Item
1.01. Entry into a Material Definitive Agreement.
Public
Offering
On
May 10, 2021, Alset EHome International Inc. (the “Company”) entered into an underwriting agreement (the “Underwriting
Agreement”) with Aegis Capital Corp., as the sole book-running manager and representative of the underwriters named therein (the
“Underwriters”), relating to an underwritten public offering (the “Offering”) of (i) 4,700,637 common units (the
“Common Units”), at a price to the public of $5.07 per Common Unit, with each Common Unit consisting of (a) one share of
common stock, par value $0.001 per share (the “Common Stock”), (b) one Series A warrant (the “Series A Warrant”
and collectively, the “Series A Warrants”) to purchase one share of Common Stock with an initial exercise price of $5.07
per whole share, exercisable until the fifth anniversary of the issuance date, and (c) one Series B warrant (the “Series B Warrant”
and collectively, the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) to purchase
one-half share of Common Stock with an initial exercise price of $6.59 per whole share, exercisable until the fifth anniversary of the
issuance date and (ii) 1,611,000 pre-funded units (the “Pre-funded Units”),
at a price to the public of $5.06 per Pre-funded Unit, with each Pre-funded Unit consisting of (a) one pre-funded warrant (the “Pre-funded
Warrant” and collectively, the “Pre-funded Warrants”) to purchase one share of Common Stock, (b) one Series A Warrant
and (c) one Series B Warrant. The shares of Common Stock, the Pre-funded Warrants, and the Warrants were offered together, but the securities
contained in the Common Units and the Pre-funded Units were issued separately.
The
Company also granted the Underwriters a 45-day over-allotment option to purchase up to 808,363 additional shares of Common
Stock and/or up to 808,363 additional Series A Warrants to purchase 808,363 shares of Common Stock, and/or up to 808,363 additional
Series B warrants to purchase 404,181 shares of Common Stock. The Offering, including the partial exercise of the Underwriters’
over-allotment option to purchase 808,363 Series A Warrants and 808,363 Series B Warrants, closed on May 13, 2021.
The
Company paid the Underwriters an underwriting discount equal to 6.5% of the gross proceeds of the Offering and a non-accountable expense
fee equal to 1.25% of the gross proceeds of the Offering. The Company also reimbursed the Underwriters for certain of their expenses,
including “roadshow”, diligence, and reasonable legal fees and disbursements, in an amount of $150,000 in the aggregate.
The Company has also agreed that it will not issue or announce the issuance or proposed issuance of any Common Stock or Common Stock
equivalents for a period of 120 days following the closing date, other than certain exempt issuances.
The
Pre-funded Units were offered and sold to purchasers whose purchase of Common Units in the 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 the Company’s outstanding Common Stock immediately following the consummation of the Offering
in lieu of Common Units that would otherwise result in the purchaser’s beneficial ownership exceeding 4.99% of the
Company’s outstanding Common Stock (or, at the election of the purchaser, 9.99%). Each Pre-funded Warrant contained in a
Pre-funded Unit is exercisable for one share of Common Stock at an exercise price of $0.01 per share. The Pre-funded Warrants
are immediately exercisable and may be exercised at any time until all of the Pre-funded Warrants are exercised in full.
The
Underwriting Agreement contains customary representations and warranties, agreements and obligations, conditions to closing and termination
provisions. The Underwriting Agreement provides for indemnification by the Underwriters of the Company, its directors and certain of
its executive officers, and by the Company of the Underwriters, for certain liabilities, including liabilities arising under the Securities
Act of 1933, as amended, and affords certain rights of contribution with respect thereto.
The
net proceeds to the Company from the Offering was approximately $29.2 million, excluding the proceeds, if any, from the exercise of the
Warrants and the Pre-funded Warrants sold in the Offering, and after deducting underwriting discounts and commissions and the payment
of other estimated offering expenses associated with the Offering that are payable by the Company. The Company intends to use the net
proceeds of the Offering for the following purposes: (i) to fund possible acquisitions of new companies and additional properties, (ii)
to fund the further development of properties, including services and infrastructure; (iii) to develop rental opportunities at properties;
(iv) to exercise warrants of our subsidiaries to accomplish the items in (i) – (iii) and (v) for working capital and general corporate
purposes.
A
registration statement on Form S-1 relating to the Offering (File No. 333-255757) was declared effective by the Securities and Exchange
Commission (the “SEC”) on May 10, 2021. The Offering is being made only by means of a prospectus and a prospectus supplement
forming a part of the effective registration statement.
Warrants
The
Pre-funded Warrants, Series A Warrants and Series B Warrants were issued in registered form under separate warrant agent agreements
(each a “Warrant Agent Agreement”) between the Company and Direct Transfer, LLC as the warrant agent.
Each
Series A Warrant entitles the registered holder to purchase one share of Common Stock at a price equal to $5.07 per share, subject to
adjustment as discussed below, terminating at 5:00 p.m., New York City time, on the fifth (5th) anniversary of the date of issuance.
No fractional warrants will be issued and only whole warrants are exercisable. The exercise price and number of shares of Common Stock
issuable upon exercise of the Series A Warrants may be adjusted in certain circumstances, including in the event of a stock dividend,
extraordinary dividend on or recapitalization, reorganization, merger or consolidation. If the Company fails to maintain a current prospectus
or prospectus relating to the Common Stock issuable upon the exercise of the Series A Warrants, holders may exercise their Series A Warrants
on a “cashless” basis pursuant to a formula set forth in the terms of the Series A Warrants. If at any time the closing price
per share of the Common Stock shall exceed 300% of the exercise price then in effect for five consecutive trading days on each of which
the daily dollar volume of the Common Stock equals or exceeds $5,000,000, the Company, at its option, may redeem the Series A Warrants,
in whole or in part, at a price of $0.001 per share (subject to adjustment as provided therein).
Each
Series B Warrant entitles the holder thereof to purchase one-half of a share of Common Stock at an exercise price of $6.59 per whole
share, subject to adjustment as discussed below, terminating at 5:00 p.m., New York City time, on the fifth (5th) anniversary of the
date of issuance. No fractional warrants will be issued and only whole warrants are exercisable. The exercise price and number of shares
of Common Stock issuable upon exercise of a whole Series B Warrant may be adjusted in certain circumstances, including in the event of
a stock dividend, extraordinary dividend on or recapitalization, reorganization, merger or consolidation. If the Company fails to maintain
a current prospectus or prospectus relating to the Common Stock issuable upon the exercise of the Series B Warrants, holders may exercise
their Series B warrants on a “cashless” basis pursuant to a formula set forth in the terms of the Series B Warrants. If at
any time the closing price per share of the Common Stock shall exceed 300% of the exercise price then in effect for five consecutive
trading days on each of which the daily dollar volume of the Common Stock equals or exceeds $5,000,000, the Company, at its option, may
redeem the Series B Warrants, in whole or in part, at a price of $0.001 per share (subject to adjustment as provided therein).
The
Pre-Funded Warrant entitles the holder thereof to purchase one share of Common Stock at an exercise price of $0.01 per share, at any
time that the Pre-funded Warrant is outstanding. There is no expiration date for the Pre-funded Warrants. No fractional warrants will
be issued and only whole warrants are exercisable. The exercise price and number of shares of Common Stock issuable upon exercise of
the Pre-funded Warrants may be adjusted in certain circumstances, including in the event of a stock dividend, extraordinary dividend
on or recapitalization, reorganization, merger or consolidation. If the Company fails to maintain a current prospectus or prospectus
relating to the Common Stock issuable upon the exercise of the Pre-funded Warrants, holders may exercise their Pre-funded Warrants on
a “cashless” basis pursuant to a formula set forth in the terms of the Pre-funded Warrants.
Warrant
holders, subject to limited exceptions, cannot exercise their warrants to the extent that, after giving effect to such exercise, the
holder (together with its affiliates) would beneficially own in excess of 4.99% (or, at the election of the purchaser, 9.99%; subject
to increase at the option of the holder to 9.99% upon 61 days’ prior written notice) of the Company’s Common Stock outstanding
immediately after giving effect to the exercise.
The
foregoing summary of the terms of the Underwriting Agreement and the Warrant Agent Agreements (including the Pre-funded Warrants and
the Warrants) are subject to, and qualified in their entirety by reference to, copies of the Underwriting Agreement and the Warrant Agent
Agreements (including the Pre-funded Warrants and the Warrants) that are filed as exhibits to this Current Report on Form 8-K and are
incorporated herein by reference. The representations, warranties and covenants contained in the Underwriting Agreement were made only
for purposes of such agreement and, as of specific dates, were solely for the benefit of the parties to the Underwriting Agreement, and
may be subject to limitations agreed upon by the contracting parties. Accordingly, the Underwriting Agreement is incorporated herein
by reference only to provide investors with information regarding the terms of the Underwriting Agreement, and not to provide investors
with any other factual information regarding the Company or its business, and should be read in conjunction with the disclosures in the
Company’s periodic reports and other filings with the SEC.