8-K: Cibus Inc. Announces $10.85 Million Registered Direct Offering

Cibus Inc. enters into securities purchase agreements for a registered direct offering of shares, warrants, and pre-funded warrants, aiming to raise $10.85 million.

Summary

• Cibus, Inc. has entered into securities purchase agreements for a registered direct offering with certain investors, including the CEO, Rory Riggs.
• The offering includes 4,340,000 shares of Class A Common Stock and accompanying common warrants, as well as pre-funded warrants to purchase 4,700,000 shares of Class A Common Stock.
• The combined offering price is $2.50 per share and accompanying common warrant, and $2.4999 per pre-funded warrant and accompanying common warrant.
• The common warrants have an exercise price of $2.50 per share and expire five years after stockholder approval.
• The pre-funded warrants are immediately exercisable with an exercise price of $0.0001.
• The offering closed with respect to a certain Investor on January 22, 2025 and is expected to close on or about January 24, 2025 with respect to Mr. Riggs and the other Investors, subject to customary closing conditions.
• The company has agreed to certain restrictions on the issuance and sale of its Class A Common Stock or Common Stock Equivalents during the 60-day period following the closing of the Offering.
• Executive officers and directors have agreed not to dispose of or hedge any shares of Class A Common Stock or securities convertible into shares of Class A Common Stock during the 60-day period following the closing of the Offering.
• Certain investors holding warrants to purchase 1,198,040 shares of Class A Common Stock have agreed to amend those warrants to reduce the exercise price to $2.50 per share, reduce the trading condition threshold to $5.00 per share, and extend the termination date to five years following the closing of the Offering.
• A.G.P./Alliance Global Partners acted as the placement agent for the offering and will receive a fee of 7.0% or 2.0% of the aggregate proceeds from the sale of the Shares, Common Warrants and Pre-Funded Warrants to certain Investors.

Sentiment

Score: 6

Explanation: The announcement is neutral. While it secures funding, it also dilutes existing shares and introduces potential future dilution from warrant exercises. The terms are fairly standard for this type of offering.

Positives

• The offering provides Cibus, Inc. with $10.85 million in gross proceeds for working capital and general corporate purposes.
• The pre-funded warrants provide immediate capital to the company.
• Amendment of existing warrants reduces the exercise price, potentially increasing the likelihood of exercise and future capital influx.
• Lock-up agreements from executive officers and directors prevent stock disposal for 60 days, stabilizing the stock price.

Negatives

• The offering dilutes existing shareholders' equity.
• Restrictions on the company issuing further equity for 60 days may limit financial flexibility.
• The company is paying fees to the placement agent.
• The company is required to seek stockholder approval for the warrants.

Risks

• The company's stock price could be negatively impacted by the new issuance of shares.
• The company may not receive stockholder approval for the warrants.
• The company's operational Soybean platform may not be successful.
• The company may be unable to meet the trading condition of $5.00 per share for 15 consecutive days.

Future Outlook

The company intends to use the net proceeds from the offering for working capital and general corporate purposes.

Industry Context

This type of registered direct offering is a common method for small to mid-sized companies to raise capital quickly. The use of warrants is intended to make the offering more attractive to investors.

Comparison to Industry Standards

• Comparable companies in the biotechnology sector, such as Amyris and Precigen, have also utilized registered direct offerings with warrants to raise capital.
• The terms of this offering, including the warrant coverage and exercise price, are generally in line with industry standards for similar transactions.
• For example, Amyris's offering in 2022 included warrants with an exercise price close to the then-current market price, similar to Cibus's offering.
• Precigen's offering in 2023 also included warrants, but with a slightly higher warrant coverage ratio.

Related Party Transactions

• The CEO, Rory Riggs, is participating in the offering as a purchaser.

Stakeholder Impact

• Shareholders will experience dilution due to the issuance of new shares and potential future dilution from warrant exercises.
• The company will have additional capital to fund its operations.
• The company's executive officers and directors are subject to a 60-day lock-up period, restricting their ability to sell shares.

Next Steps

• The company will close the offering with respect to Mr. Riggs and the other Investors on or about January 24, 2025, subject to customary closing conditions.
• The company will seek stockholder approval for the warrants.
• The company will file the Prospectus Supplement with the Commission.
• The company will apply to list the Shares and Warrant Shares on the Nasdaq Capital Market.

Key Dates