Item 5. Market for Registrant’s Common Equity
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our Class B Common Stock is listed and began
trading on the Nasdaq Capital Market tier of Nasdaq on February 3, 2023, under the symbol “ASST”. Prior to the listing, there
was no public market for our common stock.
Number of Holders of Our Common Stock
As of March 29, 2024, there was one holder of
record of our Class A Common Stock, which is not listed, quoted or traded on any stock exchange or over-the-counter market, and 25 holders
of record of our Class B Common Stock, which is listed and traded on Nasdaq under the symbol “ASST”. In computing the number
of holders of record of our common stock, holders whose shares are held in nominee or “street name” accounts through banks,
brokers or other financial institutions are not included.
Use of Proceeds from Registered Securities
The closing of our initial
public offering took place on February 7, 2023, pursuant to the Underwriting Agreement. At the closing, the Company sold the IPO Shares
for total gross proceeds of $7,500,000. After deducting the underwriting discounts, commissions, non-accountable expense allowance, and
other expenses from the initial public offering, the Company received net proceeds of approximately $6.6 million. Other terms of and
agreements relating to the Underwriting Agreement and the underwriter are described under Item 1. “ Business – Corporate
Structure and History – Initial Public Offering and Underwriting Agreement ” and Item 7. “ Management’s
Discussion and Analysis of Financial Condition – Liquidity and Capital Resources – Engagement Letter with Boustead Securities,
LLC ”.
The IPO Shares were
offered and sold, and the Representative’s Warrant was issued, pursuant to the IPO Registration Statement, initially filed with
the SEC on September 2, 2022, and declared effective by the SEC on February 2, 2023, and the IPO Public Offering Prospectus, dated February
2, 2023, filed with the SEC on February 6, 2023 pursuant to Rule 424(b)(4) of the Securities Act. In addition, a total of 1,500,000 shares
of Class B Common Stock were registered for resale by the selling stockholders named in the IPO Registration Statement, and the IPO Resale
Prospectus, was filed with the SEC on February 6, 2023 pursuant to Rule 424(b)(3) of the Securities Act. As stated in the IPO Resale
Prospectus, any resales of these shares occurred at a fixed price of $5.00 per share until the Class B Common Stock was listed on Nasdaq.
Thereafter, these sales will occur at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing
market prices, or at negotiated prices. The Company will not receive any proceeds from the resale of Class B Common Stock by the selling
stockholders.
The IPO Registration
Statement also registered for sale shares of Class B Common Stock with a maximum aggregate offering price of $1,125,000 for an additional
225,000 shares of Class B Common Stock at the assumed public offering price of $5.00 per share upon full exercise of the underwriters’
over-allotment option; and up to an additional 15,750 shares of Class B Common Stock underlying the Representative’s Warrant with
a maximum aggregate offering price of $98,437.50 at the assumed exercise price of $6.25 per share assuming full exercise of the over-allotment
option. The underwriters’ over-allotment option expired unexercised, and as of the date of this Annual Report, the Representative’s
Warrant has not been exercised.
On April 4, 2023, the
IPO Post-Effective Amendment was filed with the SEC and became effective on April 14, 2023. The IPO Post-Effective Amendment was required
to be filed to update the IPO Registration Statement’s prospectuses to include, among other things, the information contained in
our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on June 30, 2023, and information
in certain subsequent reports and filings under the Exchange Act. The IPO Post-Effective Amendment maintained the effectiveness of the
IPO Registration Statement with respect to the sale of shares of common stock issuable upon exercise of the Representative’s Warrant
and the resale of the shares of common stock held by the selling stockholders. Updates to the IPO Public Offering Prospectus and the
IPO Resale Prospectus were included with the IPO Post-Effective Amendment.
As stated in the IPO
Public Offering Prospectus, the Company intended to use the net proceeds from the initial public offering for investment in corporate
infrastructure, marketing and promotion of Discord communities, social campaigns, and the Company’s “AE.360.DDM” Discord
design, development and management service, expansion of “SiN”, the Company’s social influencer network, increasing
staff and company personnel, and general working capital, operating, and other corporate expenses.
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The following is our
reasonable estimate of the uses of the proceeds from the Company’s initial public offering from the date of the closing of the offering
on November 16, 2023 until December 31, 2023:
● None was used for construction
of plant, building and facilities;
● None was used for the purchase
and installation of machinery and equipment;
● None was used for purchases of
real estate;
● None was used for the acquisition
of other businesses;
● None was used for the repayment
of indebtedness;
● $3.5 million was used for working
capital; and
● None was used for temporary investments.
As of December 31, 2023,
none of the proceeds from the initial public offering were used to make direct or indirect payments to any of our directors or officers,
any of their associates, any persons owning 10% or more of any class of our equity securities, or any of our affiliates, or direct or
indirect payments to any others other than for the direct costs of the offering.
There has not been,
and we do not expect, any material change in the planned use of proceeds from the initial public offering as described in the IPO Registration
Statement.
Securities Authorized for Issuance Under Equity
Compensation Plans
See Item 12 “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Securities
Authorized for Issuance Under Equity Compensation Plans ”.
Dividend Policy
We have never declared or paid cash dividends
on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business
and do not anticipate paying any cash dividends on our common stock in the near future. We may also enter into credit agreements or other
borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our common stock. Any future
determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition,
operating results, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors
may deem relevant. See also “Item 1A. Risk Factors – Risks Related to Ownership of Our Class B Common Stock – We
have never paid cash dividends on our stock and do not intend to pay dividends for the foreseeable future .”
Recent Sales of Unregistered Securities
During 2023, the Company did not sell any equity
securities that were not registered under the Securities Act and that were not previously disclosed in a Quarterly Report on Form 10-Q
or Current Report on Form 8-K where required, except as disclosed below.
On June 30, 2023, the
Company entered into a Closing Agreement (the “Triton Closing Agreement”) with Triton Funds LP, a Delaware limited partnership
(“Triton”). Under the Closing Agreement, the Company agreed to sell to Triton, at its option, shares of Class B Common Stock
having an aggregate value of $1,000,000 (the “Triton Shares”), pursuant to a registration statement to be filed and made effective
for the resale of the Triton Shares. Subject to the terms of the Triton Closing Agreement, the Company was provided a right to deliver
a closing notice (the “Triton Closing Notice”) and issue the Triton Shares to Triton at any time before September 30, 2023,
pursuant to which Triton had agreed to purchase the Triton Shares for $1,000,000 before deducting a $25,000 administrative fee. The price
of each of the Triton Shares was agreed to be 85% of the lowest daily volume-weighted average price of the Class B Common Stock during
the five business days prior to the closing of the purchase of the Triton Shares (the “Triton Closing”). The Triton Closing
was required to occur within five business days after the delivery of the Triton Shares to Triton. Triton’s obligation to purchase
the Triton Shares was conditioned on the effectiveness of the required registration statement and Triton’s ownership not exceeding
9.99% of the Class B Common Stock outstanding as of June 30, 2023.
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The Triton Closing Agreement
contained additional requirements, including that the Company maintain the listing of the Class B Common Stock on the primary market
on which the Class B Common Stock is listed and provide notice to Triton of certain events affecting registration or that may suspend
its right to submit the Triton Closing Notice. The Company also agreed to provide indemnification against liabilities relating to misrepresentations,
breaches of obligations, and third-party claims relating to the Triton Closing Agreement, with certain exceptions. The Triton Closing
Agreement provided that it would expire either upon the Triton Closing or September 30, 2023.
On August 1, 2023, the
Company entered into an Amended and Restated Closing Agreement (the “Amended and Restated Closing Agreement”) with Triton.
Subject to its terms, the Amended and Restated Closing Agreement provided that the Company may deliver a Closing Notice and issue certain
securities to Triton at any time on or before September 30, 2023, pursuant to which Triton agreed to be required to purchase such securities
of the Company with an aggregate gross purchase price of $1,000,000 in the following manner. Upon delivery of a Closing Notice and the
issuance and delivery of securities as described below, Triton agreed to purchase Triton Shares in an amount equal to up to 9.99% of the
outstanding shares of Class B Common Stock following such purchase, pre-funded warrants (“Triton Pre-Funded Warrants” and
together with Triton Shares, “Triton Securities”) that may be exercised to purchase an amount of newly-issued shares of Class
B Common Stock (“Triton Warrant Shares”), or both Triton Shares and Triton Pre-Funded Warrants, such that the aggregate price
of the Triton Shares and the Triton Pre-Funded Warrants together with the exercise price to be paid upon full exercise of the Triton Pre-Funded
Warrants was required to equal a total gross purchase price of $1,000,000. Upon the Company’s election to deliver a Closing Notice,
the price of each of the Triton Shares was required to be set at 85% of the lowest daily volume-weighted average price of the Class B
Common Stock during the five business days after the date that the Triton Securities were delivered to Triton. Any proceeds under the
Amended and Restated Closing Agreement must be reduced by a $25,000 administrative fee. The Amended and Restated Closing Agreement also
provided that it would expire either upon the date that Triton paid the required purchase price after receiving a Closing Notice, or September
30, 2023.
The Amended and Restated
Closing Agreement provided that Triton’s obligation to purchase the Triton Securities was subject to certain conditions. These
conditions included the filing and effectiveness of the required registration statement for the resale of the Triton Securities. In addition,
the Class B Common Stock was required to remain listed on the Nasdaq Capital Market tier of Nasdaq, and the issuance of the Triton Securities
was required to not violate any requirements of Nasdaq. Triton’s purchase requirement was also subject to provisions that prevented
Triton from acquiring shares of Class B Common Stock at the time of any sale of the Triton Securities or exercise of the Triton Pre-Funded
Warrants that would result in the number of shares beneficially owned by Triton and its affiliates exceeding 9.99% of the total number
of shares of Class B Common Stock outstanding immediately after giving effect to the issuance of the shares under the Amended and Restated
Closing Agreement or the Triton Pre-Funded Warrants (the “Beneficial Ownership Limitation”). The Amended and Restated Closing
Agreement provided for the issuance of the Triton Pre-Funded Warrants in lieu of issuance of some or all the Triton Shares, with an exercise
price of $0.01 per share and with no expiration date, if, in Triton’s sole discretion, it would otherwise exceed the Beneficial
Ownership Limitation, or otherwise upon Triton’s election. For each of the Triton Shares that Triton instead elected to be issuable
as Triton Warrant Shares, the number of Triton Shares that we were required to issue to Triton at the time of any sale of the Triton
Securities was required to be decreased on a one-for-one basis. We were also required to provide indemnification against liabilities
relating to misrepresentations, breaches of obligations, and third-party claims relating to the Amended and Restated Closing Agreement,
with certain exceptions.
In connection with the
Amended and Restated Closing Agreement, pursuant to the Boustead Engagement Letter, upon a closing under the Amended and Restated Closing
Agreement, the Company must pay Boustead a cash fee equal to 7% of the gross proceeds to be received from such closing and pay Boustead
a non-accountable expense allowance equal to 1% of the gross proceeds to be received from such closing. The Company must also issue Boustead
a warrant with respect to any Triton Shares exercisable for a number of shares of Class B Common Stock equal to 7% of the number of the
Triton Shares at an exercise price equal to the price per share for the Triton Shares, and a warrant with respect to the issuance of
any Triton Pre-Funded Warrants exercisable for a number of shares of Class B Common Stock equal to 7% of the Triton Warrant Shares at
an exercise price equal to $0.01 per share (any such warrant, a “Tail Warrant”). Each Tail Warrant must be exercisable for
a period of five years and contain cashless exercise provisions. The Company also must reimburse Boustead for all reasonable invoiced
out-of-pocket expenses in connection with its performance of any services relating to the Amended and Restated Closing Agreement, regardless
of whether a sale under the Amended and Restated Closing Agreement occurred. For further discussion of the Underwriting Agreement and
the Boustead Engagement Letter, see Item 7. “ Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Liquidity and Capital Resources – Initial Public Offering and Underwriting Agreement ” and “— Liquidity
and Capital Resources – Engagement Letter with Boustead Securities, LLC ”.
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On August 18, 2023,
the Company filed a Registration Statement on Form S-1 (File No. 333-274079) to register the offer and sale of the Triton Securities
in an amount of up to 885,000 shares of Class B Common Stock consisting of Triton Shares and Triton Warrant Shares. The registration
statement also registered the offer and sale of up to 61,950 shares of Class B Common Stock under Tail Warrants. The registration statement
was declared effective on September 6, 2023.
Under an Amendment to
Amended and Restated Closing Agreement (the “First Triton Amendment”), dated as of September 27, 2023, the Company and Triton
agreed to amend the Amended and Restated Closing Agreement (as amended, the “Amended A&R Closing Agreement”) to provide
that the Amended A&R Closing Agreement will expire on December 30, 2023 instead of September 30, 2023; to provide that up to an aggregate
value of $1,000,000 of the Class B Common Stock, based on the purchase price formula described above, may be sold and purchased pursuant
to a Closing Notice; and to amend the form of Closing Notice to provide for a specific number of shares that may be sold to Triton under
the Amended A&R Closing Agreement. The First Triton Amendment did not amend any of the other provisions of the Amended and Restated
Closing Agreement.
As an incentive to Triton
to enter into the First Triton Amendment and agree to the extension of the term of the $1,000,000 equity line under the Amended A&R
Closing Agreement to December 30, 2023, the Company indicated to Triton that it would deliver a Closing Notice under the Amended A&R
Closing Agreement to sell a number of shares of Class B Common Stock equal to approximately 4.9% of the outstanding shares of Class B
Common Stock prior to the sale. Therefore, on September 29, 2023, under the Amended A&R Closing Agreement, the Company delivered
a Closing Notice to Triton (the “First Closing Notice”) for the purchase of 263,410 Triton Shares (the “First Triton
Shares”), which was the amount of shares of Class B Common Stock equal to approximately 4.9% of the 5,375,724 shares of Class B
Common Stock outstanding on that date. Pursuant to the Amended A&R Closing Agreement, the closing date for this purchase was required
to take place within five business days after the Triton Shares were delivered to Triton (the “Closing Date”). On the Closing
Date, Triton was required to pay the Company a purchase price per share equal to 85% of the lowest daily volume-weighted average price
of the Class B Common Stock during the period between the date that the shares were delivered to Triton and the Closing Date, the proceeds
of which would be reduced by the $25,000 administrative fee, in accordance with the terms of the Amended A&R Closing Agreement.
On October 4, 2023,
the First Triton Shares were received by Triton. Pursuant to the Amended A&R Closing Agreement, on the fifth business day following
the day that the First Triton Shares were received, Triton was required to pay the Company $46,083.53, based on a price per share of
$0.26894, equal to 85% of $0.3164, the lowest daily volume-weighted average price of the Class B Common Stock during the five-business-day
period ending October 11, 2023, less the $25,000 administrative fee. The Company received payment of this amount on October 13, 2023.
In connection with the
closing pursuant to the First Closing Notice under the Amended A&R Closing Agreement described above, pursuant to the Boustead Engagement
Letter and the Underwriting Agreement, the Company paid Boustead a fee of $4,975.85, equal to 7% of the aggregate purchase price, and
non-accountable expense allowance of $710.84, equal to 1% of the aggregate purchase price for the First Triton Shares. In addition, the
Company issued a Tail Warrant to Boustead for the purchase of 18,439 shares of Class B Common Stock, equal to 7% of the number of the
First Triton Shares, with an exercise price of $0.26894 per share, equal to the purchase price per share of the First Triton Shares.
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Under a Second Amendment
to Amended and Restated Closing Agreement (the “Second Triton Amendment”), dated as of December 30, 2023, the Company and
Triton agreed to amend the Amended A&R Closing Agreement to provide that the Amended A&R Closing Agreement will expire on March
31, 2024, instead of December 30, 2023. The Second Triton Amendment did not amend any of the other provisions of the Amended A&R
Closing Agreement.
Copies of the Closing
Agreement, the Amended and Restated Closing Agreement, the First Triton Amendment, the Second Triton Amendment, the form of the Triton
Pre-Funded Warrants, and the form of the warrants issuable to Boustead in connection with the Amended and Restated Closing Agreement,
as amended, are each attached to the Annual Report as Exhibit 10.25, Exhibit 10.26, Exhibit 10.27, Exhibit 10.30, Exhibit 4.6, and the
description above is qualified in its entirety by reference to such exhibit.
Unless otherwise stated above, the issuances
of these securities were made in reliance upon exemptions provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of
Regulation D thereunder for the offer and sale of securities not involving a public offering and in reliance on similar exemptions under
applicable state laws.
Purchases of Equity Securities
The following table provides information about
our repurchases of common stock during the three months ended December 31, 2023:
Period
Total Number of Shares Purchased
Average Price
Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
October 1, 2023 – October 31, 2023
-
$ -
-
1,250,000
November 1, 2023 – November 30, 2023
92,000
$ 0.7592
92,000
1,158,000
December 1, 2023 – December 31, 2023
158,000
$ 0.6541
250,000
1,000,000
(1) On November 27, 2023, the Company announced that its board of
directors has approved a stock repurchase program to purchase up to an aggregate of 1,250,000 shares of its outstanding Class B Common
Stock. Acquisitions pursuant to this stock repurchase program may be made through a combination of open market repurchases in compliance
with Rule 10b-18 (“Rule 10b-18”) promulgated under the Exchange Act, privately negotiated transactions, and/or other
transactions at the Company’s discretion. The Company expects to finance any stock repurchases with existing cash balances. The
stock repurchase program may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common
stock. The stock repurchase program will expire on November 21, 2024, unless otherwise modified by the board of directors.
All shares of Class B Common Stock purchased during the three months ended December 31, 2023, were repurchased pursuant to this publicly-announced
repurchase program and were repurchased in compliance with Rule 10b-18.
ITEM
6. [RESERVED]
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