8-K: Spectral AI Announces $5 Million Securities Purchase Agreement

Spectral AI, Inc. has entered into a securities purchase agreement for the sale of shares and pre-funded warrants, potentially raising up to $5 million.

Summary

• Spectral AI, Inc. has entered into a securities purchase agreement with certain purchasers to sell shares of common stock and pre-funded warrants.
• The agreement, dated December 6, 2024, allows the company to raise up to approximately $5.0 million.
• The Per Share Purchase Price is $1.66, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
• Purchasers have the option to buy Pre-Funded Warrants instead of Shares, subject to beneficial ownership limitations of 4.99% or 9.99%.
• The closing is expected to occur no later than the second Trading Day following the agreement date.
• The company intends to use the net proceeds from the Offering for working capital and general corporate purposes.
• SP Angel Corporate Finance LLP acted as the exclusive placement agent for the UK element of the offering and will receive a cash fee of 7.00% of the gross proceeds from the sale of the Shares in the offering.
• The company has also agreed to reimburse the Placement Agent for certain expenses incurred in connection with the Offering, including its reasonable fees and expenses of legal counsel.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company is raising capital, it comes at the cost of dilution and fees. The intended use of proceeds for working capital is a standard practice.

Positives

• The agreement provides Spectral AI with access to additional capital, potentially up to $5 million.
• The company intends to use the net proceeds from the Offering for working capital and general corporate purposes.
• The use of a registration statement on Form S-3 allows for a more streamlined offering process.

Negatives

• The offering will dilute existing shareholders' ownership.
• The company is paying a 7% cash commission to the placement agent, which reduces the net proceeds.
• The investors have an option to purchase additional shares of Common Stock (Additional Shares) up to the lesser of (i) $5,000,000 in aggregate proceeds or (ii) the remaining available capacity based on one-third of our public float pursuant to General Instruction I.B.6 of Form S-3 (such amount, the Commitment Amount).

Risks

• The closing of the offering is subject to customary closing conditions.
• The company's actual results could differ materially from forward-looking statements due to various risk factors.
• The investors have an option to purchase additional shares of Common Stock (Additional Shares) up to the lesser of (i) $5,000,000 in aggregate proceeds or (ii) the remaining available capacity based on one-third of our public float pursuant to General Instruction I.B.6 of Form S-3 (such amount, the Commitment Amount).

Future Outlook

The Company currently intends to use the net proceeds from the Offering for working capital and general corporate purposes.

Industry Context

Many small cap companies are finding it difficult to raise capital in the current market. This deal is an example of a smaller company accessing the markets to raise capital for working capital and general corporate purposes.

Comparison to Industry Standards

• Comparable companies such as NanoVibronix, Inc. and Biolase, Inc. have also recently undertaken similar financing activities to bolster their financial positions.
• The terms of this agreement, including the placement agent fee and warrant structure, are generally in line with industry standards for similar offerings by companies of this size and stage of development.

Stakeholder Impact

• Shareholders will experience dilution of their ownership.
• The company will have additional capital to fund its operations.
• The offering could impact the company's stock price.

Next Steps

• The company needs to satisfy the closing conditions to complete the offering.
• The company will use the net proceeds for working capital and general corporate purposes.

Key Dates