Item 1.01. Entry into Material Definitive Agreement.
On March 9, 2023, MedAvail Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with the purchasers set forth on the signature pages thereto (the “Investors”). Pursuant to the Purchase Agreement, the Company agreed to issue and sell to the Investors in a private placement (the “Private Placement”), an aggregate of (i) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 49,813,198 shares (the “Pre-Funded Warrant Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and (ii) Series A warrants (the “Series A Warrants” and collectively with the Pre-Funded Warrants, the “Warrants”), to purchase up to an aggregate of 49,813,198 shares of Common Stock (the “Series A Warrant Shares” and collectively with the Pre-Funded Warrant Shares, the “Warrant Shares”) at a purchase price of $0.3212 per Pre-Funded Warrant and accompanying Series A Warrant.
The issuance of the Pre-Funded Warrant Shares upon exercise of the Pre-Funded Warrants in excess of 19.99% of the shares of Common Stock outstanding prior to the Private Placement and the issuance of the Series A Warrants and the underlying Series A Warrant Shares are subject to stockholder approval under applicable Nasdaq rules (the “Stock Issuance Approval”). The Pre-Funded Warrants have an exercise price of $0.001 per share, are exercisable immediately upon issuance (subject to the limitation described above) and will expire when exercised in full. The Series A Warrants have an exercise price of $0.385440 per share, will be issued following approval of the Stock Issuance Proposal and will expire five years from the issuance date. If the Series A Warrants are exercised in the full, then the Company would receive up to an additional $19.2 million in gross proceeds.
The closing of the Private Placement, pursuant to which the Company received approximately $16 million in gross proceeds before deducting offering expenses, occurred on March 13, 2023, following the satisfaction of customary closing conditions.
The Company intends to use the net proceeds from the Private Placement and the exercise of the Warrants, if any, for general corporate purposes and to fund its strategic initiatives.
The Purchase Agreement contains customary representations, warranties and covenants made solely for the benefit of the parties to the Purchase Agreement. The Purchase Agreement is incorporated herein by reference, but only to provide information regarding the terms of the Purchase Agreement and not to provide with any other factual information regarding the Company or its business, and should be read in conjunction with the disclosures in the Company’s periodic reports and other filings with the Securities and Exchange Commission (the “SEC”). The Purchase Agreement requires that the Company seek stockholder approval for the Stock Issuance Proposal at the next annual meeting of the Company’s stockholders to occur no later than June 14, 2023 and use commercially reasonable efforts to promptly obtain such approval, including seeking such approval at least every six (6) months until approved. The Purchase Agreement also contains covenants from the Investors, representing a majority of the voting stock of the Company prior to and following the closing of the Private Placement, to vote in favor of the Stock Issuance Proposal and certain other proposals set forth in the Purchase Agreement (collectively the “Stockholder Proposals”). Each Investor appointed as proxies, and granted a power of attorney to, Mark Doerr and Ramona Seabaugh, to vote in accordance with the terms of the Purchase Agreement with respect to such Stockholder Proposals if, and only if, such Stockholder (i) fails to vote, or (ii) attempts to vote (whether by proxy, in person or by written consent), in a manner inconsistent with the terms of the Purchase Agreement.
H.C. Wainwright & Co., LLC has acted as the Company’s exclusive financial advisor for the Private Placement.
In connection with the Private Placement, the Company granted registration rights to the Investors pursuant to a Registration Rights Agreement dated as of March 9, 2023 (the “Registration Rights Agreement”), pursuant to which, among other things, the Company will prepare and file, within 60 days of the closing of the private placement with respect to the Pre-Funded Warrants and within 30 days following the issuance of the Series A Warrants with respect to the Series A Warrants, and cause to become effective, with the SEC registration statements to register for resale the shares of Common Stock issued or issuable upon exercise of the Warrants that are sold in the Private Placement and issued at the closing or following stockholder approval of the Stock Issuance Proposal.
The foregoing descriptions of the material terms of the Purchase Agreement, the Registration Rights Agreement and the Warrants are qualified in their entireties by reference to the full texts of the Purchase Agreement, the
Registration Rights Agreement, the forms of the Pre-Funded Warrants and the Series A Warrants which are respectively filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and incorporated herein by reference.