Gaxos.ai Inc. Announces Closing of $5 Million Registered Direct Offering Priced At-the-Market Under Nasdaq Rules

Rhea-AI Summary

Gaxos.ai (Nasdaq: GXAI) has closed its previously announced registered direct offering, raising $5 million through the sale of 1,449,277 common stock shares at $3.45 per share. The company also issued unregistered warrants in a concurrent private placement to purchase up to 1,449,277 shares at an exercise price of $3.32 per share, exercisable immediately and expiring in three years. H.C. Wainwright & Co. served as the exclusive placement agent. The net proceeds, after deducting fees and expenses, will be used for working capital and general corporate purposes. The common stock shares were offered under a shelf registration statement, while the warrants were issued privately under Section 4(a)(2) of the Securities Act.

Positive

• Secured $5 million in immediate funding through stock offering
• Warrants issued with favorable exercise price of $3.32 (below offering price)
• Three-year warrant term provides potential for additional future capital

Negative

• Dilution of existing shareholders through issuance of 1,449,277 new shares
• Additional potential dilution from warrant exercise of up to 1,449,277 shares
• Offering priced at market suggests premium pricing power

Insights

Financial Analyst

This $5 million capital raise through a registered direct offering represents a significant financial maneuver for Gaxos.ai, priced at $3.45 per share with accompanying warrants at $3.32. The structure combines immediate equity with potential future capital through warrants, creating a dual-layer financing mechanism. For a micro-cap company with a market cap of approximately $9.8 million, this offering essentially doubles the company's available capital.

The pricing dynamics are particularly noteworthy - the warrant exercise price of $3.32 sitting slightly below the share offering price suggests a balanced approach to incentivizing future exercise while minimizing immediate dilution. The three-year warrant duration provides a reasonable window for potential upside participation.

However, investors should note the dilutive impact - the 1,449,277 new shares represent substantial dilution given the company's small size. The concurrent private placement of warrants could lead to additional dilution if exercised, though this would bring in approximately another $4.8 million in fresh capital.

The use of proceeds for "working capital and general corporate purposes" lacks specificity, which is somewhat concerning for a development-stage AI company where capital deployment strategy is important for value creation.

Legal Expert

The offering's regulatory framework is meticulously structured, utilizing a combination of public and private placement mechanisms. The common stock issuance leverages the recently effective S-3 shelf registration (File No. 333-283758), while the warrants are issued through a private placement under Section 4(a)(2) and Regulation D of the Securities Act - a sophisticated dual-track approach that optimizes regulatory compliance while maintaining flexibility.

The involvement of H.C. Wainwright as the exclusive placement agent adds institutional credibility to the transaction. The careful distinction between registered and unregistered securities, along with the explicit disclaimers regarding the warrant's restricted status, demonstrates proper securities law compliance and risk mitigation.

The rapid timeline between the S-3 filing (December 12) and effectiveness (December 18) suggests efficient regulatory processing, though this quick turnaround warrants attention to ensure all disclosures are adequate. The structure provides the company with a foundation for potential future capital raises while maintaining regulatory compliance.

Roseland, NJ, Dec. 20, 2024 (GLOBE NEWSWIRE) -- Gaxos.ai Inc. (Nasdaq: GXAI), (“Gaxos” or the “Company”), a company developing artificial intelligence applications across various sectors, today announced the closing of its previously announced registered direct offering priced at-the-market under Nasdaq rules for the purchase and sale of an aggregate of 1,449,277 shares of its common stock at a purchase price of $3.45 per share. In addition, in a concurrent private placement, the Company issued unregistered warrants to purchase up to 1,449,277 shares of common stock. The warrants have an exercise price of $3.32 per share, are exercisable upon issuance and expire three years following the date of issuance. 

H.C. Wainwright & Co. acted as the exclusive placement agent for the offering.

The aggregate gross proceeds to the Company from the offering were approximately $5 million, before deducting the placement agent fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for working capital and other general corporate purposes.

The shares of common stock (but not the warrants issued in the private placement or the shares of common stock underlying such warrants) were offered by the Company pursuant to a “shelf” registration statement on Form S-3 (File No. 333-283758) filed with the Securities and Exchange Commission (“SEC”) on December 12, 2024 and became effective on December 18, 2024. The registered direct offering of the shares of common stock was made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. The prospectus supplement and the accompanying prospectus relating to the shares of common stock offered in the registered direct offering have been filed with the SEC and are at the SEC's website at www.sec.gov. Electronic copies of the prospectus supplement and the accompanying prospectus relating to the registered direct offering may also be obtained by contacting H.C. Wainwright & Co., LLC at 430 Park Avenue, 3rd Floor, New York, NY 10022, by telephone at (212) 856-5711 or e-mail at placements@hcwco.com.

The warrants described above were issued in a concurrent private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder and, along with the shares of common stock underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the warrants and underlying shares of common stock 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.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or 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 jurisdiction.

About Gaxos.ai Inc.

Gaxos.ai isn’t just developing applications; it’s aim is to redefine the human-AI relationship. Our offerings are being expanded to include health and wellness, as well as gaming. We’re committed to addressing health, longevity, and entertainment, through AI solutions.

Forward-Looking Statements

All statements other than statements of historical fact in this announcement are forward-looking statements that involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, and financial needs and are subject to market and other conditions. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Forward-looking statements include statements regarding, the use of proceeds from the offering. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s filings with the SEC.

Gaxos.ai Inc. Company Contact

Investor Relations

E: ir@gaxos.ai

T: 1-888-319-2499

FAQ

How much did Gaxos.ai (GXAI) raise in its December 2024 direct offering?

Gaxos.ai raised $5 million through the sale of 1,449,277 shares at $3.45 per share in its December 2024 registered direct offering.

What are the terms of the GXAI warrants issued in December 2024?

The warrants allow purchase of up to 1,449,277 shares at $3.32 per share, are immediately exercisable, and expire three years from issuance.

How will Gaxos.ai (GXAI) use the proceeds from its $5M offering?

Gaxos.ai intends to use the net proceeds from the offering for working capital and other general corporate purposes.

Who was the placement agent for GXAI's December 2024 offering?

H.C. Wainwright & Co. acted as the exclusive placement agent for the offering.

What was the pricing of GXAI's December 2024 stock offering?

The offering was priced at $3.45 per share, at-the-market under Nasdaq rules.