aibioKairos Pharma closes $3,497,500 private placement of pre-funded units and warrants
Tickers KAPA
Kairos Pharma (NYSE American: KAPA) sold 2,500,000 pre-funded units, each with a common warrant at $1.40 per share. Boustead Securities and D. Boral Capital were co-placement agents.
Key facts
- Company
- Kairos Pharma, Ltd. (AMEX: KAPA)
- News type
- Financings
- Primary source
- Kairos Pharma, LTD. Form 8-K filed January 17, 2025 (SEC EDGAR)
Kairos Pharma, Ltd. closed a private placement on January 16, 2025, selling 2,500,000 pre-funded units for a total purchase price of $3,497,500, or $1.399 per unit. The company reported the closing in a Form 8-K filed January 17, 2025, signed by chief executive John S. Yu. The company's cover page lists its common stock on the NYSE American under the symbol KAPA.
What the investor bought
Each unit combined a pre-funded warrant with a common warrant. The pre-funded warrant lets the holder buy one share at $0.001 per share, and the company says an additional $2,500 is payable when those warrants are exercised in full. The common warrant lets the holder buy one and one half shares at $1.40 per share.
The deal was first agreed on January 14, 2025, under a securities purchase agreement and a registration rights agreement. On January 16, the two sides signed an amended and restated purchase agreement before the closing. That amendment added a requirement that Kairos obtain shareholder approval before issuing more than 19.99% of its common stock. It also made the common warrants immediately exercisable and cut their term from 5.5 years to five years.
Who sold the deal
The 8-K says that Boustead Securities, LLC and D. Boral Capital LLC acted as co-placement agents. On January 16, Kairos signed a placement agent and advisory services agreement with Boustead. Boustead's agreement describes it as a California limited liability company, and it says Boustead engaged on an exclusive basis and on a best efforts basis. It also says Boustead will not act as an underwriter.
The placement agent agreement sets the fees. At closing, Kairos paid the agents a cash commission of 8% of the gross proceeds, which includes a 1% non-accountable expense fee. It also issued placement agent warrants for 175,000 shares at $1.40 per share. The 8-K says the cash and warrant compensation is split equally between Boustead and D. Boral.
Under the agreement, Kairos also agreed to reimburse Boustead's placement agent counsel fees of USD$75,000, payable at the initial closing. The purchase agreement names Dorsey & Whitney LLP as company counsel and Sichenzia Ross Ference Carmel LLP as placement agent counsel. The agreement's notice section lists Christopher P. Parrington, Esq., of Boustead & Company Limited, as a copy recipient for Boustead. It lists Megan J. Penick, Esq., of Dorsey & Whitney LLP, as a copy recipient for the company.
The placement agent agreement also provides for warrants to purchase 7% of the gross amount of any debt financing, divided by a strike price set at the lowest of the investors' price, any conversion price or any warrant exercise price in that financing.
The terms that limit the company
The purchase agreement restricts how Kairos can use the money. The company must use the net proceeds "for working capital purposes." It may not use them to pay down debt, other than trade payables in the ordinary course. It may not use them to redeem common stock or equivalents, to settle outstanding litigation, or in violation of foreign corrupt practices or sanctions rules.
The purchase agreement also refers to lock-up agreements with the company's directors, officers and holders of 10% or more of its common stock. The securities were sold without registration under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D, and the company must file a Form D.
Registration and approval deadlines
Kairos must file a resale registration statement for the pre-funded units within 15 days of the closing. The registration must become effective within 30 days after that, subject to SEC review.
What the filing leaves out
The 8-K and its exhibits describe the deal terms and the fees. They do not give Kairos's cash balance, its operating losses, or how long the money will last. The filing does not say what the company plans to spend the $3,497,500 on beyond the restrictions in the purchase agreement.
The fee load is also worth weighing. The cash commission, the agent warrants, the $75,000 counsel reimbursement and the common warrant coverage all add cost on top of the headline proceeds.