Arista Power, Inc. today announced that it sold a total of 1,500 shares of Series A Convertible Preferred Stock in a private placement transaction, which resulted in gross proceeds of $1.5 million to the Company. The net proceeds from the transactions totaled $1.41 million and will be used to meet the Company’s working capital needs and for general corporate purposes. Arista is a developer, manufacturer, and supplier of custom-designed power management systems, renewable energy storage systems, and a supplier and designer of solar energy systems. Arista Power’s patent-pending Power on Demand system utilizes inputs from multiple energy sources including solar PV, wind turbines, fuel cells, generators and the grid, in conjunction with a custom-designed battery storage system and a proprietary smart monitoring technology that releases energy at times to reduce peak power demand, thereby lowering electricity costs for large energy users who deal with peak usage pricing.
Arista Power also designs, sells and installs residential and commercial solar PV systems. The Company is also developing an intelligent micro-grid for the U.S. Army pursuant to development contracts awarded to the Company. Shares of Preferred Stock are entitled receive cash dividends at an annual rate of 9.0%, payable quarterly, and are convertible at a fixed conversion price equal to $0.20 into a total of 7,500,000 shares of common stock.
In connection with the purchase of the Preferred Stock, each investor received five-year warrants that were immediately vested in full to purchase a number of shares of common stock equal to 150% of the amount of investment in the Preferred Stock divided by the Conversion Price (11,250,000 warrants in total), at a fixed exercise price equal to $0.25.
The Preferred Stock is voluntarily and mandatorily convertible into shares of common stock, with any shares of Preferred Stock outstanding on March 31, 2017 automatically converting into common stock. The investors received rights of first refusal and rights of participation in future financings of the Company until March 31, 2015. In addition, the investors received most favored nation protections on the terms and conditions of the Warrants and Preferred Stock so long as such securities remain outstanding. Additionally, until September 30, 2015, each investor has the right to invest the amount invested by such investor in the above-referenced transaction in preferred stock of Arista Power on substantially similar terms.
Arista Power has agreed to register with the Securities and Exchange Commission the shares of common stock issuable pursuant to conversion of the Preferred Stock and the shares of Common Stock issuable pursuant to the Warrants on a Form S-1 (the “Registration Statement”). Specifically, the Company has agreed to file the Registration Statement on or before April 30, 2014 and to cause such registration statement to be declared effective by the Securities and Exchange Commission on or before July 31, 2014. The Warrants and the Preferred Stock have customary anti-dilution protections including a “full ratchet” anti-dilution adjustment provision.
The securities were sold without registration under the Securities Act of 1933, as amended (the “Act”), or state securities laws, in reliance on the exemptions provided by Section 4(2) of the Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Since these securities have not been registered, they may not be offered or sold by the investors absent registration or an applicable exemption from registration requirements, such as the exemption afforded by Rule 144 under the Act.