Business Context and Reporting Period
This Form 8-K is filed by Ra Medical Systems, Inc. (not Catheter Precision, Inc., which is the target of a merger referenced in the text) on March 23, 2023. The report details the closing of a private placement of securities and the conversion of preferred stock following shareholder approval of a merger agreement with Catheter Precision, Inc.
Key Financial Metrics and Capital Structure
- Capital Raised: Approximately $8.0 million in cash received from Armistice Capital Master Fund Ltd.
- Securities Issued:
- 497,908 shares of common stock.
- 7,203 shares of convertible preferred stock (convertible into approx. 4,501,060 common shares).
- 4,999,093 Series F warrants (2-year term, $3.00 exercise price).
- 4,999,093 Series G warrants (6-year term, $3.00 exercise price).
- Transaction Costs: Approximately $640,000 paid in commissions to placement agent Ladenburg Thalmann & Co. Inc.
- Stock Conversion: Approximately 1,974,905 shares of Series X Preferred Stock converted into an equal number of common shares. No cash consideration was paid for this conversion.
Material Changes
The filing reports a significant change in the company's capital structure due to the issuance of new equity and warrants to Armistice Capital. Additionally, a material portion of the Series X Preferred Stock was converted to common stock, increasing the outstanding common share count. The filing notes that the securities issued in the private placement contain no price reset or anti-dilution features.
Outlook, Risks, and Contingencies
- Registration Rights: The Company has agreed to file a resale registration statement for the common stock underlying the newly issued securities.
- Future Conversion Contingency: Approximately 12,674,687 shares of common stock remain underlying unconverted Series X Preferred Stock. These may convert on or after July 9, 2024, contingent upon the Company meeting initial listing requirements of a national stock exchange or being delisted from the NYSE American.
- Regulatory Status: The securities were offered under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D and have not been registered under the Act.
Investor Verification Checklist
- Verify the total number of outstanding common shares post-conversion and post-issuance to assess dilution impact.
- Confirm the terms of the Series F and Series G warrants, specifically the $3.00 exercise price relative to current market value.
- Review the "Amended and Restated Agreement and Plan of Merger" (Exhibit 2.1) for details on the Catheter Precision, Inc. transaction.
- Monitor the status of the resale registration statement filing.
- Assess the likelihood of the Company meeting listing requirements by July 2024 to trigger the remaining Series X Preferred conversion.