Item 1.01. Entry into a Material Definitive Agreement.
On
June 8, 2023, Precipio, Inc., a Delaware corporation (the “Company”), entered
into a securities purchase agreement (the “Purchase Agreement”) with certain
institutional investors (the “Purchasers”), pursuant to which the Company
agreed to issue and sell to the Purchasers, in a registered direct offering (the “Registered
Direct Offering”), an aggregate of: (i) 4,125,000 shares (the “Shares”)
of the Company’s common stock, $0.01 par value (the “Common Stock”),
at a price of $0.45 per share, and (ii) pre-funded warrants (the “Pre-Funded Warrants”)
to purchase up to 319,445 shares of Common Stock, at a price of $0.0449 per Pre-Funded Warrant. The Pre-Funded Warrants are immediately
exercisable, have an exercise price of $0.001 per share, and may be exercised at any time until all of the Pre-Funded Warrants are exercised
in full.
In
a concurrent private placement (the “Private Placement” and together with
the Registered Direct Offering, the “Offering”), pursuant to the Purchase
Agreement, the Company agreed to issue and sell to the Purchasers, for no additional consideration, warrants (the “Common
Warrants” and, together with the Shares and the Pre-Funded Warrants, the “Securities”)
to purchase up to 8,888,890 shares of Common Stock. The Common Warrants are exercisable beginning six months after the date of issuance,
have an exercise price of $0.63 per share, and will expire December 12, 2028. A holder of Pre-Funded Warrants may not exercise the warrant
if the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the purchaser, 9.99%) of the
number of shares of the Common Stock outstanding immediately after giving effect to such exercise. A holder of Pre-Funded Warrants may
increase or decrease this percentage not in excess of 19.99% by providing at least 61 days’ prior notice to the Company.
The
Registered Direct Offering is expected to result in gross proceeds to the Company of approximately $2.0 million. The net proceeds to the
Company from the Offering are expected to be approximately $1.7 million, excluding any proceeds that may be received upon the cash exercise
of the Common Warrants, after deducting the financial advisor’s fees and estimated offering expenses payable by the Company. The
Company intends to use the net proceeds from the Offering for working capital and general corporate purposes, which may include capital
expenditures, research and development expenditures, regulatory affairs expenditures, clinical trial expenditures, acquisitions of new
technologies and investments and others.
The
Purchase Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification
obligations of the Company, other obligations of the parties, and termination provisions. Additionally, each of the directors and executive
officers of the Company, pursuant to lock-up agreements (the “Lock-Up Agreements”),
agreed not to sell or transfer any of the Company securities which they hold, subject to certain exceptions, during the 90-day period
following the closing of the Offering. The Purchase Agreement also requires the Company to use commercially reasonable efforts to file
a registration statement with the Securities and Exchange Commission (the “SEC”)
to register the resale by the Purchasers of the shares of Common Stock issuable upon exercise of the Common Warrants within thirty (30)
days of the date of the Purchase Agreement.
On
June 7, 2023, the Company also entered into a financial advisory agreement (the “Financial
Advisor Agreement”) with A.G.P./Alliance Global Partners (the “Financial Advisor”).
Pursuant to the terms of the Financial Advisor Agreement, the Financial Advisor agreed to use its reasonable best efforts to arrange for
the sale of the Securities. The Company paid the Financial Advisor a cash fee of $140,000 generated from the sale of the Shares and Pre-Funded
Warrants.
The
Financial Advisor Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing,
indemnification obligations of the Company and the Financial Advisor, including for liabilities under the Securities Act of 1933, as
amended (the “Securities Act”), other obligations of the parties, and termination
provisions.
Pursuant
to the Purchase Agreement, the Company has agreed that, subject to certain exceptions, (i) it will not issue any shares of common stock
or securities exercisable or convertible into shares of common stock or to file any registration statement or amendment or supplement
thereto for a period of ninety (90) days following the closing of the Offering and that (ii) it will not enter into a variable rate transaction
for a period of one hundred eighty (180) days following the closing of the Offering.
The
Registered Direct Offering is being made pursuant to a registration statement on Form S-3 (File No. 333-271277), filed by the Company
with the SEC on April 14, 2023, as amended by Amendment No. 1 filed by the Company with the SEC on April 25, 2023, and declared effective
on April 27, 2023, as supplemented by a prospectus supplement dated June 9, 2023. The legal opinion of Goodwin Procter LLP relating to
the legality of the issuance and sale of the Securities in the Offering is attached as Exhibit 5.1 to this Current Report on Form 8-K.
The
Financial Advisor Agreement, Purchase Agreement, form of Lock-Up Agreement, form of Pre-Funded Warrant and form of Common Warrant, are
filed as Exhibits 1.1, 10.1, 10.2, 4.1 and 4.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The above descriptions of the terms of the Financial Advisor Agreement, Purchase Agreement, Lock-Up Agreements, Pre-Funded Warrants, and
Common Warrants are qualified in their entirety by reference to such exhibits.