aibioChina SXT Pharmaceuticals files securities purchase agreement priced at $0.20 per share
Tickers SXTC
The January 21, 2025 agreement sells up to $2,840,000 of shares at $0.20 each, with warrants for 200 percent of each buyer's shares at $1.00. It also sets a penalty of 2.0 percent of the subscription amount for public information failures.
Key facts
- Company
- China SXT Pharmaceuticals, Inc. (NASDAQ: SXTC)
- News type
- Listings
- Primary source
- China SXT Pharmaceuticals, Inc. 6-K (2025-01-27)
The agreement
China SXT Pharmaceuticals, Inc. (Nasdaq: SXTC) furnished a securities purchase agreement to the Securities and Exchange Commission on a Form 6-K, as Exhibit 99.1. The agreement is dated January 21, 2025 and is between the British Virgin Islands company and purchasers named on its signature pages. Under it, the company agreed to sell up to an aggregate of $2,840,000 of ordinary shares and ordinary share warrants.
The filing relies on Section 4(a)(2) of the Securities Act and Rule 506. Those provisions cover private sales to selected buyers rather than a public offering. The agreement does not say how many shares will be issued in total, but each purchaser receives shares equal to its subscription amount divided by the per share purchase price of $0.20.
The $0.20 price is subject to adjustment for splits, share dividends and similar transactions between the agreement date and closing.
The warrants
At closing each purchaser receives ordinary share warrants for up to 200 percent of its shares. The warrants are exercisable immediately at US$1.00 each, subject to adjustment, and have a term of exercise of five years. The gap between the $0.20 purchase price and the $1.00 warrant exercise price means that buyers hold a right to buy more shares at a price well above the one they paid.
The company also represents that no broker, finder, placement agent or investment banker is owed fees in connection with the transactions. The filing names two law firms: Campbells, which is the company's counsel on British Virgin Islands law, and Hunter Taubman Fischer & Li, LLC, its United States counsel, in New York.
Price reset terms with no visible operation
The agreement also defines a reset date, the seventh calendar day after the agreement date, and a reference price equal to 20 percent of the Nasdaq Minimum Price of the company's ordinary shares, determined on the date of the agreement. The filing's text does not show how either term changes the price or the number of shares. Investors reading the document cannot tell from it whether a reset is ever triggered, so the economic effect of these definitions is unknown.
Penalty for public information failures
The company must keep its shares registered under Section 12(b) or 12(g) of the Exchange Act and file its required reports on time. Starting six months after the agreement date, a failure to meet the current public information requirement of Rule 144 can trigger payments to purchasers. A failure to meet the Rule 144(i) conditions also triggers them for an issuer described in that rule.
The payment is in cash, is described as partial liquidated damages and not as a penalty, and equals 2.0 percent of the aggregate subscription amount of the purchaser's securities. It is due on the day of the failure and on every 30th day after that until the failure is cured. Payments are due on the earlier of the last day of the calendar month in which they arise and the third business day after the failure is cured.
Indemnity, proceeds and closing
The company agrees to indemnify purchasers and related parties for losses from any breach of the agreement, from shareholder actions against them over the transactions, and in connection with any registration statement for resale of the securities. Buyers may pay by wire or by surrendering debt the company owes them. The agreement bars using the proceeds to satisfy company debt other than ordinary trade payables, to redeem shares, or to settle litigation. Closing occurs when all transaction documents have been signed and delivered and the conditions to purchase and sale are met or waived. The agreement does not set a fixed closing date.
What comes next
The next steps under the agreement are the closing, the issue of shares and warrants to each purchaser, and the filing of a resale registration statement. The Reset Date falls seven calendar days after January 21, 2025, and the public information penalty can begin six months after that date.