Predictive Oncology Announces Exercise of Warrants for $1.26 Million Gross Proceeds

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Predictive Oncology's recent warrant exercise agreement is a strategic financial move with mixed implications. The company has secured $1.26 million in gross proceeds, which, combined with the $3.58 million raised in May, provides a total of $4.84 million in fresh capital. This influx of funds strengthens the company's working capital position, potentially extending its operational runway.

However, the reduced exercise price of $1.32 per share, down from $14.00, represents a significant dilution for existing shareholders. This 90.57% reduction in price suggests the company was under pressure to raise capital, possibly indicating financial strain.

The issuance of new warrants at an even lower price of $1.07 per share further complicates the picture. While this could provide additional future funding, it also increases the potential for further dilution. The company's decision to offer these warrants in a private placement under Section 4(a)(2) of the Securities Act might be seen as a way to expedite the fundraising process, but it also limits the pool of potential investors.

Overall, this financial maneuver provides Predictive Oncology with necessary capital but at the cost of significant shareholder dilution. Investors should closely monitor how effectively the company utilizes these funds to drive growth and create value in its AI-driven drug discovery and biologics business.

The warrant exercise agreement by Predictive Oncology reveals interesting market dynamics. The dramatic reduction in exercise price from $14.00 to $1.32 suggests a significant disconnect between the company's previous valuation and current market perception. This could be indicative of broader challenges in the AI-driven drug discovery sector or specific issues facing Predictive Oncology.

The involvement of H.C. Wainwright & Co. as the exclusive placement agent adds credibility to the transaction but also highlights the company's reliance on institutional support for fundraising. This dependency could be seen as a double-edged sword, providing access to capital but potentially limiting flexibility in future financial decisions.

The issuance of new warrants with an even lower exercise price of $1.07 is a forward-looking strategy. It provides an incentive for future investment but also signals the company's expectation of continued financial needs. The different terms for Series A (5 years) and Series B (18 months) warrants create a tiered structure that could help manage dilution over time.

From a market perspective, this transaction reflects the challenging funding environment for biotech companies, especially those in early stages of drug discovery. It underscores the importance of tangible progress in AI-driven platforms to maintain investor confidence and secure favorable financing terms.

The warrant exercise agreement and subsequent issuance of new warrants by Predictive Oncology present several legal considerations. The company's use of multiple registration statements (Forms S-1 and S-3) for the issuance and resale of shares from existing warrants demonstrates compliance with SEC regulations, ensuring these transactions are properly registered.

However, the issuance of new warrants under a private placement using Section 4(a)(2) of the Securities Act and Regulation D is a notable shift. This exemption from registration requirements allows for a faster and potentially less costly process but restricts the sale to accredited investors. The company's commitment to file a registration statement for the resale of shares issuable upon exercise of these new warrants shows proactive compliance and consideration for future liquidity.

The press release's explicit statement that it does not constitute an offer to sell or solicitation to buy securities is a important legal disclaimer, protecting the company from potential securities law violations. This careful wording, along with the emphasis on the unregistered status of the new warrants, reflects a cautious approach to regulatory compliance.

Investors should note that while these legal maneuvers provide flexibility for the company, they also introduce complexity into the capital structure. The tiered warrant system and varying exercise prices could potentially lead to shareholder disputes or complications in future financing rounds if not managed carefully.

07/26/2024 - 08:00 AM

PITTSBURGH, July 26, 2024 (GLOBE NEWSWIRE) -- Predictive Oncology Inc. (NASDAQ: POAI), a leader in AI-driven drug discovery and biologics, today announced that it has entered into a definitive agreement for the exercise of certain existing warrants to purchase an aggregate of 958,117 shares of its common stock having a current exercise price of $14.00 originally issued in February 2021, June 2021 and May 2022, at a reduced exercise price of $1.32 per share. The issuance and/or resale of the shares of common stock issuable upon exercise of the existing warrants, as applicable, are registered pursuant to effective registration statements on Form S-1 (File No. 333-267689), Form S-3 (File No. 254309) and Form S-3 (333-255582). The gross proceeds to Predictive Oncology from the exercise of the existing warrants are expected to be approximately $1.26 million, prior to deducting placement agent fees and transaction expenses payable by the Company.

H.C. Wainwright & Co. is acting as the exclusive placement agent for the transaction.

In consideration for the immediate exercise of the warrants for cash, Predictive Oncology will issue new unregistered Series A warrants to purchase up to 958,117 shares of common stock and new Series B warrants to purchase up to 958,117 shares of common stock. The new warrants will have an exercise price of $1.07 per share, will be exercisable immediately upon issuance and have a term equal to five years from the date of issuance, with respect to Series A warrants, and 18 months from the date of issuance, with respect to Series B warrants.

The transaction is expected to close on or about July 26, 2024, subject to satisfaction of customary closing conditions. The Company intends to use the net proceeds from the transaction, coupled with an additional $3.58 million in net proceeds raised in May 2024 through the Company鈥檚 at-the-market facility, for working capital and other general corporate purposes.

The new warrants described above are being offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the 鈥淪ecurities Act鈥�), and Regulation D promulgated thereunder and, along with the shares of common stock issuable upon exercise of the new warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the new warrants issued in the private placement and the shares of common stock underlying the new warrants may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. The Company has agreed to file a registration statement with the Securities and Exchange Commission covering the resale of the shares of common stock issuable upon the exercise of the new warrants.

This press release does not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Predictive Oncology

Predictive Oncology is on the cutting edge of the rapidly growing use of artificial intelligence and machine learning to expedite early drug discovery and enable drug development for the benefit of cancer patients worldwide. The company鈥檚 scientifically validated AI platform, PEDAL, is able to predict with 92% accuracy if a tumor sample will respond to a certain drug compound, allowing for a more informed selection of drug/tumor type combinations for subsequent in-vitro testing. Together with the company鈥檚 vast biobank of more than 150,000 assay-capable heterogenous human tumor samples, Predictive Oncology offers its academic and industry partners one of the industry鈥檚 broadest AI-based drug discovery solutions, further complimented by its wholly owned CLIA lab and GMP facilities. Predictive Oncology is headquartered in Pittsburgh, PA.聽

Investor Relations Contact
Tim McCarthy聽聽
LifeSci Advisors, LLC聽聽
tim@lifesciadvisors.com

Forward-Looking Statements:

Certain matters discussed in this release contain forward-looking statements, including, but not limited to, statements regarding the completion of the transaction, the satisfaction of customary closing conditions related to the transaction and the anticipated use of proceeds therefrom. These forward- looking statements reflect our current expectations and projections about future events and are subject to substantial risks, uncertainties and assumptions about our operations and the investments we make. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue and financial performance, projected costs, prospects, changes in management, plans and objectives of management are forward-looking statements. The words 鈥渁nticipate,鈥� 鈥渂elieve,鈥� 鈥渆stimate,鈥� 鈥渆xpect,鈥� 鈥渋ntend,鈥� 鈥渕ay,鈥� 鈥減lan,鈥� 鈥渨ould,鈥� 鈥渢arget鈥� and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors including, among other things, market and other conditions and the factors discussed under the heading 鈥淩isk Factors鈥� in our filings with the SEC. Except as expressly required by law, the Company disclaims any intent or obligation to update these forward-looking statements.

FAQ

How much did Predictive Oncology (POAI) raise through warrant exercise?

Predictive Oncology (POAI) raised approximately $1.26 million in gross proceeds through the exercise of existing warrants at a reduced price of $1.32 per share.

What is the exercise price of the new warrants issued by Predictive Oncology (POAI)?

The new Series A and B warrants issued by Predictive Oncology (POAI) have an exercise price of $1.07 per share.

When is the warrant exercise transaction expected to close for Predictive Oncology (POAI)?

The warrant exercise transaction for Predictive Oncology (POAI) is expected to close on or about July 26, 2024, subject to customary closing conditions.

How does Predictive Oncology (POAI) plan to use the proceeds from the warrant exercise?

Predictive Oncology (POAI) intends to use the net proceeds from the warrant exercise, along with $3.58 million raised in May 2024, for working capital and other general corporate purposes.

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