Deep Dive: Advanced Markets
ReShape Lifesciences Inc ($RSLS)
Penny stock scan top result for today Saturday February 22 is ReShape Lifesciences. Total matching stocks returned was 197.Here is a deep dive into the last 65 days and a plausible hedge fund trading pattern.
From the first S-1 amendment to the close of the Rule 105 Regulation M window the stock fell from $4.75 to $2.75 a net of $2/share in profit. Assuming the funds involved did not short during the 5 day window.
From the 13D,
On December 19, 2024, Ascent and the Issuer entered into an equity purchase agreement (the "Equity Purchase Agreement") pursuant to which the Issuer may sell to Ascent, from time to time, up to $5,000,000 worth of Common Stock. As a commitment fee, the Issuer issued to Ascent (i) 17,300 shares of Common Stock (the "ELOC Commitment Shares), and (ii) a pre-funded warrant to purchase up to 21,015 shares of Common Stock (the "Pre-Funded Warrant"). Pursuant to the Equity Purchase Agreement, Ascent agreed, with respect to up to 25,283 shares (or such greater number not to exceed 4.99% of the outstanding voting power or number of shares of Common Stock), to (a) vote in favor of the transactions contemplated by that certain merger agreement, dated as of July 8, 2024, by and among the Issuer, Vyome Therapeutics, Inc. and Raider Lifesciences Inc. (the "Merger Agreement"), (b) vote against any proposals that would materially impede the transactions contemplated by the Merger Agreement or any other transaction proposal, and (c) not sell or transfer any such shares of Common Stock prior to the record date of such stockholder meeting.From the 424B3,
The Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. The Warrants will be exercisable beginning on the effective date of such stockholder approvals as may be required by the applicable rules and regulations of the Nasdaq Capital Market (or any successor entity) to permit the exercise of the Warrants (“Warrant Stockholder Approval”). The Warrants will initially have an exercise price equal to $5.83 per share and will expire on later of (i) twelve (12) days after date of Warrant Stockholder Approval and (ii) the earlier of (x) the closing date of the transaction contemplated by the merger transaction described under “Prospectus Summary — Recent Developments — Pending Merger and Asset Sale” and (y) sixty (60) days after the date of Warrant Stockholder Approval. We have agreed not to consummate such merger transaction until at least 12 trading days after Warrant Stockholder Approval has been obtained. The Warrants will not be exercisable at the closing of this offering and may never become exercisable if the Warrant Stockholder Approval is not obtained. Therefore, the Warrants could expire worthless if the Warrant Stockholder Approval is not obtained in the future. The terms of the Warrants will include a potential one-time reset of the exercise price (subject to a floor of $1.25 per share) and number of shares of our Common Stock underlying the Warrants and an alternative cashless exercise option that are applicable after effective date of the Warrant Stockholder Approval as described under “Description of the Securities We are Offering.” Under the alternative cashless exercise option under the Warrants, a Warrant holder could elect to receive 1.2 shares of common stock without the holder having to make any exercise payment. If the exercise price of the Warrants is reset to the floor price of $1.25 per share, then based on the initial exercise price of $5.83 per share underlying the Warrants, the number of shares of Common Stock underlying each Warrant would be increased to 4.664 shares and, if a Warrant holder then elected the alternative cashless exercise option, they would receive 5.597 shares of Common Stock (equal to 1.2 times 4.664 shares). In that scenario, the maximum aggregate number of shares of Common Stock to be issued upon the alternative cashless exercise of the Warrants would be approximately 14,412,359 shares. As a result of the reset provisions in the Warrants, a higher initial exercise price of the Warrants could result in more shares of Common Stock being issued upon exercise (including the alternative cashless exercise) of the Warrants if the exercise price of the Warrants is reduced as a result of the reset provisions. Therefore, we do not expect to receive any cash proceeds from the exercise of the Warrants because it is highly unlikely that a Warrant holder will elect to pay an exercise price in cash to receive one share of common stock when they could elect the alternative cashless exercise option and pay no exercise price to receive 1.2 times the number of shares of common stock they would receive if they did pay an exercise price.The purchasers of this offering can get anywhere between 1.2 and 5.597 shares for the cost of $2.23 depending on (a) the price the stock reaches and (b) whether or not the purchases chooses “alternative cashless exercise.” This offering can reset the exercise price once to a floor of $1.25.
The terms of the merger with Vyome Therapeutics stipulate the funding raise and will yield ReShape shareholders with only 11% of the new company which will trade as $HIND.
Two familiar names, CVI Investments, Inc. and Bigger Capital Fund LP where the 13G filers after the offering which followed a large volume dilution event.
— AJ
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