of The Nasdaq Stock Market LLC or (ii) consent has been obtained from a majority of
purchasers of the Units
3.23. Suspension of Dividends
for Preferred Stock. The Company agrees that the dividends or other distribution on or in respect to shares of its preferred
stock (the “Dividends”), including but not limited to the 10.5% Series A Cumulative Perpetual Preferred Stock, the
2% Series B Cumulative Perpetual Preferred Stock, the 5% Series C Cumulative Perpetual Preferred Stock, the Series X Super Voting Preferred
Stock, and any other classes of preferred stock created after the date of this Agreement and before [*], shall be suspended from the
date of this Agreement until [*]. Any such suspended Dividends, if accrued, shall not be paid, and the Company shall not announce any
intention to declare or pay any of such suspended Dividends at any time prior to [*].
4. Conditions of Underwriter’s Obligations.
The obligations of the Underwriter to purchase and pay for the Public Securities, as provided herein, shall be subject to (i) the continuing
accuracy of the representations and warranties of the Company as of the date hereof and as of each of the Closing Date and the Option
Closing Date, if any; (ii) the accuracy of the statements of officers of the Company made pursuant to the provisions hereof; (iii) the
performance by the Company of its obligations hereunder; and (iv) the following conditions:
4.1. Regulatory Matters.
4.1.1. Effectiveness of Registration Statement;
Rule 430A Information. The Registration Statement has become effective not later than 5:00 p.m., Eastern time, on the date of this
Agreement or such later date and time as shall be consented to in writing by you, and, at each of the Closing Date and any Option Closing
Date, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued
under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus or the Prospectus has been issued and
no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated by the
Commission. The Company has complied with each request (if any) from the Commission for additional information. The Prospectus containing
the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) (without
reliance on Rule 424(b)(8)) or a post-effective amendment providing such information shall have been filed with, and declared effective
by, the Commission in accordance with the requirements of Rule 430A.
4.1.2. FINRA Clearance. On or before
the date of this Agreement, the Underwriter shall have received clearance from FINRA as to the amount of compensation allowable or payable
to the Underwriter as described in the Registration Statement.
4.1.3. Exchange Clearance. On the
Closing Date, the Firm Shares and the shares of the Common Stock underlying the applicable Firm Securities shall have been approved for
listing on the Exchange, subject only to official notice of issuance. On the first Option Closing Date (if any), the Option Shares and
the shares underlying the applicable Option Securities shall have been approved for listing on the Exchange, subject only to official
notice of issuance.
4.2. Company Counsel Matters.
4.2.1. Closing Date Opinions of
Counsel. On the Closing Date, the Underwriter shall have received the favorable opinions of Sichenzia Ross Ference Carmel LLP, counsel
for the Company, in form and substance reasonably satisfactory to Underwriter’s Counsel addressed to the Underwriter.
4.2.2. Option Closing Date Opinions
of Counsel. On the Option Closing Date, if any, the Underwriter shall have received the favorable opinions of Sichenzia Ross Ference
Carmel LLP, counsel for the Company, dated the Option Closing Date, addressed to the Underwriter and in form and substance reasonably
satisfactory to the Underwriter, confirming as of the Option Closing Date, the statements made by such counsel in its opinion delivered
on the Closing Date.
4.2.3. Reliance. In rendering such
opinions, such counsel may rely without limitation: (i) as to matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such opinion,
if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to the Underwriter) of other counsel reasonably
acceptable to the Underwriter, familiar with the applicable laws; and (ii) as to matters of fact, to the extent they deem proper, on certificates
or other written statements of officers of the Company and officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company, provided that copies of any such statements or certificates
shall be delivered to Underwriter’s Counsel if requested. The opinion referred to in Sections 4.2.1 above and any
related Option Closing Date opinion shall include a statement to the effect that it may be relied upon by Underwriter’s Counsel
in its written statement providing certain “10b-5” negative assurances delivered to the Underwriter.
4.3. Comfort Letters.
4.3.1. Cold Comfort Letter. At the
time this Agreement is executed, you shall have received a cold comfort letter, from the Auditor, containing statements and information
of the type customarily included in accountants’ comfort letters with respect to the financial statements and certain financial
information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus, addressed to the Underwriter and
in form and substance satisfactory in all respects to you and to the Auditor, dated as of the date of this Agreement.
4.3.2 Bring-down Comfort Letter. At
each of the Closing Date and the Option Closing Date, if any, the Underwriter shall have received from the Auditor a letter, dated as
of the Closing Date or the Option Closing Date, as applicable, to the effect that the Auditor reaffirms the statements made in the letter
furnished pursuant to Section 4.3.1, except that the specified date referred to shall be a date not more than three (3) business
days prior to the Closing Date or the Option Closing Date, as applicable.
4.4. Certificates.
4.4.1. Officers’ Certificate.
The Company shall have furnished to the Underwriter a certificate, dated the Closing Date and any Option Closing Date (if such date is
other than the Closing Date), of its Chief Executive Officer and its Chief Financial Officer stating that (i) such officers have carefully
examined the Registration Statement, the Pricing Disclosure Package, any Issuer Free Writing Prospectus, and the Prospectus and, in their
opinion, the Registration Statement and each amendment thereto, as of the Applicable Time and as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date) did not include any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the statements therein not misleading, and the Pricing Disclosure Package,
as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), any Issuer
Free Writing Prospectus as of its date and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date),
the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date, did not include
any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading, (ii) since the effective date of the Registration Statement, no event
has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the Pricing Disclosure Package,
or the Prospectus, (iii) to the best of their knowledge after reasonable investigation, as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date), the representations and warranties of the Company in this Agreement are true and correct
in all material respects (except for those representations and warranties qualified as to materiality, which shall be true and correct
in all respects and except for those representations and warranties which refer to facts existing at a specific date, which shall be true
and correct as of such date) and the Company has complied with all agreements and satisfied all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date (or any Option Closing Date if such date is other than the Closing Date), and (iv)
there has not been, subsequent to the date of the most recent audited financial statements included or incorporated by reference in the
Pricing Disclosure Package, a Material Adverse Change.
4.4.2. Secretary’s Certificate.
At each of the Closing Date and the Option Closing Date, if any, the Underwriter shall have received a certificate of the Company signed
by the Secretary of the Company, dated the Closing Date or the Option Date, as the case may be, respectively, certifying: (i) that each
of the Charter and Bylaws is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of the
Company’s Board of Directors (and any pricing committee thereof) relating to the Offering are in full force and effect and have
not been modified; (iii) as to the accuracy and completeness of all correspondence between the Company or its counsel and the Commission;
and (iv) as to the incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such
certificate.
4.4.3. Good Standing Certificates.
On the Closing Date and the Option Closing Date, if any, the Company shall have delivered to the Underwriter a certificate of good standing
from the State of Delaware as of a date within ten (10) days of the Closing Date for the Company.
4.5. No Material Changes. Prior
to and on each of the Closing Date and each Option Closing Date, if any: (i) there shall have been no Material Adverse Change in the condition
or prospects or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set
forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (ii) no action, suit, or proceeding, at law or
in equity, shall have been pending or threatened against the Company or any Insider before or by any court or federal or state commission,
board, or other administrative agency wherein an unfavorable decision, ruling, or finding may reasonably be expected to cause a Material
Adverse Change, except as set forth in the Registration Statement, the Pricing Disclosure Package, and the Prospectus; (iii) no stop order
shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission;
and (iv) the Registration Statement, the Pricing Disclosure Package, and the Prospectus and any amendments or supplements thereto shall
contain all material statements which are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations
and shall conform in all material respects to the requirements of the Securities Act and the Securities Act Regulations, and neither the
Registration Statement, the Pricing Disclosure Package nor the Prospectus nor any amendment or supplement thereto shall contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
4.6. Delivery of Agreements.
4.6.1. Lock-Up Agreements.
On or before the date of this Agreement, the Company shall have delivered to the Underwriter executed copies of the Lock-Up Agreements
from each of the persons listed in Schedule 3 hereto.
4.6.2 Consent to Shareholder Approval. On or before the
date of this Agreement, the Company’s Chief Executive Officer shall have delivered to the Underwriter executed copies of an irrevocable
consent to seek and vote his shares in favor of those corporate actions in Section 3.21 and 3.22.
4.6.3. Warrants. On the Closing Date
or on each Option Closing Date (if any), the Company shall have delivered to the Underwriter executed copies of the applicable Warrants.
4.6.4. Reserved.
4.7. Additional Documents.
At the Closing Date and at each Option Closing Date (if any) Underwriter’s Counsel shall have been furnished with such documents
and opinions as they may require for the purpose of enabling Underwriter’s Counsel to deliver an opinion to the Underwriter, or
in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and sale of the Public Securities as herein contemplated shall
be satisfactory in form and substance to the Underwriter and Underwriter’s Counsel.
5. Indemnification.
5.1. Indemnification of the Underwriter.
5.1.1. General. Subject to the conditions
set forth below, the Company agrees to indemnify and hold harmless the Underwriter, its affiliates and each of its and their respective
directors, officers, members, employees, representatives, partners, shareholders, affiliates, counsel, and agents and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively
the “Underwriter Indemnified Parties,” and each an “Underwriter Indemnified Party”), against any
and all loss, liability, claim, damage, and expense whatsoever (including but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing, or defending against any litigation, commenced, or threatened, or any claim whatsoever, whether
arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified
Parties and any third party, or otherwise) to which they or any of them may become subject under the Securities Act, the Exchange Act,
or any other statute or at common law or otherwise or under the laws of foreign countries (a “Claim”), arising out
of or based upon any untrue statement or alleged untrue statement of a material fact contained, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading, unless such statement or omission was made in reliance upon, and in conformity with, the Underwriter’s
Information, in (i) the Registration Statement, the Pricing Disclosure Package, any Preliminary Prospectus, the Prospectus, or in any
Issuer Free Writing Prospectus or in any Written Testing-the-Waters Communication (as from time to time each may be amended and supplemented);
(ii) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the
Offering, including any “road show” or investor presentations made to investors by the Company (whether in person or electronically);
or (iii) any application or other document or written communication (in this Section 5, collectively called “application”)
executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Public
Securities under the securities laws thereof or filed with the Commission, any state securities commission, or agency, the Exchange or
any other national securities exchange; unless such statement or omission was made in reliance upon, and in conformity with, the Underwriter’s
Information. With respect to any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement,
Pricing Disclosure Package, or Prospectus, the indemnity agreement contained in this Section 5.1.1 shall not inure to
the benefit of any Underwriter Indemnified Party to the extent that any loss, liability, claim, damage, or expense of such Underwriter
Indemnified Party results from the fact that a copy of the Prospectus was not given or sent to the person asserting any such loss, liability,
claim, or damage at or prior to the written confirmation of sale of the Public Securities to such person as required by the Securities
Act and the Securities Act Regulations, and if the untrue statement or omission has been corrected in the Prospectus, unless such failure
to deliver the Prospectus was a result of non-compliance by the Company with its obligations under Section 3.3 hereof.
The Company also agrees that it will reimburse the Underwriter Indemnified Party for all fees and expenses (including but not limited
to any and all legal or other expenses reasonably incurred in investigating, preparing, or defending against any litigation, commenced,
or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company
or between any of the Underwriter Indemnified Parties and any third party, or otherwise) (collectively, the “Expenses”),
and further agrees wherever and whenever possible to advance payment of Expenses as they are incurred by an Underwriter Indemnified Party
in investigating, preparing, pursuing, or defending any Claim.
5.1.2. Procedure. If any action is
brought against an Underwriter Indemnified Party in respect of which indemnity may be sought against the Company pursuant to Section
5.1.1, such Underwriter Indemnified Party shall promptly notify the Company in writing of the institution of such action and the Company
shall assume the defense of such action, including the employment and fees of counsel (subject to the approval of such Underwriter Indemnified
Party) and payment of actual expenses if an Underwriter Indemnified Party requests that the Company do so. Such Underwriter Indemnified
Party shall have the right to employ its or their own counsel in any such case, and the fees and expenses of such counsel shall be at
the expense of the Company and shall be advanced by the Company; provided, however, that the Company shall not
be obligated to bear the reasonable fees and expenses of more than one firm of attorneys selected by the Underwriter Indemnified Party
(in addition to local counsel). Notwithstanding anything to the contrary contained herein, and provided that the Company has timely honored
its obligations under Section 5, the Company shall have the right to approve the terms of any settlement of such action, which
approval shall not be unreasonably withheld. The Company shall not be liable for any settlement of any action effected without its consent
(which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the Underwriter (which
consent shall not be unreasonably withheld), settle, compromise, or consent to the entry of any judgment in or otherwise seek to terminate
any pending or threatened action in respect of which advancement, reimbursement, indemnification, or contribution may be sought hereunder
(whether or not such Underwriter Indemnified Party is a party thereto) unless such settlement, compromise, consent, or termination (i)
includes an unconditional release of the Underwriter Indemnified Party, acceptable to such Underwriter Indemnified Party, from all liabilities,
expenses, and claims arising out of such action for which indemnification or contribution may be sought and (ii) does not include a statement
as to or an admission of fault, culpability, or a failure to act, by or on behalf of any Underwriter Indemnified Party.
5.2. Indemnification of the Company.
The Underwriter agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement,
and persons who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any
and all loss, liability, claim, damage, and expense described in the foregoing indemnity from the Company to the Underwriter, as incurred,
but only with respect to such losses, liabilities, claims, damages, and expenses (or actions in respect thereof) which arise out of or
are based upon untrue statements or omissions, or alleged untrue statements or omissions made in the Registration Statement, any Preliminary
Prospectus, the Pricing Disclosure Package, or Prospectus or any amendment or supplement thereto or in any application, in reliance upon,
and in conformity with, the Underwriter’s Information. In case any action shall be brought against the Company or any other person
so indemnified based on any Preliminary Prospectus, the Registration Statement, the Pricing Disclosure Package, or Prospectus or any amendment
or supplement thereto or any application, and in respect of which indemnity may be sought against the Underwriter, the Underwriter shall
have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties
given to the Underwriter by the provisions of Section 5.1.2. The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against the Company or any of its officers, directors, or any person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance
and sale of the Shares or in connection with the Registration Statement, the Pricing Disclosure Package, the Prospectus, or any Issuer
Free Writing Prospectus or any Written Testing-the-Waters Communication.
5.3. Contribution. If
the indemnification provided for in this Section 5 shall for any reason be unavailable to or insufficient to hold harmless
an indemnified party under Section 5(a) or 5(c) in respect of any liabilities and Expenses referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result
of such liabilities and Expenses, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company,
on the one hand, and each of the Underwriter, on the other hand, from the Offering, or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company, on the one hand, and the Underwriter, on the other hand, in connection with the
matters as to which such liabilities or Expenses relate, as well as any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriter, on the other, with respect to such Offering shall be deemed to be in the
same proportion as the total net proceeds actually received by the Company from the Offering of the Firm Securities purchased under this
Agreement (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions actually received
by the Underwriter in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company, on the one hand, and the Underwriter, on the other, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or the Underwriter, on the other, and the parties’ relative intent, knowledge, access
to information, and opportunity to correct or prevent such untrue statement, omission, act, or failure to act; provided that
the parties hereto agree that the written information furnished to the Company through the Underwriter by or on behalf of the Underwriter
for use in any Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists
solely of the Underwriter’s Information. The Company and the Underwriter agree that it would not be just and equitable if contributions
pursuant to this Section 5.3 were determined by pro rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to above in this Section 5.3. Notwithstanding the above, no person
guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from
a party who was not guilty of such fraudulent misrepresentation.
5.4. Limitation. The Company
also agrees that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with advice or services rendered or to be rendered by any Indemnified Person pursuant to this Agreement,
the transactions contemplated thereby or any Indemnified Person’s actions or inactions in connection with any such advice, services,
or transactions, except to the extent that a court of competent jurisdiction has made a finding that Liabilities (and related Expenses)
of the Company have resulted from such Indemnified Person’s fraud, bad faith, gross negligence, or willful misconduct in connection
with any such advice, actions, inactions, or services or such Indemnified Person’s breach of this Agreement or any obligations of
confidentiality owed to the Company.
5.5. Survival & Third-Party Beneficiaries.
The advancement, reimbursement, indemnity, and contribution obligations set forth in this Section 5 shall remain in full
force and effect regardless of any termination of, or the completion of any Indemnified Person’s services under or in connection
with, this Agreement. Each Indemnified Person is an intended third-party beneficiary of this Section 5, and has the right
to enforce the provisions of Section 5 as if he/she/it was a party to this Agreement.
6. Default by Underwriter.
6.1. Default. If the Underwriter
defaults in its obligation to purchase the Firm Securities or the Option Securities, if the Over-allotment Option is exercised hereunder,
you may in your discretion arrange for yourself or for another party or parties to purchase such Firm Securities or Option Securities
to which such default relates on the terms contained herein. If, within one (1) Business Day after such default relating to more than
ten percent (10%) of the Firm Securities or Option Securities, you do not arrange for the purchase of such Firm Securities or Option Securities,
then the Company shall be entitled to a further period of one (1) Business Day within which to procure another party or parties satisfactory
to you to purchase said Firm Securities or Option Securities on such terms. In the event that neither you nor the Company arrange for
the purchase of the Firm Securities or Option Securities to which a default relates as provided in this Section 6, this Agreement
will automatically be terminated by you or the Company without liability on the part of the Company (except as provided in Sections 8.3 and 5 hereof)
or the Underwriter (except as provided in Section 5 hereof); provided, however, that if such
default occurs with respect to the Option Securities, this Agreement will not terminate as to the Firm Securities; and provided, further,
that nothing herein shall relieve the Underwriter of its liability, if any, to the Company for damages occasioned by its default hereunder.
6.2. Postponement of Closing Date.
In the event that the Firm Securities or Option Securities to which the default relates are to be purchased by the non-defaulting Underwriter,
or are to be purchased by another party or parties as aforesaid, you or the Company shall have the right to postpone the Closing Date
or Option Closing Date for a reasonable period, but not in any event exceeding five (5) Business Days, in order to effect whatever changes
may thereby be made necessary in the Registration Statement, the Pricing Disclosure Package, or the Prospectus or in any other documents
and arrangements, and the Company agrees to file promptly any amendment to the Registration Statement, the Pricing Disclosure Package,
or the Prospectus that in the opinion of counsel for the Underwriter may thereby be made necessary. The term “Underwriter”
as used in this Agreement shall include any party substituted under this Section 6 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Securities or Option Securities.
7. Equitable Remedies. Each party
to this Agreement acknowledges and agrees that (a) a breach or threatened breach by the Company of any of its obligations under Section
3.17 would give rise to irreparable harm to the Underwriter for which monetary damages would not be an adequate remedy and (b)
if a breach or a threatened breach by the Company of any such obligations occurs, the Underwriter will, in addition to any and all other
rights and remedies that may be available to such party at law, at equity, or otherwise in respect of such breach, be entitled to equitable
relief, including a temporary restraining order, an injunction, specific performance of the terms Section 3.17, and any other
relief that may be available from a court of competent jurisdiction, without any requirement to (i) post a bond or other security, or
(ii) prove actual damages or that monetary damages will not afford an adequate remedy. Each party to this Agreement agrees that such party
shall not oppose or otherwise challenge the existence of irreparable harm, the appropriateness of equitable relief or the entry by a court
of competent jurisdiction of an order granting equitable relief, in either case, consistent with the terms of this Section 7.
8. Effective Date of this Agreement and
Termination Thereof.
8.1. Effective Date. This Agreement
shall become effective when both the Company and the Underwriter have executed the same and delivered counterparts of such signatures
to the other party.
8.2. Termination. The
Underwriter shall have the right to terminate this Agreement at any time prior to any Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in your opinion will in the immediate future materially disrupt, general securities
markets in the United States; or (ii) if trading on the New York Stock Exchange or The Nasdaq Stock Market LLC shall have been suspended
or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall
have been required by FINRA or by order of the Commission or any other government authority having jurisdiction; or (iii) if the United
States shall have become involved in a new war or an increase in major hostilities; or (iv) if a banking moratorium has been declared
by a New York State or federal authority; or (v) if a moratorium on foreign exchange trading has been declared which materially adversely
impacts the United States securities markets; or (vi) if the Company shall have sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage, or other calamity or malicious act which, whether or not such loss shall have been insured, will, in your
opinion, make it inadvisable to proceed with the delivery of the Firm Securities or Option Securities; or (vii) if the Company is in material
breach of any of its representations, warranties, or covenants hereunder; or (viii) if the Underwriter shall have become aware after the
date hereof of such a Material Adverse Change, or such adverse material change in general market conditions as in the Underwriter’s
judgment would make it impracticable to proceed with the offering, sale, and/or delivery of the Firm Securities or Option Securities or
to enforce contracts made by the Underwriter for the sale of the Public Securities.
8.3. Reserved.
8.4. Indemnification. Notwithstanding
any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 shall remain in full force and effect and shall not be
in any way affected by, such election or termination or failure to carry out the terms of this Agreement or any part hereof.
8.5. Representations, Warranties, Agreements
to Survive. All representations, warranties, and agreements contained in this Agreement or in certificates of officers of the
Company submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or
on behalf of the Underwriter or its Affiliates or selling agents, any person controlling the Underwriter, its officers, or directors,
or any person controlling the Company or (ii) delivery of and payment for the Public Securities.
9. Miscellaneous.
9.1. Notices. All communications
hereunder, except as herein otherwise specifically provided, shall be in writing and shall be mailed (registered or certified mail, return
receipt requested), personally delivered or sent by facsimile transmission and confirmed and shall be deemed given when so delivered or
faxed and confirmed or if mailed, two (2) days after such mailing.
If to the Underwriter:
Aegis Capital Corp.
1345 Avenue of the Americas, 27th Floor
New York, NY 10105
Attention: Robert J. Eide, Chief Executive Officer
Email: reide@aegiscap.com
With a copy (which shall not constitute notice)
to:
Kaufman & Canoles, P.C.
1021 E. Cary Street, Suite 1400
Two James Center
Richmond, VA 23219
Attn: Anthony W. Basch, Esq.
J. Britton Williston, Esq.
Tel.: (804) 771-5700
If to the Company:
150 N. Macquesten Parkway
Mount Vernon, NY 10550
Tel: (914) 665-6100
With a copy (which shall not constitute notice)
to:
Sichenzia Ross Ference Carmel LLP
1185 Avenue of the Americas, 31st floor
New York, New York 10036
Attn.: Jeffrey P. Wofford, Esq.
Tel: (212) 930-9700
9.2. Headings. The headings
contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation
of any of the terms or provisions of this Agreement.
9.3. Amendment. This Agreement
may only be amended by a written instrument executed by each of the parties hereto.
9.4. Entire Agreement. This
Agreement (together with the other agreements and documents being delivered pursuant to or in connection with this Agreement) constitutes
the entire agreement of the parties hereto with respect to the Offering subject matter hereof and thereof, and supersedes all prior agreements
and understandings of the parties, oral and written, with respect to this Offering and matters related thereto. Nothing in this Agreement
shall abrogate or affect any rights or obligations of the parties arising out of or related to any other agreements between the parties
unrelated to this Offering.
9.5. Binding Effect. This
Agreement shall inure solely to the benefit of and shall be binding upon the Underwriter, the Company and the controlling persons, directors
and officers referred to in Section 5 hereof, and their respective successors, legal representatives, heirs, and assigns,
and no other person shall have or be construed to have any legal or equitable right, remedy, or claim under or in respect of or by virtue
of this Agreement or any provisions herein contained. The term “successors and assigns” shall not include a purchaser,
in its capacity as such, of securities from the Underwriter.
9.6. Governing Law; Consent to Jurisdiction;
Trial by Jury. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of
New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim
against it arising out of, or relating in any way to this Agreement shall be brought and enforced in the New York Supreme Court, County
of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered
or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.1 hereof.
Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The
Company agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable
attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor.
The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) and each of the
Underwriter hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
9.7. Execution in Counterparts. This
Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall
be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when
one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of
a signed counterpart of this Agreement by facsimile or email/pdf transmission shall constitute valid and sufficient delivery thereof.
9.8. Waiver, etc. The failure
of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver
of any such provision, nor to in any way effect the validity of this Agreement or any provision hereof or the right of any of the parties
hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach, non-compliance, or non-fulfillment of
any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party or parties against
whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance, or non-fulfillment shall be construed
or deemed to be a waiver of any other or subsequent breach, non-compliance, or non-fulfillment.
[Signature Page Follows]
If the foregoing correctly sets forth the understanding between the
Underwriter and the Company, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.
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Very truly yours, |
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APPLIED UV, INC. |
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By: |
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Name: |
Max Munn |
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Title: |
Chief Executive Officer |
Confirmed as of the date first written above.
AEGIS CAPITAL CORP. |
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By: |
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Name: |
Robert Eide |
Title: |
Chief Executive Officer |
SCHEDULE 1
SCHEDULE OF THE UNDERWRITER
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Total Number of Units |
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Purchase Price of the Units |
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Underwriters |
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Aegis Capital Corp. |
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Total |
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SCHEDULE 2-A
Pricing Information
Number of Units: |
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[●] |
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● Number of Units containing Firm Shares (“Common Units”) |
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[●] |
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● Number of Units containing Pre-funded Warrants (“Pre-funded Units”) |
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[●] |
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Number of Option Shares: |
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[●] |
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Number of Option Pre-funded Warrants: |
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[●] |
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Number of Option Warrants: |
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[●] |
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Public Offering Price per Common Unit: |
$ |
[●] |
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Public Offering Price per Pre-funded Unit: |
$ |
[●] |
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Exercise Price per Pre-Funded Warrant: |
$ |
0.001 |
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Exercise Price per Series A Warrant per whole share: |
$ |
[●] |
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Exercise Price per Series B Warrant per whole share: |
$ |
[●] |
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Underwriting Discount per Common Unit: |
$ |
[●] |
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Underwriting Discount per Pre-funded Unit: |
$ |
[●] |
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Non-accountable expense allowance per Common Unit and per Pre-funded Unit: |
$ |
[●] |
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Purchase Price per Option Share: |
$ |
[●] |
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Purchase Price per Option Pre-Funded Warrant: |
$ |
[●] |
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Purchase Price per Option Warrant: |
$ |
[●] |
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SCHEDULE 2-B
Issuer General Use Free Writing Prospectuses
SCHEDULE 2-C
Written Testing-the-Waters Communications
SCHEDULE 3
Max Munn
The Munn Family 2020 Irrevocable Trust
Michael Riccio
Eugene E. Burleson
Dallas C. Hack
Joseph Luhukay
Brian Stern
EXHIBIT A
Lock-Up Agreement
November [●], 2023
Aegis Capital Corp.
1345 Avenue of the Americas, 27th Floor
New York, NY 10105
The undersigned understands that Aegis Capital
Corp., the underwriter, (the “Underwriter”), proposes to enter into an Underwriting Agreement (the “Underwriting
Agreement”) with Applied UV, Inc., a company formed under the laws of Nevada (the “Company”), providing for
the offering (the “Offering”) by the Company of an aggregate of [●] units (the “Units”), each consisting
of (i) one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) or a pre-funded
warrant to purchase one share of common stock, (ii) one-tenth of a Series A warrant to purchase one share of Common Stock, and (iii) one-tenth
of a Series B warrant to purchase one share of Common Stock.
To induce the Underwriter to continue its efforts
in connection with the Offering, the undersigned hereby agrees that, without the prior written consent of the Underwriter, the undersigned
will not, during the period commencing on the date hereof and ending one hundred and two hundred and twenty (220) days from the Closing
Date (as defined in the Underwriting Agreement) of the Offering (the “Lock-Up Period”), (1) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock or any securities convertible into or exercisable
or exchangeable for the Common Stock (collectively, the “Lock-Up Securities”); (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of the Lock-Up Securities, in cash or otherwise. The foregoing
sentence shall not apply to (a) transactions relating to the Securities or other securities acquired in open market transactions after
the completion of the Offering, or (b) transfers of the Lock-Up Securities as a bona fide gift, by will or intestacy,
or to a family member or trust for the benefit of a family member (for purposes of this lock-up agreement, “family member”
means any relationship by blood, marriage, or adoption, not more remote than first cousin); provided that in the case
of any transfer or distribution pursuant to clause (b), each donee or distributee shall sign and deliver a lock-up letter substantially
in the form of this letter agreement; (c) transfers of Lock-Up Securities to a charity or educational institution; (d) if the undersigned,
directly or indirectly, controls a corporation, partnership, limited liability company, or other business entity, any transfers of Lock-Up
Securities to any shareholder, partner, or member of, or owner of similar equity interests in, the undersigned, as the case may be; provided that
in the case of any transfer pursuant to the foregoing clauses (b), (c), or (d), (i) any such transfer shall not involve a disposition
for value, (ii) each transferee shall sign and deliver to the Underwriter a lock-up agreement substantially in the form of this lock-up
agreement (this “Lock-Up Agreement”), (iii) no filing under Section 16(a) U.S. Securities Exchange Act of 1934, as
amended (the “Exchange Act”), shall be required or shall be voluntarily made, and (iv) neither transferor nor transferee
shall be required by law (including without limitation the disclosure requirements of the Securities Act of 1933, as amended (the “Securities
Act”), and the Exchange Act) to make, and shall agree to not voluntarily make, any filing or announcement of the transfer or
disposition prior to the expiration of the Lock-Up Period (collectively, “Permitted Transfers”). In addition, the undersigned
agrees that, without the prior written consent of the Underwriter, it will not, during the Lock-Up Period, make any demand for or exercise
any right with respect to, the registration of any Common Stock or any security convertible into or exercisable or exchangeable for Common
Stock, except with respect to securities eligible for registration on Registration Statement on Form S-8. The undersigned also agrees
and consents to the entry of stop transfer instructions with the Company’s transfer agent against the transfer of the undersigned’s
Lock-Up Securities except in compliance with the foregoing restrictions.
No provision in this lock-up agreement shall be
deemed to restrict or prohibit (i) the shares to be sold pursuant to the Underwriting Agreement, (ii) any shares of common stock issued
upon the exercise of an option or other security outstanding on the date of the Offering, (iii) such issuances of options or grants of
restricted stock or other equity-based awards under the Applied UV, Inc. 2020 Omnibus Incentive Plan and the Applied UV, Inc. 2023 Equity
Incentive Plan and the issuance of shares issuable upon exercise of any such equity-based awards, (iv) the filing of registration statements
on Registration Statement on Form S-8, (v) the issuance of securities to affiliates and subsidiaries of the Company, and (vi) the issuance
of securities in connection with mergers, acquisitions, joint ventures, licensing arrangements, or any other similar non-capital raising
transactions.
If the undersigned is an officer or director of
the Company, (i) the undersigned agrees that the foregoing restrictions shall be equally applicable to any securities that the undersigned
may purchase in the Offering; and (ii) the Underwriter agrees that, at least three (3) business days before the effective date of any
release or waiver of the foregoing restrictions in connection with a transfer of Lock-Up Securities, the Underwriter will notify the Company
of the impending release or waiver. Any release or waiver granted by the Underwriter hereunder to any such officer or director shall only
be effective two (2) business days after the release or waiver. The provisions of this paragraph will not apply if (A) the release or
waiver is effected solely to permit a transfer of Lock-Up Securities not for consideration or in connection with any other Permitted Transfer
and (B) the transferee has agreed in writing to be bound by the same terms described in this letter agreement to the extent and for the
duration that such terms remain in effect at the time of such transfer.
The undersigned understands that the Company and
the Underwriter are relying upon this Lock- Up Agreement in proceeding toward consummation of the Offering. The undersigned further understands
that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors
and assigns.
The undersigned understands that, if (i) the Underwriting
Agreement is not executed by November 30, 2023, (ii) the Company notifies the Underwriter in writing that it does not intend to proceed
with the Offering or (iii) the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or
be terminated prior to payment for and delivery of the Securities to be sold thereunder, the undersigned shall be released from all obligations
under this Lock-Up Agreement.
Whether or not the Offering actually occurs depends
on a number of factors, including market conditions. Any Offering will only be made pursuant to an Underwriting Agreement, the terms of
which are subject to negotiation between the Company and the Underwriter. The undersigned acknowledges that no assurances are given by
the Company or the Underwriter that any Offering will be consummated.
This Lock-Up Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
Very truly yours,
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EXHIBIT B
Form of Lock-Up Waiver Press Release
APPLIED UV, INC.
[●]
Applied UV, Inc. (the “Company”)
announced today that Aegis Capital Corp., acting as Underwriter in the Company’s recent public offering of the Company’s shares
of common stock, is [waiving] [releasing] a lock-up restriction with respect to the Company’s shares of common stock held by [certain
officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on [●], and the shares may
be sold on or after such date.
This press release is not an offer or sale
of the securities in the United States or in any other jurisdiction where such offer or sale is prohibited, and such securities may not
be offered or sold in the United States absent registration or an exemption from registration under the Securities Act of 1933, as amended.
SERIES A WARRANT TO PURCHASE COMMON STOCK
APPLIED UV, INC.
Warrant Shares: [●] |
Initial Exercise Date: November [●], 2023 |
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Issue Date: November [●], 2023 |
THIS SERIES A WARRANT TO PURCHASE
COMMON STOCK (the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after
the Initial Exercise Date and on or prior to 5:00 p.m. (New York City time) on [●], 2028, (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Applied UV, Inc., a Delaware corporation (the “Company”), up
to [●] shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price
of one (1) share of Common Stock under this Series A Warrant (this “Warrant”) shall be equal to the Exercise Price, as defined
in Section 2(b).
Section 1. Definitions.
In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid Price”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed
or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses
of which shall be paid by the Company.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed
to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential
employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental
authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York
generally are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, $0.0001 par value per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Registration
Statement” means the Company’s registration statement on Form S-1 (File No. 333-274879), as amended.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC (or
any successor entity) from the shareholders of the Company or board of directors in lieu thereof: (a) to render inapplicable clause (i)
of the definition of the Floor Price in Section 3(b) hereof, (b) to consent to any adjustment to the exercise price or number of shares
of Common Stock underlying the Warrants in the event of a Share Combination Event (as defined below), and to (c) to consent to the voluntary
adjustment, from time to time, of the exercise price of any and all currently outstanding warrants pursuant to Section 3(i).
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock
Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transaction
Documents” means, the Warrants, the Underwriting Agreement, the Lock-Up Agreement (as defined in the Underwriting Agreement)
and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated
hereunder.
“Transfer
Agent” means VStock Transfer LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place Woodmere,
NY 11598 and an email address of oscar@vstocktransfer.com, and any successor transfer agent of the Company.
“Underwriting
Agreement” means the underwriting agreement dated as of [●], 2023 by and between the Company and Aegis Capital Corp. as
the underwriter named therein, as amended, modified or supplemented from time to time in accordance with its terms.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock
so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
“Warrants”
means this Warrant and other Warrant to Purchase Common Stock issued to investors by the Company pursuant to the Registration Statement.
Section 2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on
or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted
by e-mail (or e-mail attachment) of the Notice of Exercise substantially in the form attached hereto as Exhibit A (the
“Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver
the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s
check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable
Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding
number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and
the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.
b) Exercise
Price. The exercise price per Warrant Share shall be $[*]1,
subject to adjustment hereunder (the “Exercise Price”).
c) Cashless
Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in
part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = as applicable:
(i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1)
both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant
to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation
NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading
Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading
Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice
of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including
until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii)
the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise
is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading
Day;
(B) = the Exercise
Price of this Warrant, as adjusted hereunder; and
(X) = the number
of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were
by means of a cash exercise rather than a cashless exercise.
If Warrant Shares
are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act,
the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position
contrary to this Section 2(c).
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c).
d) Mechanics
of Exercise.
i. Delivery
of Warrant Shares upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system
and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered
in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder
is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest
of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the
aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery
to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice
of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate
Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the
number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. Notwithstanding anything
herein to the contrary, upon delivery of the Notice of Exercise, the Holder shall be deemed for purposes of Regulation SHO under the Exchange
Act to have become the holder of the Warrant Shares irrespective of the date of delivery of the Warrant Shares. If the Company fails for
any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading
Day on the third (3rd) Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date
until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a Transfer Agent that is a participant
in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect
to the Common Stock as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing, with respect to any
Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at
any time after the time of execution of the Underwriting Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s)
by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date
for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received
by such Warrant Share Delivery Date.
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and
upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided, however, that the Holder shall
be required to return any Warrant Shares subject to any such rescinded exercise notice concurrently with the return to Holder of the aggregate
Exercise Price paid to the Company for such Warrant Shares and the restoration of Holder’s right to acquire such Warrant Shares
pursuant to this Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise
(a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise
at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored and
return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case such exercise shall
be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving
rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round up to the next whole share.
vi. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant
Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto as Exhibit B duly executed by the Holder and the
Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of
the Warrant Shares.
vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise
as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting
as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation
on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder
that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the
Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion
of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation
to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within
one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder
prior to the issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease
the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds
9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e)
to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations
contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain
Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions on shares of Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of Common Stock any shares
of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock and such other capital stock of the Company (excluding treasury shares, if any) outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock and such other capital stock of the Company
(excluding treasury shares, if any) outstanding immediately after such event, and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment
made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification. The Company shall effect a reverse stock split within seven (7) business days after the date that
is the earlier of (x) the date by which [*] million shares of Common Stock have been traded on The Nasdaq Stock Market LLC following
the closing date or (y) [*], 2024 (the “First Reverse Split Date”). No reverse stock split shall be effectuated
before the First Reverse Split Date, except if (i) the Company is not in compliance with Rule 5810(c)(3)(A)(iii) of The Nasdaq Stock Market
LLC or (ii) consent has been obtained from a majority of purchasers of the Warrants.
b) Adjustment Upon Issuance of
shares of Common Stock. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”),
the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to sell,
or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant or any option to purchase or other
disposition), or, in accordance with this Section 3(f), is deemed to have issued or sold, any shares of Common Stock or Common Share
Equivalents (excluding any Excluded Securities (as defined below) issued or sold or deemed to have been issued or sold) for a consideration
per share less than a price equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (such
Exercise Price then in effect is referred to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”),
then simultaneously with the consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect
shall be reduced to an amount equal to the lowest VWAP during the period commencing 5 consecutive Trading Days following the Dilutive
Issuance (the “New Issuance Price”) and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then
outstanding shall remain unchanged; provided that the New Issuance Share Price shall not be less than (i) $[●] or (ii) in the event
of Shareholder Approval, the price of the Dilutive Issuance ((i) and (ii) together, the “Floor Price”) (subject to
adjustment for reverse and forward stock splits, recapitalizations and similar transactions following the date of the Underwriting Agreement).
Notwithstanding the foregoing, if one or more Dilutive Issuances occurred prior to the Shareholder Approval being obtained and the reduction
of the Exercise Price was limited by clause (i) of the definition of Floor Price, once the Shareholder Approval is obtained, the Exercise
Price will automatically be reduced to equal the greater of (x) the lowest New Issuance Price with respect to any Dilutive Issuance that
occurred prior to the Shareholder Approval being obtained, and (y) the price determined by reference to clause (ii) of the definition
of Floor Price. If the Company enters into a Variable Rate Transaction, the Company shall be deemed to have issued shares of Common Stock
or share of Common Stock Equivalents at the lowest possible price, conversion price or exercise price at which such securities may be
issued, converted or exercised. “Excluded Securities” means any issuance of shares of Common Stock, restricted share
units, Options and/or Convertible Securities (i) under the Company’s current or future equity incentive plans or issued to
employees, directors, consultants or officers as compensation or consideration in the ordinary course of business, including any issuance
of Options (and the underlying shares of Common Stock) in exchange for Options issued under the Company’s equity incentive plans;
provided, that with respect to consultants only, such issuances do not exceed 1 million shares of Common Stock (as adjusted for stock
splits, reverse stock splits, stock dividends, stock combinations and similar events) in any 12 month period, (ii) issued pursuant
to agreements, Options, restricted share units, Convertible Securities or Adjustment Rights (as defined below) existing as of the date
hereof, (iii) issued pursuant to acquisitions (whether by merger, consolidation, purchase of equity, purchase of assets, reorganization
or otherwise), mergers, consolidations, reorganizations or strategic transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through
its subsidiaries, an operating company or an owner of an asset in a business complementary with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company
is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities,
provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights
that require or permit the filing of any registration statement in connection therewith or (iv) to which a majority-in-interest of
Holders of the Warrants consent in writing. “Adjustment Right” means any right granted with respect to any securities issued
in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with this Section 3(f)) of
shares of Common Stock (other than rights of the type described in Sections 3(a) through (e)) that could result in a decrease in the net
consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash
settlement rights, cash adjustment or other similar rights). For all purposes of the foregoing, the following shall be applicable:
i. Issuance of Options. If,
during the Adjustment Period, the Company in any manner grants or sells any Options (other than Excluded Securities) and the lowest price
per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option (such shares of Common Stock issuable upon such exercise of any Option
or upon conversion, exercise or exchange of any Convertible Securities, the “Convertible Securities Shares”) is less
than the Applicable Price, then such shares of Common Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 3(f)(i), the “lowest
price per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of
any Convertible Securities issuable upon exercise of any such Option” shall be equal to (A) the sum of (1) the lowest
amount of consideration (if any) received or receivable by the Company with respect to any one Convertible Securities Share upon the granting
or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option and (2) the lowest exercise price set forth in such Option for which one Convertible Securities Share is
issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise
of any such Option, minus (B) the sum of all amounts paid or payable to the holder of such Option (or any other Person), with respect
to any one Convertible Securities Share, upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Option (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Convertible Securities Share
upon conversion, exercise or exchange of such Convertible Securities.
ii. Issuance of Convertible Securities.
If, during the Adjustment Period, the Company in any manner issues or sells any Convertible Securities (other than Excluded Securities)
and the lowest price per share for which one Convertible Securities Share is issuable upon the conversion, exercise or exchange thereof
is less than the Applicable Price, then such Convertible Securities Share shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 3(e)(ii), the “lowest price per share for which one Convertible Securities Share is issuable upon the conversion, exercise
or exchange thereof” shall be equal to (A) the sum of (1) the lowest amount of consideration (if any) received or receivable
by the Company with respect to one Convertible Securities Share upon the issuance or sale of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security and (2) the lowest conversion price set forth in such Convertible Security for
which one Convertible Securities Share is issuable upon conversion, exercise or exchange thereof, minus (B) the sum of all amounts
paid or payable to the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share,
upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit
conferred on, the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of the Exercise Price has been or is to be made pursuant to other provisions
of this Section 3(e), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue
or sale.
iii. Change in Option Price or
Rate of Conversion. If, during the Adjustment Period, the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional
changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), the Exercise Price
in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased
or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(f)(iii),
if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are increased or decreased
in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Convertible Securities
Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase
or decrease. No adjustment pursuant to this Section 3(f) shall be made if such adjustment would result in an increase of the Exercise
Price then in effect.
iv. Calculation
of Consideration Received. If any Option or Convertible Security is issued in connection with the issuance or sale or deemed issuance
or sale of any other securities of the Company (the “Primary Security”, and such Option or Convertible Security, the
“Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising
one integrated transaction, the aggregate consideration per Common Share with respect to such Primary Security shall be deemed to be the
lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest
price per share for which one Common Share is at any time issuable upon the exercise or conversion of the Primary Security in accordance
with Section 3(f)(i) or 3(f)(ii) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the five
Trading Day period immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public
announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day
in such five Trading Day period). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of cash received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the
amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists
of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic
average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares
of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options
or Convertible Securities (as the case may be). The fair market value of any consideration other than cash or publicly traded securities
will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after
the occurrence of an event requiring valuation (the “Valuation Event”), the fair market value of such consideration
will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
v. Record Date. If, during
the Adjustment Period, the Company takes a record of the holders of the shares of Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells
any share of Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to all (or substantially
all) of the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent
that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to all (or substantially all) holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance
for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion
of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the
voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity
of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor
Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the
consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction),
purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of
the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however,
that, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of
Directors, the Holder shall only be entitled to receive from the Company or any Successor Entity the same type or form of consideration
(and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to
the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of
cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative
forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Common
Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed
to have received common stock/shares of the Successor Entity (which Entity may be the Company following such Fundamental Transaction)
in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day
of consummation of the applicable contemplated Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable contemplated
Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) 100% and (2) the 100 day volatility
as obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following the public announcement of the applicable contemplated Fundamental Transaction, (C) the underlying price per share used in such
calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration,
if any, being offered in such Fundamental Transaction and (ii) the highest VWAP during the period beginning on the Trading Day immediately
preceding the public announcement of the applicable contemplated Fundamental Transaction (or the consummation of the applicable Fundamental
Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section 3(e) and (D) a remaining
option time equal to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and the
Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available
funds (or such other consideration) within the later of (i) five (5) Business Days after the Holder’s election and (ii) the date
of consummation of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the
Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Warrant and other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this Warrant that is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account
the relative value of the shares of Common Stock prior to such Fundamental Transaction and the value of such shares of capital stock,
such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to
the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company”
under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of
this Warrant and other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the
Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally
with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall
assume all of the obligations of the Company prior thereto under this Warrant and other Transaction Documents with the same effect as
if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance
of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has
sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior
to the Initial Exercise Date.
The Company shall
mail, by first class mail, postage prepaid, to each Holder, written notice of the execution of any such amendment, supplement or agreement
with the Successor Entity. Any supplemented or amended agreement entered into by the successor corporation or transferee shall provide
for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3(e). The Company
shall have no duty, responsibility or obligation to determine the correctness of any provisions contained in such agreement or such notice,
including but not limited to any provisions relating either to the kind or amount of securities or other property receivable upon exercise
of warrants or with respect to the method employed and provided therein for any adjustments, and shall be entitled to rely conclusively
for all purposes upon the provisions contained in any such agreement. The provisions of this Section 3(e) shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales and conveyances of the kind described above.
f) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice
to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number
of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of
all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall
appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders
of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such
notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the
Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
h) Share
Combination Event Adjustment. In addition to the adjustments set forth in this Section 3, subject to Shareholder Approval, if
at any time and from time to time on or after the Issuance Date until the three-year anniversary of the Issue Date, there occurs any share
split, reverse share split, share dividend, share combination recapitalization or other similar transaction involving the Common Stock
(each, a “Share Combination Event”, and such date thereof, the “Share Combination Event Date”) and
the lowest VWAP during the 5 consecutive Trading Days commencing on the Share Combination Event Date (the “Event Market Price”)
(provided if the Share Combination Event is effective after close of Trading on the primary Trading Market, then commencing on the next
Trading Day which period shall be the “Share Combination Adjustment Period”) is less than the Exercise Price then in
effect (after giving effect to the adjustment in clause 3(a) above), then, as permitted by the rules and regulations of the Trading Market,
at the close of trading on the primary Trading Market on the last day of the Share Combination Adjustment Period, the Exercise Price then
in effect on such fifth (5th) Trading Day shall be reduced (but in no event increased) to the Event Market Price and the number of Warrant
Shares issuable upon exercise of this Warrant hereunder (such resulting number, the “Share Combination Issuable Shares”) shall
be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall
be equal to the aggregate Exercise Price on the Issuance Date for the Warrant Shares then outstanding. Notwithstanding the foregoing,
if one or more Share Combination Events occurs prior to the Shareholder Approval being obtained and the reduction of the Exercise Price
to the Event Market Price, once the Shareholder Approval is obtained, the Exercise Price will automatically be reduced to the lowest Event
Market Price with respect to any Share Combination Event that occurred prior to the Shareholder Approval being obtained and the Share
Combination Issuable Shares will automatically be adjusted to equal the highest such number with respect to any Share Combination Event
that occurred prior to the Shareholder Approval being obtained. For the avoidance of doubt, if the adjustment in the immediately preceding
sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made, and if this Warrant is exercised,
on any given Exercise Date during the Share Combination Adjustment Period, solely with respect to such portion of this Warrant exercised
on such applicable Exercise Date, such applicable Share Combination Adjustment Period shall be deemed to have ended on, and included,
the Trading Day immediately prior to such Exercise Date and the Event Market Price on such applicable Exercise Date will be the lowest
VWAP of the Common Stock immediately during such the Share Combination Adjustment Period prior to such Exercise Date and ending on, and
including the Trading Day immediately prior to such Exercise Date.
i) Voluntary
Adjustment by Company. Subject to the rules and regulations of the Trading Market and the consent of Holders of a majority in interest
of the Warrants then outstanding, the Company may at any time during the term of this Warrant reduce the then current Exercise Price to
any amount and for any period of time deemed appropriate by the Board of Directors.
j) Shareholder
Approval. The Company shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) at the
earliest practicable date after the date hereof, but in no event later than forty five (45) after the Closing Date (as defined in the
Underwriting Agreement) for the purpose of obtaining Shareholder Approval, if required to effect the purpose thereof, with the recommendation
of the Company’s Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders
in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders
shall vote their proxies in favor of such proposal. The Company shall use its reasonable best efforts to obtain such Shareholder Approval,
and officers, directors and shareholders subject to the Lock-Up Agreement (as defined in the Underwriting Agreement) shall cast their
proxies in favor of such proposal. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall call a
meeting every three (3) months thereafter to seek Shareholder Approval until the earlier of the date Shareholder Approval is obtained
or the Warrants are no longer outstanding. Notwithstanding the foregoing, the Company may, in lieu of holding a special meeting of shareholders
as aforesaid, obtain the written consent of a majority of its shareholders covering the Shareholder Approval so long as prior to forty
five (45) days after the Closing Date, such written consents are obtained and in accordance with Exchange Act Rule 14c-2 at least twenty
(20) days shall have transpired from the date on which a written information statement containing the information specified in Schedule
14C detailing such Shareholder Approval shall have been filed with the Commission and delivered to shareholders of the Company.
k)
Variable Rate Transactions. The Company, at any time while a majority-in-interest of Holders of
the Warrants are outstanding: shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or
any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities
that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either
(A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of
or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security
or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for
the shares of Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity
line of credit; but excluding an "at-the-market offering" in which Common Stock is sold at a minimum price per share that is
at least $[*]2 (as adjusted for stock splits, reverse stock splits, stock dividends, stock combinations and similar
events), whereby the Company may issue securities at a future determined price. The Holder shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages and any adjustments
herein. Notwithstanding the foregoing, the parties agree that this Section 3(k) shall not prohibit the Company from entering into a transaction
that includes features substantially similar to the adjustments included in Section 3(b) or 3(h) hereof ; provided such features are no
more favorable to any investor in such subsequent transaction than as set forth in Section 3(b) or 3(h), respectively.
Section 4. Transfer
of Warrant.
a) Transferability.
This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto as Exhibit B duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment,
the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall
not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case,
the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment
form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or
its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be
identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder
of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No
Rights as Stockholder until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends
or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set
forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to
Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required
to net cash settle an exercise of this Warrant.
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make
and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding Trading Day.
d) Authorized
Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the
necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable
(which means that no further sums are required to be paid by the holders thereof in connection with the issue thereof) and free from all
taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
Except and to the
extent as waived or consented to by Holders of a majority in interest of the Warrants then outstanding, the Company shall not by any action,
including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without
limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any
action that would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
e) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted
by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in
such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Notwithstanding the foregoing, nothing
in this paragraph shall limit or restrict the federal district court in which a Holder may bring a claim under the federal securities
laws.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not
utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. No provision of this Warrant shall be construed
as a waiver by the Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the
Commission thereunder. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the
Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’
fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
h) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice
of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed
to the Company, at 150 N. Macquesten Parkway, Mount Vernon, NY 10550, , Attention: Chief Executive officer, email address: m.munn@sterilumen.com,
or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent
by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing
on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest
of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication
is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the
Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable
by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and
a majority-in-interest of Holders of the Warrants, on the other hand.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
[AUVI Warrant Signature Page Follows]
[AUVI Warrant Signature Page]
IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
APPLIED UV, INC.
By: ______________________________
Name: Max Munn
Its: Chief Executive Officer
Exhibit A
NOTICE OF EXERCISE
TO: APPLIED
UV, INC.
(1) The undersigned hereby
elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take
the form of (check applicable box):
[ ] in lawful money of the United States;
or
[ ] if permitted the cancellation of such number of Warrant
Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said
Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4) The undersigned is
an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name of Investing Entity: |
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Signature of Authorized Signatory of Investing Entity: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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Date: |
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Exhibit B
ASSIGNMENT FORM
(To assign the foregoing
Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)
FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to
Name: |
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(Please Print) |
Address: |
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Phone Number:
Email Address: |
(Please Print)
______________________________________
______________________________________ |
Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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1
Insert ten (10) times of the price per Unit.
2
150% above the offering price of the units sold in the offering.
SERIES B WARRANT TO PURCHASE COMMON STOCK
APPLIED UV, INC.
Warrant Shares: [●] |
Initial Exercise Date: November [●], 2023 |
|
Issue Date: November [●], 2023 |
THIS SERIES B WARRANT TO PURCHASE
COMMON STOCK (the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after
the Initial Exercise Date and on or prior to 5:00 p.m. (New York City time) on [●], 2028, (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Applied UV, Inc., a Delaware corporation (the “Company”), up
to [●] shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price
of one (1) share of Common Stock under this Series B Warrant (this “Warrant”) shall be equal to the Exercise Price, as defined
in Section 2(b).
Section 1. Definitions.
In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid Price”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed
or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses
of which shall be paid by the Company.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed
to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential
employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental
authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York
generally are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, $0.0001 par value per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company,
joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Registration
Statement” means the Company’s registration statement on Form S-1 (File No. 333-274879), as amended.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of The Nasdaq Stock Market LLC (or
any successor entity) from the shareholders of the Company or board of directors in lieu thereof: (a) to render inapplicable clause (i)
of the definition of the Floor Price in Section 3(b) hereof, (b) to consent to any adjustment to the exercise price or number of shares
of Common Stock underlying the Warrants in the event of a Share Combination Event (as defined below), and to (c) to consent to the voluntary
adjustment, from time to time, of the exercise price of any and all currently outstanding warrants pursuant to Section 3(i).
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock
Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).
“Transaction
Documents” means, the Warrants, the Underwriting Agreement, the Lock-Up Agreement (as defined in the Underwriting Agreement)
and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated
hereunder.
“Transfer
Agent” means VStock Transfer LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place Woodmere,
NY 11598 and an email address of oscar@vstocktransfer.com, and any successor transfer agent of the Company.
“Underwriting
Agreement” means the underwriting agreement dated as of [●], 2023 by and between the Company and Aegis Capital Corp. as
the underwriter named therein, as amended, modified or supplemented from time to time in accordance with its terms.
“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock
is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market
(or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock
so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
“Warrants”
means this Warrant and other Warrant to Purchase Common Stock issued to investors by the Company pursuant to the Registration Statement.
Section 2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on
or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted
by e-mail (or e-mail attachment) of the Notice of Exercise substantially in the form attached hereto as Exhibit A (the
“Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising
the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver
the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s
check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable
Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding
number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and
the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.
b) Exercise
Price. The exercise price per Warrant Share shall be $[*]1,
subject to adjustment hereunder (the “Exercise Price”).
c) Cashless
Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in
part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = as applicable:
(i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1)
both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant
to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation
NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading
Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading
Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice
of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including
until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii)
the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise
is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading
Day;
(B) = the Exercise
Price of this Warrant, as adjusted hereunder; and
(X) = the number
of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were
by means of a cash exercise rather than a cashless exercise.
If Warrant Shares
are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act,
the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position
contrary to this Section 2(c).
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c).
d) Mechanics
of Exercise.
i. Delivery
of Warrant Shares upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system
and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered
in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder
is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest
of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the
aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery
to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice
of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate
Exercise Price (other than in the case of a cashless exercise) is received within the earlier of (i) two (2) Trading Days and (ii) the
number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. Notwithstanding anything
herein to the contrary, upon delivery of the Notice of Exercise, the Holder shall be deemed for purposes of Regulation SHO under the Exchange
Act to have become the holder of the Warrant Shares irrespective of the date of delivery of the Warrant Shares. If the Company fails for
any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading
Day on the third (3rd) Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date
until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a Transfer Agent that is a participant
in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period”
means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect
to the Common Stock as in effect on the date of delivery of the Notice of Exercise. Notwithstanding the foregoing, with respect to any
Notice(s) of Exercise delivered on or prior to 12:00 p.m. (New York City time) on the Initial Exercise Date, which may be delivered at
any time after the time of execution of the Underwriting Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s)
by 4:00 p.m. (New York City time) on the Initial Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date
for purposes hereunder, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received
by such Warrant Share Delivery Date.
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and
upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.
iii. Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise; provided, however, that the Holder shall
be required to return any Warrant Shares subject to any such rescinded exercise notice concurrently with the return to Holder of the aggregate
Exercise Price paid to the Company for such Warrant Shares and the restoration of Holder’s right to acquire such Warrant Shares
pursuant to this Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares upon Exercise. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise
(a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise
at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored and
return any amount received by the Company in respect of the Exercise Price for those Warrant Shares (in which case such exercise shall
be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving
rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue
any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
v. No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round up to the next whole share.
vi. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant
Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto as Exhibit B duly executed by the Holder and the
Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of
the Warrant Shares.
vii. Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
e) Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise
as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting
as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation
on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder
that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the
Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion
of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation
to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within
one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding
shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder
prior to the issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease
the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds
9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial
Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e)
to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations
contained in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain
Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions on shares of Common Stock or any other equity or equity equivalent securities payable in shares of Common
Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant),
(ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of Common Stock any shares
of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock and such other capital stock of the Company (excluding treasury shares, if any) outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock and such other capital stock of the Company
(excluding treasury shares, if any) outstanding immediately after such event, and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment
made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification. The Company shall effect a reverse stock split within seven (7) business days after the date that
is the earlier of (x) the date by which [*] million shares of Common Stock have been traded on The Nasdaq Stock Market LLC following
the closing date or (y) [*], 2024 (the “First Reverse Split Date”). No reverse stock split shall be effectuated
before the First Reverse Split Date, except if (i) the Company is not in compliance with Rule 5810(c)(3)(A)(iii) of The Nasdaq Stock Market
LLC or (ii) consent has been obtained from a majority of purchasers of the Warrants.
b) Adjustment Upon Issuance of
shares of Common Stock. If, at any time while this Warrant is outstanding (such period, the “Adjustment Period”),
the Company issues, sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into an agreement to sell,
or grants any right to reprice, or otherwise disposes of or issues (or announces any offer, sale, grant or any option to purchase or other
disposition), or, in accordance with this Section 3(f), is deemed to have issued or sold, any shares of Common Stock or Common Share
Equivalents (excluding any Excluded Securities (as defined below) issued or sold or deemed to have been issued or sold) for a consideration
per share less than a price equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (such
Exercise Price then in effect is referred to as the “Applicable Price”) (the foregoing a “Dilutive Issuance”),
then simultaneously with the consummation (or, if earlier, the announcement) of such Dilutive Issuance, the Exercise Price then in effect
shall be reduced to an amount equal to the lowest VWAP during the period commencing 5 consecutive Trading Days following the Dilutive
Issuance (the “New Issuance Price”) and the number of shares of Common Stock issuable upon exercise of this Warrant
shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant on the Issuance Date for the Warrant Shares then
outstanding shall remain unchanged; provided that the New Issuance Share Price shall not be less than (i) $[●] or (ii) in the event
of Shareholder Approval, the price of the Dilutive Issuance ((i) and (ii) together, the “Floor Price”) (subject to
adjustment for reverse and forward stock splits, recapitalizations and similar transactions following the date of the Underwriting Agreement).
Notwithstanding the foregoing, if one or more Dilutive Issuances occurred prior to the Shareholder Approval being obtained and the reduction
of the Exercise Price was limited by clause (i) of the definition of Floor Price, once the Shareholder Approval is obtained, the Exercise
Price will automatically be reduced to equal the greater of (x) the lowest New Issuance Price with respect to any Dilutive Issuance that
occurred prior to the Shareholder Approval being obtained, and (y) the price determined by reference to clause (ii) of the definition
of Floor Price. If the Company enters into a Variable Rate Transaction, the Company shall be deemed to have issued shares of Common Stock
or share of Common Stock Equivalents at the lowest possible price, conversion price or exercise price at which such securities may be
issued, converted or exercised. “Excluded Securities” means any issuance of shares of Common Stock, restricted share
units, Options and/or Convertible Securities (i) under the Company’s current or future equity incentive plans or issued to
employees, directors, consultants or officers as compensation or consideration in the ordinary course of business, including any issuance
of Options (and the underlying shares of Common Stock) in exchange for Options issued under the Company’s equity incentive plans;
provided, that with respect to consultants only, such issuances do not exceed 1 million shares of Common Stock (as adjusted for stock
splits, reverse stock splits, stock dividends, stock combinations and similar events) in any 12 month period, (ii) issued pursuant
to agreements, Options, restricted share units, Convertible Securities or Adjustment Rights (as defined below) existing as of the date
hereof, (iii) issued pursuant to acquisitions (whether by merger, consolidation, purchase of equity, purchase of assets, reorganization
or otherwise), mergers, consolidations, reorganizations or strategic transactions approved by a majority of the disinterested directors
of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through
its subsidiaries, an operating company or an owner of an asset in a business complementary with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company
is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities,
provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights
that require or permit the filing of any registration statement in connection therewith or (iv) to which a majority-in-interest of
Holders of the Warrants consent in writing. “Adjustment Right” means any right granted with respect to any securities issued
in connection with, or with respect to, any issuance or sale (or deemed issuance or sale in accordance with this Section 3(f)) of
shares of Common Stock (other than rights of the type described in Sections 3(a) through (e)) that could result in a decrease in the net
consideration received by the Company in connection with, or with respect to, such securities (including, without limitation, any cash
settlement rights, cash adjustment or other similar rights). For all purposes of the foregoing, the following shall be applicable:
i. Issuance of Options. If,
during the Adjustment Period, the Company in any manner grants or sells any Options (other than Excluded Securities) and the lowest price
per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option (such shares of Common Stock issuable upon such exercise of any Option
or upon conversion, exercise or exchange of any Convertible Securities, the “Convertible Securities Shares”) is less
than the Applicable Price, then such shares of Common Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 3(f)(i), the “lowest
price per share for which one Common Share is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of
any Convertible Securities issuable upon exercise of any such Option” shall be equal to (A) the sum of (1) the lowest
amount of consideration (if any) received or receivable by the Company with respect to any one Convertible Securities Share upon the granting
or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon
exercise of such Option and (2) the lowest exercise price set forth in such Option for which one Convertible Securities Share is
issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise
of any such Option, minus (B) the sum of all amounts paid or payable to the holder of such Option (or any other Person), with respect
to any one Convertible Securities Share, upon the granting or sale of such Option, upon exercise of such Option and upon conversion, exercise
or exchange of any Convertible Security issuable upon exercise of such Option plus the value of any other consideration received or receivable
by, or benefit conferred on, the holder of such Option (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Convertible Securities Share
upon conversion, exercise or exchange of such Convertible Securities.
ii. Issuance of Convertible Securities.
If, during the Adjustment Period, the Company in any manner issues or sells any Convertible Securities (other than Excluded Securities)
and the lowest price per share for which one Convertible Securities Share is issuable upon the conversion, exercise or exchange thereof
is less than the Applicable Price, then such Convertible Securities Share shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 3(e)(ii), the “lowest price per share for which one Convertible Securities Share is issuable upon the conversion, exercise
or exchange thereof” shall be equal to (A) the sum of (1) the lowest amount of consideration (if any) received or receivable
by the Company with respect to one Convertible Securities Share upon the issuance or sale of the Convertible Security and upon conversion,
exercise or exchange of such Convertible Security and (2) the lowest conversion price set forth in such Convertible Security for
which one Convertible Securities Share is issuable upon conversion, exercise or exchange thereof, minus (B) the sum of all amounts
paid or payable to the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share,
upon the issuance or sale of such Convertible Security plus the value of any other consideration received or receivable by, or benefit
conferred on, the holder of such Convertible Security (or any other Person), with respect to any one Convertible Securities Share. Except
as contemplated below, no further adjustment of the Exercise Price shall be made upon the actual issuance of such Convertible Securities
Share upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities
is made upon exercise of any Options for which adjustment of the Exercise Price has been or is to be made pursuant to other provisions
of this Section 3(e), except as contemplated below, no further adjustment of the Exercise Price shall be made by reason of such issue
or sale.
iii. Change in Option Price or
Rate of Conversion. If, during the Adjustment Period, the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional
changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 3(a)), the Exercise Price
in effect at the time of such increase or decrease shall be adjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased
or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3(f)(iii),
if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are increased or decreased
in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Convertible Securities
Shares deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase
or decrease. No adjustment pursuant to this Section 3(f) shall be made if such adjustment would result in an increase of the Exercise
Price then in effect.
iv. Calculation
of Consideration Received. If any Option or Convertible Security is issued in connection with the issuance or sale or deemed issuance
or sale of any other securities of the Company (the “Primary Security”, and such Option or Convertible Security, the
“Secondary Securities” and together with the Primary Security, each a “Unit”), together comprising
one integrated transaction, the aggregate consideration per Common Share with respect to such Primary Security shall be deemed to be the
lowest of (x) the purchase price of such Unit, (y) if such Primary Security is an Option and/or Convertible Security, the lowest
price per share for which one Common Share is at any time issuable upon the exercise or conversion of the Primary Security in accordance
with Section 3(f)(i) or 3(f)(ii) above and (z) the lowest VWAP of the shares of Common Stock on any Trading Day during the five
Trading Day period immediately following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public
announcement is released prior to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day
in such five Trading Day period). If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of cash received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the
amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists
of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic
average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. If any shares
of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options
or Convertible Securities (as the case may be). The fair market value of any consideration other than cash or publicly traded securities
will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after
the occurrence of an event requiring valuation (the “Valuation Event”), the fair market value of such consideration
will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.
v. Record Date. If, during
the Adjustment Period, the Company takes a record of the holders of the shares of Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe
for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the
issue or sale of shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or purchase (as the case may be).
c) Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells
any share of Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to all (or substantially
all) of the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent
that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to all (or substantially all) holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance
for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion
of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the
voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity
of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor
Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the
consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction),
purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of
the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however,
that, if the Fundamental Transaction is not within the Company’s control, including not approved by the Company’s Board of
Directors, the Holder shall only be entitled to receive from the Company or any Successor Entity the same type or form of consideration
(and in the same proportion), at the Black Scholes Value of the unexercised portion of this Warrant, that is being offered and paid to
the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of
cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative
forms of consideration in connection with the Fundamental Transaction; provided, further, that if holders of Common
Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such holders of Common Stock will be deemed
to have received common stock/shares of the Successor Entity (which Entity may be the Company following such Fundamental Transaction)
in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day
of consummation of the applicable contemplated Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable contemplated
Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) 100% and (2) the 100 day volatility
as obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately
following the public announcement of the applicable contemplated Fundamental Transaction, (C) the underlying price per share used in such
calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration,
if any, being offered in such Fundamental Transaction and (ii) the highest VWAP during the period beginning on the Trading Day immediately
preceding the public announcement of the applicable contemplated Fundamental Transaction (or the consummation of the applicable Fundamental
Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section 3(e) and (D) a remaining
option time equal to the time between the date of the public announcement of the applicable contemplated Fundamental Transaction and the
Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available
funds (or such other consideration) within the later of (i) five (5) Business Days after the Holder’s election and (ii) the date
of consummation of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the
Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under
this Warrant and other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this Warrant that is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account
the relative value of the shares of Common Stock prior to such Fundamental Transaction and the value of such shares of capital stock,
such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to
the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company”
under this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of
this Warrant and other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the
Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally
with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall
assume all of the obligations of the Company prior thereto under this Warrant and other Transaction Documents with the same effect as
if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the avoidance
of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e) regardless of (i) whether the Company has
sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction occurs prior
to the Initial Exercise Date.
The Company shall
mail, by first class mail, postage prepaid, to each Holder, written notice of the execution of any such amendment, supplement or agreement
with the Successor Entity. Any supplemented or amended agreement entered into by the successor corporation or transferee shall provide
for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 3(e). The Company
shall have no duty, responsibility or obligation to determine the correctness of any provisions contained in such agreement or such notice,
including but not limited to any provisions relating either to the kind or amount of securities or other property receivable upon exercise
of warrants or with respect to the method employed and provided therein for any adjustments, and shall be entitled to rely conclusively
for all purposes upon the provisions contained in any such agreement. The provisions of this Section 3(e) shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales and conveyances of the kind described above.
f) Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice
to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number
of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall
authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock
of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of
all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities,
cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs
of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall
appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders
of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such
notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the
Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
h) Share
Combination Event Adjustment. In addition to the adjustments set forth in this Section 3, subject to Shareholder Approval, if
at any time and from time to time on or after the Issuance Date until the three-year anniversary of the Issue Date, there occurs any share
split, reverse share split, share dividend, share combination recapitalization or other similar transaction involving the Common Stock
(each, a “Share Combination Event”, and such date thereof, the “Share Combination Event Date”) and
the lowest VWAP during the 5 consecutive Trading Days commencing on the Share Combination Event Date (the “Event Market Price”)
(provided if the Share Combination Event is effective after close of Trading on the primary Trading Market, then commencing on the next
Trading Day which period shall be the “Share Combination Adjustment Period”) is less than the Exercise Price then in
effect (after giving effect to the adjustment in clause 3(a) above), then, as permitted by the rules and regulations of the Trading Market,
at the close of trading on the primary Trading Market on the last day of the Share Combination Adjustment Period, the Exercise Price then
in effect on such fifth (5th) Trading Day shall be reduced (but in no event increased) to the Event Market Price and the number of Warrant
Shares issuable upon exercise of this Warrant hereunder (such resulting number, the “Share Combination Issuable Shares”) shall
be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall
be equal to the aggregate Exercise Price on the Issuance Date for the Warrant Shares then outstanding. Notwithstanding the foregoing,
if one or more Share Combination Events occurs prior to the Shareholder Approval being obtained and the reduction of the Exercise Price
to the Event Market Price, once the Shareholder Approval is obtained, the Exercise Price will automatically be reduced to the lowest Event
Market Price with respect to any Share Combination Event that occurred prior to the Shareholder Approval being obtained and the Share
Combination Issuable Shares will automatically be adjusted to equal the highest such number with respect to any Share Combination Event
that occurred prior to the Shareholder Approval being obtained. For the avoidance of doubt, if the adjustment in the immediately preceding
sentence would otherwise result in an increase in the Exercise Price hereunder, no adjustment shall be made, and if this Warrant is exercised,
on any given Exercise Date during the Share Combination Adjustment Period, solely with respect to such portion of this Warrant exercised
on such applicable Exercise Date, such applicable Share Combination Adjustment Period shall be deemed to have ended on, and included,
the Trading Day immediately prior to such Exercise Date and the Event Market Price on such applicable Exercise Date will be the lowest
VWAP of the Common Stock immediately during such the Share Combination Adjustment Period prior to such Exercise Date and ending on, and
including the Trading Day immediately prior to such Exercise Date.
i) Voluntary
Adjustment by Company. Subject to the rules and regulations of the Trading Market and the consent of Holders of a majority in interest
of the Warrants then outstanding, the Company may at any time during the term of this Warrant reduce the then current Exercise Price to
any amount and for any period of time deemed appropriate by the Board of Directors.
j) Shareholder
Approval. The Company shall hold a special meeting of shareholders (which may also be at the annual meeting of shareholders) at the
earliest practicable date after the date hereof, but in no event later than forty five (45) after the Closing Date (as defined in the
Underwriting Agreement) for the purpose of obtaining Shareholder Approval, if required to effect the purpose thereof, with the recommendation
of the Company’s Board of Directors that such proposal be approved, and the Company shall solicit proxies from its shareholders
in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders
shall vote their proxies in favor of such proposal. The Company shall use its reasonable best efforts to obtain such Shareholder Approval,
and officers, directors and shareholders subject to the Lock-Up Agreement (as defined in the Underwriting Agreement) shall cast their
proxies in favor of such proposal. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall call a
meeting every three (3) months thereafter to seek Shareholder Approval until the earlier of the date Shareholder Approval is obtained
or the Warrants are no longer outstanding. Notwithstanding the foregoing, the Company may, in lieu of holding a special meeting of shareholders
as aforesaid, obtain the written consent of a majority of its shareholders covering the Shareholder Approval so long as prior to forty
five (45) days after the Closing Date, such written consents are obtained and in accordance with Exchange Act Rule 14c-2 at least twenty
(20) days shall have transpired from the date on which a written information statement containing the information specified in Schedule
14C detailing such Shareholder Approval shall have been filed with the Commission and delivered to shareholders of the Company.
k)
Variable Rate Transactions. The Company, at any time while a majority-in-interest of Holders of
the Warrants are outstanding: shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or
any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction.
“Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities
that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either
(A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of
or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security
or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for
the shares of Common Stock or (ii) enters into, or effects a transaction under, any agreement, including, but not limited to, an equity
line of credit; but excluding an "at-the-market offering" in which Common Stock is sold at a minimum price per share that is
at least $[*]2 (as adjusted for stock splits, reverse stock splits, stock dividends, stock combinations and similar
events), whereby the Company may issue securities at a future determined price. The Holder shall be entitled to obtain injunctive relief
against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages and any adjustments
herein. Notwithstanding the foregoing, the parties agree that this Section 3(k) shall not prohibit the Company from entering into a transaction
that includes features substantially similar to the adjustments included in Section 3(b) or 3(h) hereof; provided such features are no
more favorable to any investor in such subsequent transaction than as set forth in Section 3(b) or 3(h), respectively.
Section 4. Transfer
of Warrant.
a) Transferability.
This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto as Exhibit B duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment,
the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall
not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case,
the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment
form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.
b) New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or
its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be
identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder
of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
Section 5. Miscellaneous.
a) No
Rights as Stockholder until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends
or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set
forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to
Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required
to net cash settle an exercise of this Warrant.
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make
and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted
herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding Trading Day.
d) Authorized
Shares.
The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the
necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented
by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable
(which means that no further sums are required to be paid by the holders thereof in connection with the issue thereof) and free from all
taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
Except and to the
extent as waived or consented to by Holders of a majority in interest of the Warrants then outstanding, the Company shall not by any action,
including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without
limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any
action that would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
e) Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough
of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted
by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in
such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such action or proceeding. Notwithstanding the foregoing, nothing
in this paragraph shall limit or restrict the federal district court in which a Holder may bring a claim under the federal securities
laws.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not
utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. No provision of this Warrant shall be construed
as a waiver by the Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the
Commission thereunder. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the
Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’
fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
h) Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice
of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed
to the Company, at 150 N. Macquesten Parkway, Mount Vernon, NY 10550, , Attention: Chief Executive officer, email address: m.munn@sterilumen.com,
or such other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent
by a nationally recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing
on the books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest
of (i) the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section
prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication
is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the
Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any
action for specific performance that a remedy at law would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable
by the Holder or holder of Warrant Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and
a majority-in-interest of Holders of the Warrants, on the other hand.
m) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n) Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
[AUVI Warrant Signature Page Follows]
[AUVI Warrant Signature Page]
IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
APPLIED UV, INC.
By: ______________________________
Name: Max Munn
Its: Chief Executive Officer
Exhibit A
NOTICE OF EXERCISE
TO: APPLIED
UV, INC.
(1) The undersigned hereby
elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take
the form of (check applicable box):
[ ] in lawful money of the United States;
or
[ ] if permitted the cancellation of such number of Warrant
Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said
Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
_______________________________
_______________________________
_______________________________
(4) The undersigned is
an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
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Signature of Authorized Signatory of Investing Entity: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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Exhibit B
ASSIGNMENT FORM
(To assign the foregoing
Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)
FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to
Name: |
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(Please Print) |
Address: |
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Phone Number:
Email Address: |
(Please Print)
______________________________________
______________________________________ |
Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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1
Insert twenty (20) times of the price per Unit.
2
150% above the offering price of the units sold in the offering.
PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK
APPLIED UV, INC.
Warrant Shares: [●] |
Initial Exercise Date: November [●], 2023 |
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Issue Date: November [●], 2023 |
THIS PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK
(the “Warrant”) certifies that, for value received, [●] or its assigns (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time until this Warrant is
exercised in full (the “Termination Date”) but not thereafter, to subscribe for and purchase from Applied UV, Inc.,
a Delaware corporation (the “Company”), up to [●] shares (as subject to adjustment hereunder, the “Warrant
Shares”) of Common Stock. The purchase price of one (1) share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).
Section 1. Definitions. In
addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person
that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person,
as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid Price” means, for any
date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02
p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading
on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in all other cases,
the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a
majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be
paid by the Company.
“Board of Directors” means
the board of directors of the Company.
“Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain
closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required
by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any
other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so
long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are
open for use by customers on such day.
“Commission” means the United
States Securities and Exchange Commission.
“Common Stock” means the common
stock of the Company, $0.0001 par value per share, and any other class of securities into which such securities may hereafter be reclassified
or changed.
“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person” means an individual
or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other entity of any kind.
“Registration Statement” means
the Company’s registration statement on Form S-1 (File No. 333-274879), as amended.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiary” means any subsidiary
of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the
date hereof.
“Trading Day” means a day on
which the Common Stock is traded on a Trading Market.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or
any successors to any of the foregoing).
“Transfer Agent” means VStock
Transfer LLC, the current transfer agent of the Company, with a mailing address of 18 Lafayette Place Woodmere, NY 11598 and an email
address of oscar@vstocktransfer.com, and any successor transfer agent of the Company.
“Underwriter” means Aegis Capital
Corp.
“Underwriting Agreement” means
the underwriting agreement dated as of [●], 2023 among the Company and Aegis Capital Corp. as underwriter named therein, as amended,
modified or supplemented from time to time in accordance with its terms.
“VWAP” means, for any date,
the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market
on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City
time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed
or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid price per share of Common Stock so reported, or (d) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by
the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses
of which shall be paid by the Company.
“Warrants” means this Warrant
and other Pre-Funded Warrant to Purchase Common Stock issued by the Company pursuant to the Underwriting Agreement.
Section 2. Exercise.
a) Exercise of Warrant. Exercise
of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise
Date and on or before the Termination Date by delivery to the Company of a duly executed PDF copy submitted by e-mail (or e-mail attachment)
of the Notice of Exercise substantially in the form attached hereto as Exhibit A (the “Notice of Exercise”).
Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the
Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank
unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original
Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full,
in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which
the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the
total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise
within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the
number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b) Exercise Price. The aggregate
exercise price of this Warrant, except for a nominal exercise price of $0.00001 per Warrant Share, was pre-funded to the Company on or
prior to the Initial Exercise Date and, consequently, no additional consideration (other than the nominal exercise price of $0.00001 per
Warrant Share) shall be required to be paid by the Holder to any Person to effect any exercise of this Warrant. The Holder shall not be
entitled to the return or refund of all, or any portion, of such pre-paid aggregate exercise price under any circumstance or for any reason
whatsoever, including in the event this Warrant shall not have been exercised prior to the Termination Date. The remaining unpaid exercise
price per share of Common Stock under this Warrant shall be $0.00001, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. This Warrant
may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled
to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = as applicable: (i) the VWAP on the Trading
Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered
pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof
on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated
under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported
by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed
during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2)
hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the
date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both
executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
(B) = the Exercise Price of this Warrant, as adjusted
hereunder; and
(X) = the number of Warrant Shares that would
be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise
rather than a cashless exercise.
If Warrant Shares are issued in such a cashless
exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take
on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section
2(c).
d) Mechanics of Exercise.
i. Delivery of Warrant Shares upon Exercise.
The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal
at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective
registration statement permitting the issuance of the Warrant Shares to Holder or (B) this Warrant is being exercised via cashless exercise,
and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder
in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice
of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days
comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant
Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery
of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received
within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following
delivery of the Notice of Exercise. Notwithstanding anything herein to the contrary, upon delivery of the Notice of Exercise, the Holder
shall be deemed for purposes of Regulation SHO under the Exchange Act to have become the holder of the Warrant Shares irrespective of
the date of delivery of the Warrant Shares. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to
a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as
a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable
Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the third (3rd) Trading Day after the Warrant Share Delivery
Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.
The Company agrees to maintain a Transfer Agent that is a participant in the FAST program so long as this Warrant remains outstanding
and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a
number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery
of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m.
(New York City time) on the Initial Exercise Date, which may be delivered at any time after the time of execution of the Underwriting
Agreement, the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial
Exercise Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of
the aggregate Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date.
ii. Delivery of New Warrants Upon
Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant.
iii. Rescission Rights. If the
Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure
to Timely Deliver Warrant Shares upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause
the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to
an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in
an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number
of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price
at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored and return any amount received
by the Company in respect of the Exercise Price for those Warrant Shares (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide
the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of
a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a
cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to
the next whole share.
vi. Charges, Taxes and Expenses.
Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect
of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto as Exhibit B duly executed by the Holder and the
Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of
the Warrant Shares.
vii. Closing of Books. The Company
will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
e) Holder’s Exercise Limitations.
The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the
Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess
of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that
the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify
or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section
2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common
Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B)
a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one (1) Trading
Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this
Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common
Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the
issuance of any Warrants, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership
Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct
this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein
contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained
in this paragraph shall apply to a successor holder of this Warrant.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits.
If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions
on shares of Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance
of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding
shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of Common Stock any shares of capital stock
of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the
number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant
shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination
or re-classification.
b) Reserved.
c) Subsequent Rights Offerings.
In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents
or rights to purchase stock, warrants, securities or other property pro rata to all (or substantially all) of the record holders of any
class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number
of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are
to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as
a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) Pro Rata Distributions. During
such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights
to acquire its assets) to all (or substantially all) holders of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification,
corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent
that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however,
that, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership
of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance
for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially or completely exercised at the time of such Distribution, such portion
of the Distribution shall be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.
e) Fundamental Transaction.
If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects
any merger or consolidation of the Company with or into another Person, (ii) the Company or any Subsidiary, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a
series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the
voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires 50% or more of the outstanding shares of Common Stock or 50% or more of the voting power of the common equity
of the Company (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this
Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction
by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the Underwriting
Agreement in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory
to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of
the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant that is exercisable for a corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock
prior to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise
price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction,
the Successor Entity shall be added to the term “Company” under this Warrant (so that from and after the occurrence or consummation
of such Fundamental Transaction, each and every provision of this Warrant and the Underwriting Agreement referring to the “Company”
shall refer instead to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Successor Entity
or Successor Entities, jointly and severally with the Company, may exercise every right and power of the Company prior thereto and the
Successor Entity or Successor Entities shall assume all of the obligations of the Company prior thereto under this Warrant and the Underwriting
Agreement with the same effect as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named
as the Company herein. For the avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(e)
regardless of (i) whether the Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii)
whether a Fundamental Transaction occurs prior to the Initial Exercise Date.
f) Calculations. All calculations
under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section
3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares
of Common Stock (excluding treasury shares, if any) issued and outstanding.
g) Notice to Holder.
i. Adjustment to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder
by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares
and setting forth a brief statement of the facts requiring such adjustment.
ii. Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company
shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any
rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any sale or transfer of all or substantially
all of its assets, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or
(E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then,
in each case, the Company shall cause to be delivered by email to the Holder at its last email address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a
record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer
or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in
the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that
any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries,
the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain
entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer of Warrant.
a) Transferability. This Warrant
and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially
in the form attached hereto as Exhibit B duly executed by the Holder or its agent or attorney and funds sufficient to
pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so
assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.
b) New Warrants. This Warrant
may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject
to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All
Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant
except as to the number of Warrant Shares issuable pursuant thereto.
c) Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.
Section 5. Miscellaneous.
a) No Rights as Stockholder until
Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder
of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting
any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments
pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be required to net cash settle an exercise of this
Warrant.
b) Loss, Theft, Destruction or Mutilation
of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
c) Saturdays, Sundays, Holidays,
etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not
be a Trading Day, then such action may be taken or such right may be exercised on the next succeeding Trading Day.
d) Authorized Shares.
The Company covenants that, during the period
the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for
the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable (which means
that no further sums are required to be paid by the holders thereof in connection with the issue thereof) and free from all taxes, liens
and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).
Except and to the extent as waived or consented
to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder
as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the
par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value,
(ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations
under this Warrant.
Before taking any action that would result in
an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
e) Governing Law. All questions
concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant
(whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees
or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication
of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party
shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding
shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding. Notwithstanding the foregoing, nothing in this paragraph shall limit or restrict
the federal district court in which a Holder may bring a claim under the federal securities laws.
f) Restrictions. The Holder
acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless
exercise, will have restrictions upon resale imposed by state and federal securities laws.
g) Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice the Holder’s rights, powers or remedies. No provision of this Warrant shall be construed as a waiver by the
Holder of any rights which the Holder may have under the federal securities laws and the rules and regulations of the Commission thereunder.
Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply
with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those
of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
h) Notices. Any and all notices
or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall
be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company,
at 150 N. Macquesten Parkway, Mount Vernon, NY 10550, Attention: Chief Executive officer, email address: m.munn@sterilumen.com, or such
other email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by e-mail, or sent by a nationally
recognized overnight courier service addressed to each Holder at the e-mail address or address of such Holder appearing on the books of
the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the
time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section prior to
5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or communication
is delivered via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. To the extent that any
notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.
i) Limitation of Liability.
No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
j) Remedies. The Holder, in
addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance
of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for
specific performance that a remedy at law would be adequate.
k) Successors and Assigns. Subject
to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding
upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant
are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of
Warrant Shares.
l) Amendment. This Warrant may
be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and the Holder, on the
other hand. m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
n) Headings. The headings used
in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
********************
[AUVI Pre-Funded Warrant Signature Page Follows]
[AUVI Pre-Funded Warrant Signature Page]
IN WITNESS WHEREOF, the Company has caused this
Pre-Funded Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
APPLIED UV, INC.
By: ______________________________
Name: Max Munn
Its: Chief Executive Officer
Exhibit A
NOTICE OF EXERCISE
TO: APPLIED
UV, INC.
(1) The undersigned hereby elects to
purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders
herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of
(check applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted the cancellation of such number
of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect
to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3) Please issue said Warrant Shares
in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following
DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
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Signature of Authorized Signatory of Investing Entity: |
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Name of Authorized Signatory: |
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Title of Authorized Signatory: |
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Exhibit B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this
form and supply required information. Do not use this form to exercise the Warrant to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and
all rights evidenced thereby are hereby assigned to
Name: |
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(Please Print) |
Address: |
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Phone Number:
Email Address: |
(Please Print)
______________________________________
______________________________________ |
Dated: _______________ __, ______ |
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Holder’s Signature: |
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Holder’s Address: |
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November 9, 2023
Applied UV, Inc.
150 N Macquesten Pkwy
Mt Vernon, NY 10550
Ladies and Gentlemen:
We have acted as counsel for Applied UV, Inc.,
a Nevada corporation (the “Company”), in connection with the preparation and filing of a Registration Statement on Form S-1,
as amended (File No. 333-274879) (the “Registration Statement”), including a related prospectus filed with the Registration
Statement (the “Prospectus”), with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities
Act of 1933, as amended (the “Securities Act”), covering a firm commitment underwritten offering of up to (i) 24,000,000 units,
each consisting of (A) one (1) share (“Share”) of common stock, par value $0.0001, of the Company (“Common Stock”)
or one (1) pre-funded warrant (“Pre-Funded Warrant,” and each share of Common Stock underlying a Pre-Funded Warrant, a “Pre-Funded
Warrant Share”), to purchase one (1) share of Common Stock in lieu thereof, (B) one-tenth (1/10th) of a Series A warrant
(“Series A Warrant” and each share of Common Stock underlying a Series A Warrant, a “Series A Warrant Share”)
to purchase one (1) share of Common Stock and (C) one-tenth (1/10th) of a Series B warrant (“Series B Warrant”
and, together with the Series A Warrant, the “Warrants” and, each share of Common Stock underlying a Series B Warrant, a “Series
B Warrant Share” and, together with the Series A Warrant Share, the “Warrant Shares”) and (ii) (A) 3,600,000 shares
of Common Stock issued pursuant to the Over-Allotment Option (the “Over-Allotment Option Shares”) and/or Pre-Funded Warrants
in lieu thereof (the “Over-Allotment Option Pre-Funded Warrants,” and each share of Common Stock underlying an Over-Allotment
Option Pre-Funded Warrant, an “Over-Allotment Option Pre-Funded Warrant Share”) and/or (B) 360,000 Series A Warrants issued
pursuant to the Over-Allotment Option (the “Over-Allotment Option Series A Warrants,” and each share of Common Stock underlying
an Over-Allotment Series A Option Warrant, an “Over-Allotment Option Series A Warrant Share”) and/or (C) 360,000 Series B
Warrants issued pursuant to the Over-Allotment Option (the “Over-Allotment Option Series B Warrants,” and each share of Common
Stock underlying an Over-Allotment Option Series B Warrant, an “Over-Allotment Option Series B Warrant Share” and, together
with the Over-Allotment Option Series A Warrant Share, the “Over-Allotment Option Warrant Shares”), issuable upon the exercise
of an over-allotment option granted by the Company to the underwriters (the “Over-Allotment Option”). The Shares, the Pre-Funded
Warrants, the Pre-Funded Warrant Shares, the Warrants and the Warrant Shares, including any Over-Allotment Option Shares, Over-Allotment
Option Pre-Funded Warrants, Over-Allotment Option Pre-Funded Warrant Shares, Over-Allotment Option Warrants and Over-Allotment Option
Warrant Shares are to be sold in connection with an underwriting agreement (the “Underwriting Agreement”) to be entered into
between the Company and the underwriter.
In connection with this opinion, we have examined
originals or copies (certified or otherwise identified to our satisfaction) of (i) the Company’s Articles of Incorporation, as currently
in effect, (ii) the Company’s Bylaws as currently in effect, (iii) the Registration Statement and related Prospectus, (iv) the form
of underwriting agreement, (v) the form of Pre-Funded Warrant, (vi) the form of Series A Warrant, (vii) the form of Series B Warrant and
(viii) such corporate records, agreements, documents and other instruments, and such certificates or comparable documents of public officials
or of officers and representatives of the Company, as we have deemed relevant and necessary as a basis for the opinion hereinafter set
forth.
In such examination, we have assumed the genuineness
of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified, conformed or photostatic copies, and the authenticity of the originals
of such latter documents. As to certain questions of fact material to this opinion, we have relied upon certificates or comparable documents
of officers and representatives of the Company and have not sought to independently verify such facts.
Based on the foregoing, and in reliance thereon,
and subject to the qualifications, limitations, exceptions and assumptions set forth herein, we are of the opinion that, having been issued
and sold in exchange for payment in full to the Company of all consideration required therefor as applicable, including with regard to
the Shares, the Pre-Funded Warrants, the Pre-Funded Warrant Shares, the Warrants, the Warrant Shares, the Over-Allotment Option Shares,
the Over-Allotment Option Pre-Funded Warrants, the Over-Allotment Option Pre-Funded Warrant Shares, the Over-Allotment Option Warrants
and the Over-Allotment Option Warrant Shares and as described in the Registration Statement:
(i) | | The Shares, when issued against payment therefor, will be validly
issued, fully paid and non-assessable shares of Common Stock; |
(ii) | | The Pre-Funded Warrants, when issued against payment therefor,
will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms,
except that (a) such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’
rights in general and (b) the remedies of specific performance and injunctive and other forms of injunctive relief may be subject to
equitable defenses; |
(iii) | | The Pre-Funded Warrant Shares have been duly authorized by
all necessary corporate action on the part of the Company and, when issued, sold and delivered by the Company pursuant to the exercise
of the Pre-Funded Warrants against payment therefor, will be validly issued, fully paid and non-assessable shares of Common Stock; |
(iv) | | The Series A Warrants, when issued against payment therefor,
will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms,
except that (a) such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’
rights in general and (b) the remedies of specific performance and injunctive and other forms of injunctive relief may be subject to
equitable defenses; |
(v) | | The Series A Warrant Shares have been duly authorized by all
necessary corporate action on the part of the Company and, when issued, sold and delivered by the Company pursuant to the exercise of
the Series A Warrants against payment therefor, will be validly issued, fully paid and non-assessable shares of Common Stock; |
(vi) | | The Series B Warrants, when issued against payment therefor,
will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms,
except that (a) such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’
rights in general and (b) the remedies of specific performance and injunctive and other forms of injunctive relief may be subject to
equitable defenses; |
(vii) | | The Series B Warrant Shares have been duly authorized by all
necessary corporate action on the part of the Company and, when issued, sold and delivered by the Company pursuant to the exercise of
the Series B Warrants against payment therefor, will be validly issued, fully paid and non-assessable shares of Common Stock; |
(viii) | | The Over-Allotment Option Shares, when issued against payment
therefor, will be validly issued, fully paid and non-assessable shares of Common Stock; |
(ix) | | The Over-Allotment Option Pre-Funded Warrants, when issued
against payment therefor, will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in
accordance with their terms, except that (a) such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors’ rights in general and (b) the remedies of specific performance and injunctive and other forms of
injunctive relief may be subject to equitable defenses; |
(x) | | The Over-Allotment Option Pre-Funded Warrant Shares have been
duly authorized by all necessary corporate action on the part of the Company and, when issued, sold and delivered by the Company pursuant
to the exercise of the Over-Allotment Option Pre-Funded Warrants against payment therefor, will be validly issued, fully paid and non-assessable
shares of Common Stock; |
(xi) | | The Over-Allotment Option Series A Warrants, when issued against
payment therefor, will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance
with their terms, except that (a) such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors’ rights in general and (b) the remedies of specific performance and injunctive and other forms of injunctive relief
may be subject to equitable defenses; |
(xii) | | The Over-Allotment Option Series A Warrant Shares have been
duly authorized by all necessary corporate action on the part of the Company and, when issued, sold and delivered by the Company pursuant
to the exercise of the Over-Allotment Option Series A Warrants against payment therefor, will be validly issued, fully paid and non-assessable
shares of Common Stock of the Company; |
(xiii) | | The Over-Allotment Option Series B Warrants, when issued against
payment therefor, will constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance
with their terms, except that (a) such enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors’ rights in general and (b) the remedies of specific performance and injunctive and other forms of injunctive relief
may be subject to equitable defenses; and |
(xiv) | | The Over-Allotment Option Series B Warrant Shares have been
duly authorized by all necessary corporate action on the part of the Company and, when issued, sold and delivered by the Company pursuant
to the exercise of the Over-Allotment Option Series B Warrants against payment therefor, will be validly issued, fully paid and non-assessable
shares of Common Stock of the Company. |
The opinion expressed herein is limited to the
Nevada Revised Statutes (including reported judicial decisions interpreting the Nevada Revised Statutes) and, with respect to the enforceability
of the Pre-Funded Warrants and the Warrants, the laws of the State of New York, and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
We assume no obligation to update or supplement
any of our opinions to reflect any changes of law or fact that may occur. We hereby consent to the filing of this letter as an exhibit
to the Registration Statement and to the reference to our firm under the caption “Legal Matters” in the Prospectus which is
a part of the Registration Statement. In giving such consents, we do not thereby admit that we are in the category of persons whose consent
is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission promulgated thereunder.
Very truly yours,
Sichenzia Ross Ference Carmel LLP
Sichenzia Ross Ference Carmel LLP
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Preliminary
Prospectus of Applied UV, Inc. on Form S-1 Amendment No.3 (File No. 333-274879) of our report dated March 31, 2023, on the consolidated
financial statements of Applied UV, Inc. as of December 31, 2022 and 2021 and for each of the two years in the period ended December
31, 2022, which appears in the Annual Report on Form 10-K of Applied UV, Inc. for the year ended December 31, 2022. We also consent to
the reference to our Firm under the caption “Experts” in the Registration Statement.
/s/ Mazars USA LLP
Fort Washington, PA
November 9, 2023
Exhibit 107
Calculation of Filing Fee Tables
Form S-1
Applied UV, Inc.
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered Securities
Table 1: Newly Registered and Carry Forward
Securities
|
|
Security Type |
|
Security Class Title |
|
Fee Calculation Rule or Carry Forward Rule |
|
Amount Registered(1) |
|
Proposed Maximum Offering Price Per Unit(2) |
|
Maximum Aggregate Offering Price(1) |
|
Fee Rate |
|
Amount of Registration Fee(2) |
Fees to be Paid |
|
Equity |
|
Units, each consisting of: (i) one share of common stock, $0.0001 par value per share (“Common Stock”); (ii) one-tenth of a Series A Warrant to purchase one share of Common Stock (the “Series A Warrant”); and (iii) one-tenth of a Series B Warrant to purchase one share of Common Stock (together with the Series A Warrant, “Warrants”) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
6,900,000 |
|
|
|
.00014760 |
|
|
$ |
1,018.44 |
|
|
|
Equity |
|
Common Stock included as part of the Units which include a share of Common Stock(2) |
|
|
457 |
(o) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Other |
|
Units, each consisting of: (i) one Pre-Funded Warrant exercisable for one share of Common Stock; and (ii) the Warrants(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Other |
|
Pre-Funded Warrants to purchase Common Stock, included as part of the Units which include a Pre-Funded Warrant(3) |
|
|
457 |
(g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Equity |
|
Common Stock underlying Pre-Funded Warrants(4) |
|
|
457 |
(o) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Other |
|
Warrants to Purchase Common Stock, included as part of the Units(4) |
|
|
457 |
(g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Equity |
|
Common Stock underlying Warrants(5) |
|
|
457 |
(o) |
|
|
— |
|
|
|
— |
|
|
$ |
28,800,000 |
|
|
|
.00014760 |
|
|
$ |
4,250.88 |
|
Carry Forward Securities |
|
– |
|
– |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Offering Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
35,700,000 |
|
|
|
.00014760 |
|
|
$ |
5,269.32 |
|
Total Fee Offsets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Fees Previously Paid |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,036.88 |
|
Net Fee Due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,232.44 |
|
(1) |
|
Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”). Includes an additional 15% related to the exercise in full of the over-allotment option by the underwriters. |
(2) |
|
Pursuant to Rule 416 under the Securities Act, this registration statement shall also cover any additional shares of the registrant’s securities that become issuable by reason of any share splits, share dividends or similar transactions. |
(3) |
|
The registrant may issue Units which include a Pre-Funded Warrant to purchase Common Stock in lieu of a share of Common Stock in the offering. The purchase price of each Unit which includes a Pre-Funded Warrant will equal the price per share at which Units which include a share of Common Stock are being sold to the public in this offering, minus $0.001, which constitutes the pre-funded portion of the exercise price of the Pre-Funded Warrants, and the remaining unpaid exercise price of the Pre-Funded Warrants will equal $0.001 per share (subject to adjustment as provided for therein). The proposed maximum aggregate offering price of the Units which include a Pre-Funded Warrant will be reduced on a dollar-for-dollar basis based on the offering price of any Units which include a Pre-Funded Warrant issued in the offering, and the proposed maximum aggregate offering price of the Units which include a share of Common Stock to be issued in the offering will be reduced on a dollar-for-dollar basis based on the offering price of any Units which include a share of Common Stock issued in the offering. Accordingly, the proposed maximum aggregate offering price of the Units which include a share of Common Stock and Units which include a Pre-Funded Warrant is $35,700,000, including the Over-allotment Option, if any. |
(4) |
|
No separate registration fee is payable pursuant to Rule 457(g) under the Securities Act. |
(5) |
|
The exercise price of each Series A Warrant is equal to ten times the offering price per Unit and the exercise price of each Series B Warrant is equal to 20 times the offering price per Unit. |
Applied UV (NASDAQ:AUVIP)
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부터 11월(11) 2024 으로 12월(12) 2024
Applied UV (NASDAQ:AUVIP)
과거 데이터 주식 차트
부터 12월(12) 2023 으로 12월(12) 2024