DEF 14A: Spectral AI Sets Date for 2024 Annual Stockholders Meeting, Proposes Director Elections and Incentive Plan Ratification

Sentiment:

Proxy Statement 4 April 2024 11:01 AM

Spectral AI announces its 2024 Annual Meeting of Stockholders to be held on May 14, 2024, to vote on director elections, ratification of the 2023 Long Term Incentive Plan, appointment of KPMG LLP as the independent auditor, and authorization for share issuance to YA II PN, Ltd.

Capital raiseThe company has entered into a Purchase Agreement with Yorkville, allowing the company to sell up to $30.0 million of its shares of Common Stock.Yorkville has agreed to advance up to $12.5 million in convertible promissory notes, paid in three tranches.The first tranche of $5.0 million was disbursed on March 20, 2024, with a fixed conversion price of $3.16.The second tranche of $5.0 million will be advanced after the registration statement is declared effective or shareholder approval is obtained.The third tranche of $2.5 million will be advanced sixty days following the second tranche closing.The purchase price for each tranche is 92.0% of the principal amount.Yorkville may convert the Convertible Notes into shares of the company's common stock at any time at a fixed conversion price equal to (i) in respect of the Convertible Note issued in connection with the first Pre-Paid Advance, $3.16, and (ii) in respect of the Convertible Notes issued in connection with the second and third Pre-Paid Advances, a price per share equal to 120% of the average of the daily VWAPs during the three consecutive trading days immediately preceding the issuance date of each Convertible Note.Beginning on the forty-fifth (45th) day following the issuance date of Convertible Note issued in connection with the first Pre-Paid Advance, and continuing on the same day of each successive month thereafter, (each, an Installment Date), the Company shall repay a portion of the outstanding balance of the Pre-Paid Advance in an amount equal to (i) $1,750,000, provided however, in respect of any Installment Date prior to the closing of the second Pre-Paid Advance, $750,000 (the Installment Principal Amount), plus (ii) the a payment premium of 7% of such Installment Principal Amount, and (iii) accrued and unpaid interest hereunder as of each Installment Date (collectively, the Installment Amount).At any time or times on or after any Installment Date, the Investor shall be entitled to convert any portion of any due and unpaid Installment Amount outstanding under a Convertible Note until such amount has been paid into shares at a price per share equal to 85% of the lowest daily VWAP during the 10 consecutive Trading Days immediately preceding the Conversion Date, but which Variable Price shall not be lower than the $0.47.

Summary

Spectral AI, Inc. will hold its 2024 Annual Meeting of Stockholders on May 14, 2024, at 9:30 a.m. Central Daylight Time, at its corporate headquarters in Dallas, TX.
Stockholders of record as of March 25, 2024, are eligible to vote at the meeting.
The meeting's agenda includes the election of six directors, ratification of the Spectral AI, Inc. 2023 Long Term Incentive Plan, and ratification of the appointment of KPMG LLP as the company's independent registered public accounting firm for the 2024 fiscal year.
Additionally, stockholders will vote on authorizing the reservation and issuance of common stock shares to YA II PN, Ltd. (Yorkville) under a Standby Equity Purchase Agreement dated March 20, 2024.
As of April 2, 2024, there were 17,482,333 shares of Common Stock outstanding and entitled to vote at the Annual Meeting.
The company has elected to provide access to proxy materials over the internet.
Stockholders can attend the meeting in person or virtually by registering in advance at www.proxydocs.com/MDAI.
Questions for the meeting must be submitted in advance by 10:59 p.m. CDT on May 13, 2024.

Sentiment

Score: 6

Explanation: The document is neutral in tone, primarily conveying factual information about the upcoming annual meeting and proposals for stockholder vote. The potential capital raise is a mixed bag, providing needed capital but diluting existing shareholders.

Positives

The company is seeking stockholder approval for a new long-term incentive plan, which could help attract and retain key employees.
The company is seeking stockholder approval for the reservation and issuance of shares to YA II PN, Ltd. which will provide additional sources of capital to the Company.

Negatives

The company is seeking stockholder approval for the reservation and issuance of shares to YA II PN, Ltd. which will dilute the percentage ownership interest of all stockholders, will dilute the book value per share of the Common Stock and will increase the number of the Company's outstanding shares, which could depress the market price of the Common Stock.

Risks

Failure to obtain stockholder approval for the share issuance to YA II PN, Ltd. may limit the company's ability to utilize the entirety of the CEF for the benefit of our financing obligations.
The issuance of shares of Common Stock to Yorkville will dilute the percentage ownership interest of all stockholders, will dilute the book value per share of the Common Stock and will increase the number of the Company's outstanding shares, which could depress the market price of the Common Stock.

Future Outlook

The company seeks to obtain stockholder approval to potentially sell additional shares of Common Stock above the Exchange Cap as is available pursuant to the Purchase Agreement.

Industry Context

This announcement is a routine part of corporate governance, ensuring stockholders have a voice in key decisions such as electing directors, approving incentive plans, and ratifying the appointment of auditors.

Stakeholder Impact

Stockholders will be directly impacted by the decisions made at the Annual Meeting, including the election of directors and approval of the incentive plan.
Employees may be affected by the approval of the 2023 Long Term Incentive Plan.
The potential share issuance to YA II PN, Ltd. could impact the market price of the company's stock.

Next Steps

Stockholders should review the proxy materials and vote on the proposals.
The company will hold the Annual Meeting on May 14, 2024, and announce the results.

Key Dates

Date	Description
March 20, 2024	Date of the Standby Equity Purchase Agreement with YA II PN, Ltd.
March 25, 2024	Record date for determining stockholders eligible to vote at the Annual Meeting.
April 2, 2024	Date as of which share ownership information is presented.
April 4, 2024	Date of the Notice of Annual Meeting of Stockholders and Proxy Statement.
May 13, 2024	Deadline for submitting questions for the Annual Meeting (10:59 p.m. CDT).
May 14, 2024	Date of the 2024 Annual Meeting of Stockholders (9:30 a.m. CDT).
December 5, 2024	Deadline for stockholder proposals to be considered for inclusion in the 2025 proxy materials.
January 14, 2025	Earliest date for submitting proposals for the 2025 Annual Meeting of Stockholders.
February 13, 2025	Latest date for submitting proposals for the 2025 Annual Meeting of Stockholders.

Keywords

Annual Meeting, Stockholders, Director Election, Incentive Plan, KPMG, YA II PN, Share Issuance, Proxy Statement, Spectral AI

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