TWFG, Inc. 10-Q

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Recent Sales of Unregistered Securities In connection with the reorganization transactions (as defined in the IPO Prospectus), we issued (i) 2,161,874 shares of the Company’s Class A common stock in exchange for LLC Units, (ii) 7,277,651 shares of the Company’s Class B common stock for consideration of $0.00001 per share (or $72.78 in the aggregate) and (iii) 33,893,810 shares of the Company’s Class C common stock for consideration of $0.00001 per share (or $338.94 in the aggregate), to certain members of TWFG Holding Company, LLC. The shares were issued in reliance on the exemption contained in Section 4(a)(2) of the Securities Act, on the basis that the transaction did not involve a public offering. Use of Proceeds On July 19, 2024, we closed our IPO in which we sold 12,650,000 shares of Class A common stock, including 1,650,000 shares of Class A common stock pursuant to the underwriters’ full exercise of their 30-day option, at a public offering price of $17.00 per share. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to our Registration Statement on Form S-1 (File No. 333-280439), which was declared effective by the SEC on July 17, 2024. J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC acted as joint lead book-running managers of the IPO and as representatives of the underwriters. We received approximately $194.1 million in net proceeds after deducting underwriting discounts and commissions of $15.1 million and offering expenses of approximately $5.9 million. We used the net proceeds from the IPO (including the net proceeds received from the underwriters’ exercise of their option to purchase additional shares of Class A common stock) to acquire a number of newly issued LLC Units equal to the number of shares of Class A common stock in the IPO from TWFG Holding Company, LLC, at a purchase price per LLC Unit equal to the initial public offering price of Class A common stock after underwriting discounts and commissions. TWFG Holding Company, LLC used a portion of the proceeds it received from the sale of LLC Units to pay the expenses in connection with the IPO and the reorganization transactions and to repay in full outstanding debt under our Revolving Facility in the amount of $41.0 million.