ScanTech signs term sheet for $20M financing

ScanTech (STAI) AI Systems entered into a non-binding term sheet with ARC Group for a proposed $20 million subordinated convertible note facility financing. The Company believes that this prospective financing will complement and operate alongside the Company’s previously announced ARC Investment Agreement and Equity Line of Credit, providing ScanTech with greater flexibility in managing working capital, supporting ongoing commercial deployments, and strengthening its balance sheet as it executes its near-term growth objectives. Under the term sheet, the Company would have access to up to $6 million upon the initial closing, following the filing of a registration statement on Form S-1 with the U.S. Securities and Exchange Commission and receipt of required shareholder approvals. Subsequent tranches of $2 million each are expected to be available every forty-five trading days after the first tranche, subject to the Company not being in default and other customary conditions. The convertible notes contemplated by the term sheet are subordinated convertible notes bearing a 9% annual dividend and a 3% original issue discount, and are convertible into shares of the Company’s common stock at a price equal to 110% of the closing price of the common stock on the trading day prior to signing the term sheet, subject to a $1.00 per share floor. The term sheet also contemplates five-year warrants representing up to 30% of each disbursed tranche, with an exercise price initially set at the average closing price of the common stock for the five trading days immediately preceding the closing of each tranche, subject to customary anti-dilution adjustments.