On May 25, 2023, Aptose Biosciences
Inc. (the “Company”) and Keystone Capital Partners, LLC (“Keystone”), entered into a common share
purchase agreement (the “Purchase Agreement”), which provides that subject to the terms and conditions set forth therein,
the Company may sell to Keystone up to the lesser of (i) $25,000,000 of the Company’s common shares, no par value (the “Common
Share”) and (ii) the Exchange Cap (as defined below) (subject to certain exceptions provided in the Purchase Agreement) (the
“Total Commitment”), from time to time during the term of the Purchase Agreement.
Additionally, on May 25,
2023, the Company and Keystone entered into a registration rights agreement (the “Registration Rights Agreement”),
pursuant to which the Company agreed to file a registration statement with the United States Securities and Exchange Commission (“SEC”)
covering the resale of Common Shares that are issued to Keystone under the Purchase Agreement.
Under the terms and subject
to the satisfaction of the conditions set forth in the Purchase Agreement, the Company has the right, but not the obligation, to sell
to Keystone, and Keystone is obligated to purchase, up to the Total Commitment. Such sales of Common Shares by the Company, if any, will
be subject to certain limitations as set forth in the Purchase Agreement, and may occur from time to time, at the Company’s sole
discretion, over a 24-month period commencing on the date that all of the conditions to the Company’s right to commence such sales
are satisfied, including that the registration statement referred to above is declared effective by the SEC and a final form of the prospectus
included therein is filed with the SEC (the “Commencement Date”). Keystone has no right to require the Company to sell
any Common Shares to Keystone, but Keystone is obligated to make purchases as the Company directs, subject to satisfaction of the conditions
set forth in the Purchase Agreement.
Upon entering into the Purchase
Agreement, the Company agreed to issue to Keystone an aggregate of 377,336 Common Shares (the “Commitment Shares”)
as consideration for Keystone’s commitment to purchase Common Shares upon the Company’s direction under the Purchase Agreement.
The Company issued 113,201 Common Shares, or 30% of the Commitment Shares, on the date of the Purchase Agreement. An additional 113,201
Common Shares, or 30% of the Commitment Shares, shall be issued to Keystone 90 days following the Commencement Date. The remaining 150,934
Common Shares, or 40% of the Commitment Shares, shall be issued to Keystone 180 days following the Commencement Date. The Company also
agreed to pay Keystone up to $25,000 for its reasonable expenses under the Purchase Agreement.
Under the Purchase Agreement,
the Company may, at its discretion, from time to time from and after the Commencement Date, direct Keystone to purchase (a “Fixed
Purchase”) up to 50,000 Common Shares on any trading day on which the closing sale price of the Common Shares is not below $0.25
per share on the Nasdaq Capital Market (“NASDAQ”); provided, however that, Keytone’s committed obligation under
any single Fixed Purchase shall not exceed $50,000.
In addition to Fixed Purchases,
and provided that the Company has directed Keystone to purchase the maximum allowable amount of 50,000 Common Shares in a Fixed Purchase,
the Company also may, at its discretion, from time to time from and after the Commencement Date, direct Keystone to purchase additional
Common Shares on the trading day immediately following the purchase date for such Fixed Purchase (each, a “VWAP Purchase”)
and, under certain circumstances set forth in the Purchase Agreement, direct Keystone to purchase additional Common Shares on the same
trading day as such VWAP Purchase (each, an “Additional VWAP Purchase”), in each case upon the terms and subject to
the conditions set forth in the Purchase Agreement.
Under
applicable rules of NASDAQ, in no event may the Company issue or sell to Keystone under the Purchase Agreement more than 18,866,776 Common
Shares (including the Commitment Shares), which number of Common Shares is equal to 19.99% of the Common Shares outstanding immediately
prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless
(i) the Company first obtains stockholder approval to issue Common Shares in excess of the Exchange Cap in accordance with applicable
Nasdaq listing rules, or (ii) at the time we have issued Common Shares equal to the Exchange Cap and at all times thereafter, the average
price per Common Share for all Common Shares sold by us to Keystone under the Purchase Agreement equals or exceeds $0.44 per share, such
that the Exchange Cap limitation would no longer apply to issuances and sales of Common Shares by us to Keystone under the Purchase Agreement
under applicable NASDAQ listing rules.
The Purchase Agreement also
prohibits the Company from directing Keystone to purchase any Common Shares if those shares, when aggregated with all other Common Shares
then beneficially owned by Keystone and its affiliates, would result in Keystone having beneficial ownership of more than 4.99% of the
outstanding Common Shares or if such shares proposed to be issued and sold would materially affect control of the company pursuant to
the rules of the Toronto Stock Exchange.
The net proceeds under the
Purchase Agreement to the Company will depend on the frequency of sales and the number of Common Shares sold to Keystone and prices at
which the Company sells Common Shares to Keystone. The Company expects that any net proceeds received by the Company from such sales to
Keystone will be used for working capital and general corporate purposes. Management of the Company believes that it is in the Company’s
best interests to have the flexibility to sell Common Shares pursuant to the Purchase Agreement, subject to market conditions.
The foregoing descriptions
of the Purchase Agreement and the Registration Rights Agreement are qualified in their entirety by reference to the full text of the Purchase
Agreement and the Registration Rights Agreement, each of which is attached hereto as Exhibit 10.1 and Exhibit 10.2, respectively, and
each of which is incorporated herein by reference.
The
Purchase Agreement and Registration Rights Agreement contain customary representations and warranties, covenants and indemnification provisions
that the parties made to, and solely for the benefit of, each other in the context of all of the terms and conditions of such agreements
and in the context of the specific relationship between the parties thereto. Keystone has covenanted not to cause or engage in any manner
whatsoever, any direct or indirect short selling or hedging of the Common Shares. The provisions of the Purchase Agreement and Registration
Rights Agreement, including any representations and warranties contained therein, are not for the benefit of any party other than the
parties thereto and are not intended as documents for investors and the public to obtain factual information about the current state of
affairs of the parties thereto. Rather, investors and the public should look to other disclosures contained in our annual, quarterly and
current reports we file with the SEC. There are no assurances that the Company will sell to Keystone Common Shares pursuant to the Purchase
Agreement.
This Current Report on Form
8-K shall not constitute an offer to sell or a solicitation of an offer to buy any Common Shares, nor shall there be any sale of Common
Shares in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state or other jurisdiction.
Forward-Looking Statements
Certain statements and assumptions
in this Current Report contain or are based upon “forward-looking” information and are being made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this Current Report include, among others,
statements about the Company’s strategy and future plans. These forward-looking statements are subject to risks and uncertainties.
When we use the words “will likely result,” “may,” “anticipate,” “estimate,” “should,”
“expect,” “believe,” “intend,” or similar expressions, we intend to identify forward-looking statements.
Such statements are subject to numerous assumptions and uncertainties, many of which are outside the Company’s control. These forward-looking
statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those
anticipated, including, without limitation, the completion of any sales under the Purchase Agreement or proceeds received under the Purchase
Agreement, if any. Other risk factors are more fully discussed in the Company’s filings with the SEC.