Azio AI Holdings, Inc. has entered into a standby equity purchase agreement (SEPA) with YA II PN, Ltd., a Cayman Islands exempt limited company, dated September 25, 2026. The agreement provides for a $3.5 million pre-paid advance to be issued in two tranches, evidenced by convertible promissory notes.
The first tranche of $3.0 million was disbursed on September 25, 2026. The second tranche of $0.5 million is scheduled to be advanced on the second trading day following the effectiveness of a resale registration statement. The promissory notes accrue interest at an annual rate of 6%, which increases to 18% upon the occurrence of an Event of Default.
Under the terms of the agreement, the Investor has the right to convert outstanding principal into shares of common stock at a conversion price equal to 92% of the lowest daily volume-weighted average price (VWAP) over a five-day period preceding the conversion date. The company also has the right to require the Investor to purchase up to $50 million in common stock over the life of the agreement.
Shares issued under the SEPA are subject to a volume limitation and a maximum issuance cap of 3,473,960 shares, which represents 19.99% of the outstanding shares. Additionally, the company issued warrants to the Investor for 1,735,758 shares with an exercise price of $0.01 per share and paid a $50,000 structuring fee.
The agreement includes a registration rights provision requiring the company to file a registration statement covering the resale of up to 28,000,000 shares within 30 days of the agreement's execution. The SEPA is set to automatically terminate on September 25, 2029, subject to the repayment of the promissory notes and debentures.
