Pasithea Therapeutics Corp. — Form 8-K Summary
Reporting date: December 9, 2022; filed December 14, 2022. The filing reports a settlement with the Camac Group and the results of a special shareholder meeting. Pasithea is listed on Nasdaq under KTTA and KTTAW.
Material Agreement and Financial Impact
- Pasithea entered into a Settlement and Cooperation Agreement with the Camac Group, which beneficially owned 3,205,282 shares, approximately 11.0% of Pasithea’s outstanding common stock based on shares outstanding as of November 14, 2022.
- On or about December 13, 2022, the Company agreed to repurchase all 3,205,282 shares at $1.0003 per share, implying consideration of approximately $3.21 million.
- Pasithea also agreed to reimburse the Camac Group’s expenses by up to $689,491. The disclosed obligations therefore represent aggregate cash uses of up to approximately $3.90 million, before any other transaction costs.
- The filing does not provide revenue, earnings, cash flow, margin, debt, cash balance, liquidity, or other operating metrics for the reporting period.
Settlement Terms, Litigation, and Restrictions
- Camac agreed to use reasonable best efforts to vote against or abstain from voting on each proposal at the December 9, 2022 special meeting.
- Within three business days after completion of the share repurchase and expense reimbursement, specified Camac Group entities are to dismiss with prejudice the Delaware Court of Chancery litigation against Pasithea and its board.
- The parties agreed to mutual general releases relating to the Camac Group’s investment, the special meeting, Pasithea’s acquisitions of Alpha 5 Integrin and Allomek Therapeutics, and the litigation.
- During the standstill period, extending from the agreement date through three years after the Company’s 2023 annual meeting, the Camac Group is restricted from supporting proxy contests, calling special meetings, supporting change-of-control transactions, acquiring Company securities, and engaging in certain related activities.
- The parties also agreed not to make statements disparaging one another during the standstill period.
Special Meeting Results
As of the November 9, 2022 record date, 29,248,688 common shares were outstanding. All proposals were denied, including the proposed removal of five directors, the filling of related vacancies, repeal of certain bylaw provisions, and adjournment of the meeting.
| Proposal | For | Against | Abstain | Result |
|---|---|---|---|---|
| Remove Tiago Reis Marques | 6,420,984 | 10,750,297 | 1,994,612 | Denied |
| Remove Alfred Novak | 6,419,802 | 10,750,297 | 1,995,794 | Denied |
| Remove Lawrence Steinman | 6,420,984 | 10,750,297 | 1,994,612 | Denied |
| Remove Simon Dumesnil | 6,423,202 | 10,750,897 | 1,991,794 | Denied |
| Remove Emer Leahy | 6,420,984 | 10,750,297 | 1,994,612 | Denied |
| Fill director vacancies | 6,693,557 | 10,478,142 | 1,994,194 | Denied |
| Repeal specified bylaw provisions | 6,415,202 | 10,755,297 | 1,995,394 | Denied |
| Adjourn meeting | 6,415,202 | 10,754,297 | 1,996,394 | Denied |
Outlook, Risks, and Unusual Items
- The agreement resolves an activist dispute and is intended to end related litigation, subject to completion of the repurchase and expense reimbursement.
- Key execution risks include the timing and funding of the repurchase, payment of the expense reimbursement, filing of the litigation dismissal, and compliance with the standstill and release provisions.
- The repurchase will reduce shares outstanding but also consume cash; the filing does not state the source of funds or the resulting liquidity position.
- The filing provides no financial guidance or operating outlook.
Facts Investors Should Verify
- Whether the 3,205,282-share repurchase and up-to-$689,491 expense reimbursement were completed as scheduled.
- Whether the specified parties filed the promised dismissal with prejudice within three business days.
- The Company’s cash balance, liquidity runway, debt, and subsequent financing needs after the transaction.
- The final reduction in shares outstanding and any effect on ownership concentration.
- The full Settlement and Cooperation Agreement, including the detailed standstill, release, and litigation provisions.
- The apparent difference in the reported “Against” vote totals for the Simon Dumesnil proposal versus other director-removal proposals, as stated in the filing.