Business Context and Reporting Period
This Form 8-K was filed by AIT Therapeutics, Inc. (not Beyond Air, Inc.) on August 10, 2018. The company is an emerging growth company focused on developing a nitric oxide (NO) generator and delivery system for use with breathing masks and ventilators. The filing reports the entry into a material definitive agreement to raise capital.
Key Financial Metrics and Transaction Details
- Commitment Fee: The company paid Lincoln Park Capital Fund, LLC a non-refundable commitment fee of $500,000.
- Total Offering Capacity: The company has the right to sell up to $20,000,000 of common stock over a 36-month period.
- Initial Purchase Option: The company may sell up to 117,000 shares at a fixed price of $4.50 per share, generating up to $526,500 in gross proceeds.
- Regular Purchase Terms: Subsequent sales are subject to a minimum closing price of $1.00 per share. There is no upper price limit. Single purchase obligations are capped at $750,000.
- Ownership Limit: Sales are restricted if they would cause Lincoln Park to beneficially own more than 4.99% of the company's common stock.
Material Changes and Unusual Items
The primary material change is the establishment of an "at-the-market" equity offering facility. This agreement provides the company with a flexible mechanism to raise capital but includes a significant immediate cash outflow of $500,000 for the commitment fee. The filing does not provide comparative financial data (revenue, profit, or cash flow) as this is a current report regarding a specific event rather than a periodic financial statement.
Guidance, Outlook, and Risks
Use of Proceeds: Funds raised will be used for general corporate purposes, specifically the development of the NO generator and preparation for pivotal studies in bronchiolitis and nontuberculous mycobacteria (NTM) lung infections.
Risks and Contingencies:
- Market Price Floor: The company cannot sell shares under the regular purchase terms if the closing price falls below $1.00 per share.
- Variable Rate Restriction: The company is restricted from entering into other variable rate transactions (e.g., floating conversion rate securities) for 36 months from the agreement date or commencement date.
- Termination: The agreement automatically terminates after 36 months or upon the sale of the full $20,000,000. The company may terminate the agreement at any time at no cost.
Investor Verification Checklist
- Verify the current stock price relative to the $1.00 minimum threshold required for regular purchases.
- Confirm the impact of the $500,000 commitment fee on the company's current cash position.
- Review the full text of the Purchase Agreement (Exhibit 10.1) for specific adjustment formulas and limitations.
- Monitor the filing of the Registration Statement required within 40 business days of the execution date.
- Assess the company's progress on the nitric oxide generator and pivotal studies to evaluate the necessity of the capital raise.