As previously disclosed, on November 17, 2023, the Company issued Senior Convertible Promissory Notes (collectively, the “November 2023 Senior Convertible Notes”), in an aggregate amount of $4.0 million, to several existing lenders and investors in the Company, including Israel Biotech Fund I, L.P., Israel Biotech Fund II, L.P., Arkin Bio Ventures L.P. and Biotel Limited (the “Noteholders”). The Senior Convertible Notes are convertible into shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at any time at the option of the Noteholders, and are subject to mandatory conversion upon certain events, including a change of control transaction and certain financing transactions involving the Company, at a conversion price equal to the lower of (i) 50% of the Common Stock’s price per share as of market close on November 16, 2023 and (ii) 50% of the Common Stock’s price per share as of the close of market on the Trading Day immediately prior to the date of the Notice of Conversion, subject to certain adjustments. In connection with the issuance of the November 2023 Senior Convertible Notes, the Company issued to the Noteholders warrants to purchase an aggregate of 15,000,000 shares of the Common Stock with an exercise price equal to the lower of (A) 50% of the Common Stock’s price per share as of market close on November 16, 2023 and (ii) 50% of the Common Stock’s price per share as of the close of market on the Trading Day immediately prior to the date of the Notice of Exercise of the warrant, subject to adjustment, which exercise may be on a cashless basis.
Pursuant to the Side Letter Agreement (New Notes) between the Noteholders and the Company also entered into on November 17, 2024, the Noteholders have the right to lend an additional $4.0 million dollars to the Company on the same terms, including warrant coverage. This right is exercisable until the earliest of (i) May 17, 2024, (ii) the date of consummation of a Change of Control Transaction, and (iii) the date of consummation of a Financing Transaction (both as defined in the such Side Letter Agreement).
On March 1, 2024, the Company issued Senior Convertible Promissory Notes to the Noteholders (collectively, the “March 2024 Senior Convertible Notes”), in substantially the same form as the November 2023 Senior Convertible Notes, in connection with the loan by the Noteholders to the Company an additional $2.0 million, pursuant to their rights under the Side Letter Agreement (New Notes). In connection with the issuance of the March 2024 Senior Convertible Notes, the Company issued to the Noteholders warrants to purchase an aggregate of 7,500,000 shares of the Common Stock on the same terms as the warrants issued on November 17, 2023.
The shares of Common Stock issuable upon conversion of the March 2024 Senior Convertible Notes and such warrants are covered by the Registration Rights Agreement dated as of November 17, 2023 entered into by the Company and the Noteholders providing to the Noteholders customary rights with respect to the registration of the shares of Common Stock issuable upon conversion of the notes or exercise of the warrants under the Securities Act of 1933, as amended.
The March 2024 Senior Convertible Notes, the warrants issued in connection therewith, and the shares of Common Stock issuable pursuant to the conversion of such notes and the exercise of such warrants, were offered and sold pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, afforded by Section 4(a)(2) thereof, for the sale of securities not involving a public offering.
The foregoing summaries of the March 2024 Senior Convertible Notes and the warrants issued in connection with the March 2024 Senior Convertible Notes do not purport to be complete and are qualified in their entireties by reference to the full copies of such agreements and instruments, which are attached as exhibits 10.1 and 10.2, respectively, to this Form 8-K and incorporated into this Item 2.03 by reference.
