Business Context and Reporting Period
This Form 8-K, dated November 20, 2025, reports material events for KALA BIO, Inc. (KALA) following a severe liquidity crisis. On September 29, 2025, the company received a default notice from its lender, Oxford Finance, LLC, regarding a 2021 Loan Agreement. By October 19, 2025, Oxford swept substantially all of the company's cash, restricted operations to minimal payroll, and terminated most employees. The filing details a restructuring plan executed in late November 2025 to settle the debt, raise new capital, and reorganize leadership.
Key Financial Metrics and Transactions
The filing does not provide standard revenue, profit, or cash flow metrics for a reporting period, as the company was in a distressed state with operations suspended. Key financial figures relate to the restructuring and capital raise:
- Debt Settlement: The company agreed to settle all obligations under the Oxford Loan Agreement (originally defaulted) via a "Settlement Payment" consisting of $2.0 million in cash and 1,620,000 shares of Common Stock.
- Capital Raise (Private Placement): Entered into a Securities Purchase Agreement for up to $6.0 million in aggregate gross proceeds via two closings:
- First Closing: $1.8 million raised from the sale of 900,000 Series AA Preferred Shares at $2.00 per share (completed November 24, 2025).
- Second Closing: Up to $4.2 million potential proceeds from 2,100,000 Series AAA Preferred Shares at $2.00 per share, contingent on stockholder approval.
- Debt Reduction: Upon completion of the initial settlement payment, the outstanding loan amount is deemed reduced by $7,000,000, with all interest and final payments waived.
- Liquidity: Oxford released control over company cash accounts upon issuance of settlement stock, allowing the company to use funds for operations and liabilities.
Material Changes Versus Prior Period
The company has undergone a fundamental operational and financial shift compared to the prior period:
- Operational Status: Transitioned from a state of near-total operational suspension (October 2025) with cash swept by a lender to a restructured entity with access to capital and a new management team.
- Capital Structure: Issued new Series AA and Series AAA Convertible Preferred Stock, altering the equity hierarchy. The Series AA stock ranks senior to Common Stock but junior to existing Series E through I Preferred Stock.
- Debt Obligations: Moved from an active default with foreclosure proceedings to a settlement agreement that waives $7 million of debt and releases liens upon full payment.
- Leadership: Complete overhaul of executive leadership and board composition (detailed below).
Guidance, Outlook, Management Commentary, and Risks
Management Changes:
- Appointments: David Lazar was appointed Chief Executive Officer, Principal Financial Officer, and Class II Director (Chair of the Board) effective November 21, 2025.
- Departures: Mary Reumuth (CFO) was terminated without cause. Todd Bazemore ceased serving as CEO but remains on the Board. Gregory Perry resigned from the Board.
- Settlements: Settlement agreements were reached with Todd Bazemore ($52,400), Mary Reumuth ($37,700), and Kim Brazzell ($36,613) in exchange for waiving severance rights.
- Second Closing: The $4.2 million second tranche of funding is contingent on stockholder approval of a share increase and conversion terms, expected before March 31, 2026.
- Strategic Transaction: The company has agreed to pursue a material strategic alternative transaction within one year of the settlement agreement.
- Future Payments: The company must pay $1.0 million of the cash settlement to Oxford by January 15, 2026, or the date of the stockholder meeting, whichever is earlier. Additionally, 10% of future equity proceeds (up to $1.0 million) will be paid to Oxford.
- Bankruptcy Risk: If the settlement payment is avoided or reduced due to bankruptcy or insolvency, the settlement agreement is void, and the original Loan Agreement resumes full force.
- Listing Status: The company faces risks regarding its ability to maintain its Nasdaq listing.
- Execution Risk: Failure to obtain stockholder approvals or consummate the strategic transaction could jeopardize the remaining funding and debt settlement.
Important Facts for Investor Verification
- Verify the status of the $1.0 million initial cash payment to Oxford Finance due by January 15, 2026.
- Confirm the date and outcome of the Stockholder Meeting required to approve the Second Closing and the Charter Amendment.
- Review the full text of the Series AA and Series AAA Certificate of Designations to understand conversion ratios (55:1 for Series AA; 420:1 for Series AAA) and liquidation preferences.
- Monitor the company's progress in identifying a "material strategic alternative transaction" within the one-year deadline.
- Check for any subsequent filings regarding the resignation of Gregory Perry and the appointment of David Lazar to ensure no undisclosed conflicts of interest.