On April 19, 2023 (the “Closing Date”), Augmedix, Inc., a Delaware corporation (the “Company”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with RedCo II Master Fund, L.P. (“Redmile”) and HINSIGHT-AUGX HOLDINGS, LLC, a Delaware limited liability company (the “Purchasers”), pursuant to which the Company sold to the Purchasers an aggregate of 3,125,000 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) at a purchase price of $1.60 per share (the “Purchase Price per Share”), pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 4,375,273 shares of Common Stock (the “Pre-Funded Warrant Shares”), at a price per Pre-Funded Warrant equal to the Purchase Price per Share, less $0.0001, and breakeven warrants (the “Breakeven Warrants” and together with the Shares and the Pre-Funded Warrants, the “Securities”) to purchase up to 1,875,069 shares of Common Stock (the “Breakeven Warrant Shares” and together with the Pre-Funded Warrant Shares, the “Warrant Shares”), at an exercise price of $1.75 per share, that will become exercisable on the earliest of (1) the date on which the Company closes an equity or debt financing prior to December 31, 2025, (2) December 31, 2025, if the Company cannot provide written certification that it has achieved cash flow break even from operations, excluding interest payments, for two out of three consecutive quarters between the Closing Date and December 31, 2025, on such date, (3) immediately prior to a change of control that occurs prior to December 31, 2025, and (4) the date on which a specified regulatory event occurs (such earliest date, the “Initial Exercise Date”); provided, however, that the Breakeven Warrants shall terminate effective as of 5:00 P.M. Pacific Time on December 31, 2025 if none of the foregoing events have occurred on or prior to December 31, 2025, in exchange for aggregate consideration of $11,999,999.29 (the “PIPE”). In no event shall the Initial Exercise Date be prior to the 6 month anniversary of the date of issuance, and the Breakeven Warrants will expire seven years following the date of issuance. The Pre-Funded Warrants have an exercise price of $0.0001 per Pre-Funded Warrant Share, became exercisable upon issuance and remain exercisable until exercised in full.
The Purchase Agreement contains representations and warranties of the Company and the Purchasers that are typical for transactions of this type. The Purchase Agreement also contains covenants on the part of the Company that are typical for transactions of this type.
The Purchase Agreement also contemplates that Redmile and the Company will finalize and enter into a separate equity line of credit within 30 days of the date of the Purchase Agreement, subject to the approval of the Company’s stockholders. This equity line of credit would allow the Company to sell shares of Common Stock having an aggregate price of up to $5,000,000 to Redmile from time to time, at a purchase price of $1.60 per share.
On April 19, 2023, in connection with the Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers, requiring the Company to register the securities issued under the Purchase Agreement. Pursuant to the Registration Rights Agreement, the Company will be required to file, on or prior to May 19, 2023 (the “Filing Date”), a registration statement with the U.S. Securities and Exchange Commission (the “SEC”) to register the resale of the Shares and the Warrant Shares.
The foregoing summaries of the Purchase Agreement, Pre-Funded Warrants, Breakeven Warrants and Registration Rights Agreement are not complete and are qualified in their entirety by reference to the full text of the form of the Purchase Agreement, Pre-Funded Warrants, Breakeven Warrants and Registration Rights Agreement attached hereto as Exhibits 10.1, 4.1, 4.2 and 10.2, respectively, to this Current Report on Form 8-K (the “Report”).
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Item 3.02. Unregistered Sales of Equity Securities.
