Item 1.01 |
Entry into a Material Definitive Agreement. |
The Offering
On November 13, 2022, Surgalign Holdings, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with a single institutional investor pursuant to which the Company agreed to sell, in a registered direct offering (the “Offering”) priced at the market under Nasdaq rules, an aggregate of (i) 740,000 shares (the “Shares”) of its common stock, par value $0.001 per share (the “Common Stock”), (ii) pre-funded warrants (the “Pre-Funded Warrants”) exercisable for up to an aggregate of 5,260,000 shares of Common Stock, (iii) Series A warrants (the “Series A Warrants”) exercisable for up to an aggregate of 6,000,000 shares of Common Stock and (iv) Series B warrants exercisable for up to an aggregate of 1,500,000 shares of Common Stock (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”). The offering price for each share of Common Stock and accompanying Warrants is $2.00 and the offering price for each Pre-Funded Warrant and accompanying Warrants is $1.999.
The Offering is expected to close on or about November 16, 2022, subject to the satisfaction of customary closing conditions.
The net proceeds of the Offering, after deducting the placement agent’s fees and expenses and other estimated Offering expenses payable by the Company and excluding the net proceeds, if any, from the exercise of the Warrants, are expected to be approximately $10.8 million. The Company intends to use the net proceeds from the Offering for working capital and general corporate purposes, including implementing corporate wide cost cutting strategies, preparation for approval, utilization and ongoing development of our digital health offerings.
In the Purchase Agreement, the Company has agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or file any registration statement or prospectus, or any amendment or supplement thereto for 90 days after the closing date of the Offering, subject to certain exceptions. In addition, the Company has agreed not to effect or enter into an agreement to effect any issuance of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock involving a variable rate transaction (as defined in the Purchase Agreement) until the one-year anniversary of the closing date of the Offering, subject to certain exceptions.
The Purchase Agreement contain customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the purchasers, including for liabilities arising under the Securities Act (as defined below), other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Purchase Agreement were made only for the purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements, and may be subject to limitations agreed upon by the contracting parties.
The form of Purchase Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K. The foregoing summary of the terms of the Purchase Agreement is subject to, and qualified in its entirety by the form of such document, which is incorporated herein by reference.
Terms of the Pre-Funded Warrants
Each Pre-Funded Warrants is exercisable for one share of Common Stock at an exercise price of $0.001 per share and will expire when exercised in full. The Company is prohibited from effecting an exercise of any Pre-Funded Warrants to the extent that such exercise would result in the number of shares of Common Stock beneficially owned by such holder and its affiliates exceeding 9.99% of the total number of shares of Common Stock outstanding immediately after giving effect to the exercise, which percentage may be increased or decreased at the holder’s election not to exceed 9.99%.