8-K: DatChat Announces $6 Million At-The-Market Offering

DatChat, Inc. has entered into a sales agreement with The Benchmark Company, LLC to sell up to $6 million of its common stock through an at-the-market offering program.

Summary

• DatChat, Inc. has entered into a Sales Agreement with The Benchmark Company, LLC to sell shares of its common stock, with an aggregate sales price of up to $6,000,000, through an at-the-market offering program.
• Benchmark will act as the sales agent for this offering.
• The sales will be made through any method permitted by law deemed to be an at the market offering as defined in Rule 415 under the Securities Act of 1933.
• DatChat will pay Benchmark a commission rate equal to 4.0% of the aggregate gross proceeds from each sale of Shares; provided however, that in the event that the amount of Shares sold under the Sales Agreement increases to $1 million or more, then the commission rate will be reduced to 3%.
• The company will also reimburse Benchmark for certain specified expenses.
• DatChat is not obligated to sell any of the shares and may suspend solicitation and offers at any time.
• The offering will terminate upon the sale of shares having an aggregate offering price of $6,000,000 or the termination of the Sales Agreement.
• The shares will be issued pursuant to a shelf registration statement on Form S-3 filed on October 28, 2022, and declared effective on December 6, 2022.
• A prospectus supplement dated February 10, 2025, is being filed with the SEC in connection with the offer and sale of the shares.

Sentiment

Score: 5

Explanation: Neutral sentiment. The announcement is a standard capital raising activity. The terms are typical for an ATM offering.

Risks

• The company is not obligated to sell any of the shares under the Sales Agreement and may at any time suspend solicitation and offers thereunder.
• There is no guarantee that the company will successfully sell the shares or raise the full $6,000,000.

Future Outlook

The company intends to use the net proceeds as described in the prospectus.

Industry Context

At-the-market offerings are a common way for companies to raise capital over time, providing flexibility in managing dilution and taking advantage of market conditions.

Comparison to Industry Standards

• At-the-market offerings are frequently used by small to mid-cap companies to raise capital incrementally.
• The commission rate of 4.0% (reducing to 3% if sales exceed $1 million) is within the typical range for ATM offerings, although it can vary based on the size and complexity of the offering, as well as the specific agreement with the sales agent.
• Comparable companies that have utilized ATM offerings include [hypothetical company A] and [hypothetical company B], which executed similar programs to fund growth initiatives.

Stakeholder Impact

• Shareholders may experience dilution as a result of the issuance of new shares.
• The company's ability to execute its business plan may be enhanced by the additional capital.
• The company's financial flexibility will increase.

Next Steps

• DatChat will file a prospectus supplement with the SEC.
• The Benchmark Company will begin selling shares of DatChat's common stock under the terms of the Sales Agreement.
• DatChat will use the net proceeds as described in the Prospectus in the section entitled Use of Proceeds.

Key Dates

Keywords

at-the-market offering, common stock, sales agreement, Benchmark Company, DatChat, financing