Femasys (FEMY) secures $30M private placement with extensive warrant package and board rights
Rhea-AI Filing Summary
Femasys Inc. entered into a private placement with accredited investors to sell 5,013,559 shares of common stock, pre-funded warrants for 4,361,440 shares, and warrants for 18,749,998 shares at a purchase price of $3.20 per share (or $3.1999 per pre-funded warrant), for expected gross proceeds of approximately $30.0 million before expenses.
Pre-funded warrants are exercisable at $0.0001 per share with no expiration other than full exercise. Common and milestone warrants have a $2.95 exercise price and three-year terms, with milestone warrants exercisable only if the company achieves both $1,500,000 in U.S. revenue in any fiscal quarter and a volume-weighted average price at least 130% of the exercise price for 20 of 30 trading days. Exercise is capped at 4.99% or 9.99% beneficial ownership.
Nantahala Capital Management, as lead investor, obtained rights to designate up to two board members and one non-voting observer, subject to ownership thresholds, lasting up to ten years. Five company executives invested about $134,000 on the same terms. The securities are unregistered and rely on Section 4(a)(2) and Rule 506 of Regulation D, with agreed resale registration to be filed after closing. A prior lender terminated its separate board and observer nomination rights.
Positive
- The company expects to raise approximately $30.0 million in gross proceeds through the private placement, bolstering its capital position without using a public offering.
- Five senior executives participated on the same terms as other investors, contributing about $134,000, which aligns management financially with the new financing structure.
Negative
- The financing structure creates substantial potential equity issuance, including 5,013,559 new shares plus 4,361,440 pre-funded warrants and 18,749,998 additional warrants, which may be dilutive if exercised.
- Milestone warrants become exercisable upon achieving at least $1,500,000 in U.S. quarterly revenue and a VWAP at 130% of the exercise price, adding contingent overhang tied to business and trading performance.
8-K Event Classification
3 items: 1.01, 3.02, 9.01
3 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 3.02
Unregistered Sales of Equity Securities
Securities
The company sold equity securities in a private placement or other unregistered transaction.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Common shares sold: 5,013,559 shares
Pre-funded warrants: 4,361,440 shares
Accompanying warrants: 18,749,998 shares
+5 more
8 metrics
Common shares sold
5,013,559 shares
Shares of common stock issued in the private placement
Pre-funded warrants
4,361,440 shares
Shares underlying pre-funded warrants issued in the financing
Accompanying warrants
18,749,998 shares
Shares underlying common and milestone warrants issued
Purchase price per share
$3.20
Price per share of common stock in the private placement
Prefunded warrant price
$3.1999
Per pre-funded warrant, equal to share price minus $0.0001 exercise price
Common/milestone warrant exercise price
$2.95 per share
Exercise price for both common warrants and milestone warrants
Expected gross proceeds
$30.0 million
Aggregate gross proceeds anticipated from the private placement
Milestone revenue trigger
$1,500,000
U.S. revenue in any fiscal quarter required for milestone warrant exercisability
Key Terms
Pre-Funded Warrants, Milestone Warrants, Registration Rights Agreement, volume-weighted average price, +2 more
6 terms
Pre-Funded Warrants financial
"pre-funded warrants to purchase up to 4,361,440 shares of Common Stock (the “Pre-Funded Warrants”)"
Pre-funded warrants are financial instruments that give investors the right to purchase a company's stock at a set price, but with most or all of the purchase price paid upfront. They function like a coupon or gift card for stock, allowing investors to buy shares later at a fixed price, which can be beneficial if they want to avoid future price increases. This makes them important for investors seeking flexibility and certainty in their investment plans.
Milestone Warrants financial
"a milestone warrant to purchase an aggregate of 9,374,999 shares of Common Stock (the “Milestone Warrants”)"
Milestone warrants are rights that let holders buy a company’s stock only if specific goals—such as regulatory approvals, sales targets, or project completions—are met. Think of them as a coupon that only becomes usable when the company hits agreed checkpoints; they matter to investors because they create contingent value and potential share dilution, and they signal which outcomes the company and its backers consider most important.
Registration Rights Agreement regulatory
"entered into a Registration Rights Agreement (the “Registration Rights Agreement”)"
A registration rights agreement is a contract that gives investors the option to have their ownership stakes officially registered with the government, making it easier to sell their shares later. This agreement matters because it provides investors with a clearer path to cash out their investments if they choose, offering more liquidity and confidence in their ability to sell their holdings when desired.
volume-weighted average price financial
"a volume-weighted average price of the Common Stock equal to or greater than 130% of the exercise price"
Volume-weighted average price (VWAP) is the average price of a stock over a specific time period where each trade is weighted by the number of shares traded, so larger trades influence the average more than small ones. Investors and traders use VWAP as a reference point to judge whether trades are happening at relatively good or poor prices—like checking the average price paid for an item at a market where bulk purchases count more than single-item buys.
Section 4(a)(2) of the Securities Act regulatory
"exempt from the registration requirements of the Securities Act pursuant to the exemption under Section 4(a)(2) of the Securities Act"
A legal exemption that allows a company to sell securities directly to a limited group of buyers without registering the offering with the Securities and Exchange Commission. Think of it like a private sale among known parties rather than a public auction: it can speed fundraising and reduce disclosure requirements, but it also means less public information, lower liquidity and resale restrictions—factors investors should consider when weighing risk and exit options.
Rule 506 of Regulation D regulatory
"and Rule 506 of Regulation D of the Securities Act and in reliance on similar exemptions"
Rule 506 of Regulation D is a U.S. Securities and Exchange Commission exemption that lets companies sell securities privately without registering them with the SEC, similar to a private party invitation rather than a public auction. It matters to investors because it determines how much information they’ll receive, who can buy (accredited vs. non-accredited), whether public advertising is allowed, and how easily the investment can be resold — all factors that affect risk, transparency and liquidity.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What did Femasys (FEMY) announce regarding its new financing?
Femasys entered a private placement to sell 5,013,559 shares, 4,361,440 pre-funded warrants, and 18,749,998 accompanying warrants at $3.20 per share, expecting about $30.0 million in gross proceeds before expenses.
What are the key terms of the FEMY warrants issued in this private placement?
Pre-funded warrants are exercisable at $0.0001 per share with no expiration. Common and milestone warrants have a $2.95 exercise price, three-year terms, and beneficial ownership caps of 4.99% or 9.99% per holder.
When do Femasys (FEMY) milestone warrants become exercisable?
Milestone warrants become exercisable only if Femasys achieves U.S. revenue of at least $1,500,000 in any fiscal quarter and its stock’s VWAP is at least 130% of the exercise price for 20 of 30 trading days.
How much will Femasys (FEMY) executives invest in the private placement?
The CEO, CFO, COO, CTO, and Chief Clinical and Medical Affairs Officer together are purchasing securities for about $134,000, on terms identical to those offered to all other accredited investors in the transaction.
What board rights did the lead investor receive in the Femasys (FEMY) deal?
Nantahala Capital Management may designate up to two board members and one non-voting observer, subject to minimum ownership thresholds, with these board representation rights lasting up to ten years from the agreement date.
Will Femasys (FEMY) register the securities from this private placement?
Yes. Under a Registration Rights Agreement, Femasys agreed to file a resale registration statement for 100% of the common shares issuable from the private placement warrants, within 30 days after closing, and seek SEC effectiveness by a defined deadline.