OBLN Obalon Therapeutics Inc

On June 28, 2021, ReShape Lifesciences Inc. (the “Company”) entered into a warrant exercise agreement with existing accredited investors to exercise certain outstanding warrants (the “Exercise”) to purchase up to an aggregate of 7.9 million shares of the Company’s common stock (the “Existing Warrants”). In consideration for the immediate exercise of the Existing Warrants for cash, the exercising holders received new unregistered warrants to purchase up to an aggregate of 5.9 million shares (equal to 75% of the shares of common stock issued in connection with the Exercise) of the Company’s common stock (the “New Warrants”) in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933 (the “Securities Act”). The investors paid a cash purchase price for the New Warrants equal to $0.09375 per share of common stock underlying the New Warrants. In connection with the Exercise, the Company also agreed to reduce the exercise price of certain of the Existing Warrants to $6.00, which is equal to the most recent closing price of the Company’s common stock on The Nasdaq Capital Market prior to the execution of the warrant exercise agreement.

The New Warrants are exercisable immediately upon issuance at an exercise price of $6.00 per share and have a term of exercise equal to five years. The Company agreed to file a resale registration statement on Form S-3 within 30 days with respect to the New Warrants and the shares of common stock issuable upon exercise of the New Warrants. The warrant exercise agreement and the New Warrants each include a beneficial ownership limitation that prevents any of the investors from owning more than 9.99% of the Company’s outstanding common stock at any time.

The gross proceeds to the Company from the Exercise and the sale of the New Warrants was approximately $46 million, prior to deducting placement agent fees and estimated offering expenses. The Company used approximately $10.8 million of the net proceeds to repay in full the outstanding principal and accrued interest under its secured credit agreement dated March 25, 2020, as amended. The Company intends to use the remainder of the net proceeds for working capital and general corporate purposes.  

Maxim Group LLC (“Maxim”) acted as the exclusive placement agent for the Exercise. Pursuant to an amendment, dated June 28, 2021, to its existing engagement agreement with Maxim, the Company has agreed to pay Maxim an aggregate cash fee equal to 7.0% of the gross proceeds received by the Company from the Exercise and the sale of the New Warrants and certain other expenses.

The foregoing descriptions of the warrant exercise agreement and the New Warrants are not complete and are qualified in their entirety by reference to the full text of the form of warrant exercise agreement and the form of the New Warrant, copies of which are attached hereto as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.