Spectral Medical Inc. Announces Proposed Public Offering of Units and Private Placement of Notes

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

TORONTO, Oct. 05, 2022 (GLOBE NEWSWIRE) -- Spectral Medical Inc. (TSX: EDT) (“Spectral” or the “Company”) is pleased to announce the launch of a proposed prospectus offering of units (the “Unit Offering”) of the Company (the “Units”) and private placement (the “Note Offering” and collectively with the Unit Offering, the “Offering”) of convertible senior notes (the “Notes”) of at least C$8.5 million. The Offering will be conducted by Paradigm Capital Inc. (“Paradigm” or the “Agent”) on a “best efforts” agency basis.

Each Unit will consist of one common share of the Company (a “Common Share”) and one-half (½) of one Common Share purchase warrant of the Company (each whole Common Share purchase warrant, a “Warrant”), with each Warrant entitling the holder thereof to acquire one Common Share for a period of 36 months following the closing of the Offering.

The Notes will have a face value of US$1,000 per Note, bear interest of 7% and are due in 2026 (“Maturity Date”). Holders of the Notes may convert all or any portion of the Notes in integral multiples of US$1,000 principal amount at any time prior to the Maturity Date. The Notes shall be convertible into Common Shares of the company at a conversion price equal to a 30% premium to the price allocated to the Common Shares underlying the Units, subject to customary anti-dilution adjustments.

The Company intends to complete a portion of the Note Offering with an existing strategic commercial partner of the Company and potentially Pinnacle Island L.P., pursuant to which the strategic commercial partner has agreed to purchase US$2.5 million in Notes. Closing of the Note Offering is conditional on closing of the Unit Offering, finalizing a securities purchase agreement and other customary conditions of closing for a transaction of this nature.

The Company has also agreed to grant the Agent an over-allotment option (the “Over-Allotment Option”) to offer for sale up to an additional number of Units equal to 15% of the Offering, to cover over-allotments, if any, and for market stabilization purposes. The Over-Allotment Option will be exercisable in whole or in part, at the sole discretion of the Agent, at any time, and from time to time, for a period of 30 days from and including the closing date of the Offering and shall be exercisable for additional Units, Warrants, Notes and/or Common Shares (or any combination thereof).

The Company intends to use the net proceeds from the Offering for its Phase III registration trial (Tigris) for its PMX (as defined below) treatment for endotoxemic septic shock and for general corpor