SRM Entertainment Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Unregistered Sales of Equity Securities, Material Modification to Rights of Security Holders, Leadership Update, Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year, Other Events, Financial Statements and Exhibits
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Item 1.01 Entry into a Material Definitive Agreement.
On May 21, 2025, SRM Entertainment, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Investor”) for a private investment in public equity (the “PIPE Offering”) of 5,000 shares of its Series A Convertible Preferred Stock par value $0.0001 per share (the “Series A Preferred Stock”), convertible into 8,928,571 shares of common stock, par value $0.0001 (the “Common Stock”), at a conversion price of $0.56 per share of Series A Preferred Stock, and an aggregate of 8,928,571 warrants (the “PIPE Warrants”) to acquire up to 8,928,571 shares of Common Stock, subject to beneficial ownership limitations set by the holder. The purchase price for one unit (consisting of one share of Series A Convertible Preferred Stock convertible into approximately 1,785 shares and the same number of warrants) was $1,000. The PIPE Warrants issued in the PIPE Offering are exercisable immediately upon issuance at an exercise price of $0.65 per share and will expire two years from the date of issuance.
The PIPE Offering closed on May 27, 2025, with aggregate gross proceeds totaling approximately $5 million, before deducting placement agent fees and other expenses. The Company intends to use the proceeds from the PIPE Offering for general corporate and working capital purposes.
The exercise price and number of shares of Common Stock issuable upon exercise of the PIPE Warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Common Stock and the exercise price. Subject to limited exceptions, the Investor may not exercise any portion of the PIPE Warrants to the extent that the Investor would beneficially own more than 4.99% (or, at the election of the holder prior to the date of issuance, 9.99%) of the outstanding Common Stock after exercise. In the event of certain fundamental transactions, the holder of the PIPE Warrants will have the right to receive the Black Scholes Value (as defined in the PIPE Warrants) of its PIPE Warrants calculated pursuant to a formula set forth in the PIPE Warrants, payable in cash. There is no trading market available for the PIPE Warrants on any securities exchange or nationally recognized trading system. The Company does not intend to list the PIPE Warrants on any securities exchange or nationally recognized trading system.
Pursuant to the Securities Purchase Agreement, for a period of eighteen (18) months after the closing date, the Investor shall have the right of first refusal to participate with respect to any offering involving (i) future equity or equity-linked securities of the Company or (ii) debt of the Company, which is convertible into equity or in which there is an equity component.
Dominari Securities, LLC acted as placement agent (the “Placement Agent”) in connection with the PIPE Offering, pursuant to that certain Placement Agency Agreement, dated as of May 21, 2025, between the Company and the Placement Agent, pursuant to which the Company paid the Placement Agent (i) a cash fee equal to 6.00% of the aggregate gross proceeds from the sale of the shares of Common Stock in the PIPE Offering and (ii) reimbursement for certain of out-of-pocket expenses, including for reasonable expenses and legal fees of $100,000. In addition, we issued to the Placement Agent or its designees the placement agent warrants (the “Placement Agent Warrants”) to purchase up to an aggregate of 535,714 shares of Common Stock (6.0% of the Common Stock sold in the PIPE Offering). The Placement Agent Warrants have identical terms as the PIPE Warrants.
The securities being offered and sold by the Company in the PIPE Offering have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission (the “SEC”) or an applicable exemption from such registration requirements. The securities were offered only to accredited investors. The Company has agreed to file one or more registration statements with the SEC covering the resale of the unregistered shares issuable upon the conversion of the Series A Preferred Stock and the shares issuable upon exercise of the unregistered warrants pursuant to a Registration Rights Agreement entered into between the Company and the Investor (the “Registration Rights Agreement”).
The foregoing descriptions of the PIPE Warrants, Placement Agent Warrants, Securities Purchase Agreement, Placement Agency Agreement, and Registration Rights Agreement (collectively, the “Transaction Documents”), do not purport to be a complete description and are qualified in its entirety by reference to the full text of the Transaction Documents, copies of which are filed herewith as Exhibits 4.1, 4.2, 10.1, 10.2, 10.3, respectively, and incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K with regard to the offer and sale of the shares of Series A Preferred Stock and the PIPE Warrants to the Investor pursuant to the Securities Purchase Agreement is incorporated herein by reference. The shares of Series A Preferred Stock and the PIPE Warrants issued and sold under the Securities Purchase Agreement as described in Item 1.01 were offered and sold by the Company in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. The Placement Agent Warrants issued under the Placement Agency Agreement as described in Item 1.01 were issued by the Company in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.
Item 3.03 Material Modification to Rights of Security Holders.
Pursuant to the PIPE Offering, on May 22, 2025, the Company filed a Certificate of Designation of Series A Preferred Stock with the Secretary of State of the State of Nevada and subsequently, on May 23, 2025 the Company filed an Amended & Restated Certificate of Designation (the “A&R Series A Certificate of Designation”) to correct the conversion price of the Series A Preferred Stock from $0.50 per share to $0.56 per share.
The stated value of the Series A Preferred Stock is $1,000 per share.
Holders of Series A Preferred Stock are entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Series A Preferred Stock are convertible on the basis of a conversion price of $0.56. The Holders shall vote together with the holders of shares of Common Stock as a single class.
Holders shall be entitled to receive, and the Company shall pay, dividends on shares of Series A Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock.
The foregoing description of the A&R Series A Certificate of Designation does not purport to be a complete description and is qualified in its entirety by reference to the A&R Series A Certificate of Designation, which is filed herewith as Exhibit 3.1 and incorporated by reference into this Item 3.03.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers
On May 23, 2025, 465,000 stock options (“Options”) were issued to Richard Miller pursuant to the Company’s 2023 Equity Incentive Plan as well as 310,000 Options were issued pursuant to the Company’s 2024 Equity Incentive Plan. On May 23, 2025, 575,000 Options were issued to Douglas McKinnon pursuant to the Company’s 2024 Equity Incentive Plan.
The issuances were approved by the members of the Compensation Committee of the Board of Directors (the “Compensation Committee”) prior to the close of trading on the Nasdaq Capital Market on May 23, 2025. The Options have an exercise price per share of $0.56 per share, will vest and become exercisable immediately and shall expire on May 23, 2030.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
The disclosures set forth in Item 3.03 above are incorporated by reference into this Item 5.03.
Item 8.01 Other Events.
On May 23, 2025, 100,000 Options were issued to each of Gary Herman, Christopher Melton, and Hans Haywood, the non-employee directors of the Company. The Options were issued pursuant to the Company’s 2024 Equity Incentive Plan. The issuances were approved by the members of the Compensation Committee prior to the close of trading on the Nasdaq Capital Market on May 23, 2025. The Options have an exercise price per share of $0.56 per share, will vest and become exercisable immediately and shall expire on May 23, 2030.
On May 27, 2025, the Company issued a press release announcing the closing of the PIPE Offering. A copy of the press release is filed as Exhibit 99.1 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits
| Exhibit No. | Description | |
| 3.1 | Amended and Restated Certificate of Designation of Series A Preferred Stock | |
| 4.1 | Form of Common Stock Purchase Warrant | |
| 4.2 | Form of Placement Agent Warrant | |
| 10.1 | Form of Securities Purchase Agreement | |
| 10.2 | Form of Placement Agency Agreement | |
| 10.3 | Form of Registration Rights Agreement | |
| 99.1 | Press Release dated May 27, 2025 | |
| 104 | Cover Page Interactive Data File (embedded with the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SRM ENTERTAINMENT, INC. | ||
| Date: May 28, 2025 | By: | /s/ Richard Miller |
| Name: | Richard Miller | |
| Title: | Chief Executive Officer | |