CITIUS ONCOLOGY, INC. 8-K

What Happened
Citius Oncology, Inc. announced on May 5, 2026 that it entered a warrant inducement agreement and a loan and security agreement. The warrant inducement reduces the exercise price on certain existing warrants to $0.90 (from $1.09) in exchange for issuance of new warrants and generated approximately $11.5 million of gross proceeds (offering expected to close May 6, 2026). Separately, the company closed a secured loan facility providing up to $25.0 million in term loans (Tranche 1 = $10.0M funded May 6, 2026; Tranche 2 up to $7.0M and Tranche 3 up to $8.0M subject to revenue/timing milestones).

Key Details

• Warrant transaction: Induced existing warrants for 12,777,778 underlying shares and issued New Warrants to purchase 25,555,556 shares at $0.90 exercisable upon stockholder approval and registration; beneficial ownership limits (default 4.99%, electable to 9.99%) apply. Placement agent warrants of 894,444 shares granted at $1.125. Company paid placement fees to H.C. Wainwright (7% of gross proceeds) plus reimbursements.
• Loan facility: Up to $25.0M with interest = greater of (prime + 6%) or 12.75%; maturity November 1, 2029; interest-only payments for ~18 months then amortization; $10.0M (Tranche 1) funded May 6, 2026. Company granted security interest in its assets. Prepayment fees scale from 3% to 1% depending on timing; a final payment of $1,062,500 is due on maturity or earlier full prepayment.
• Warrants & conversion: Lender Warrants will allow the lenders to purchase shares equal to $1M plus 10% of any Tranche 2/3 funded, divided by $0.90 (exercise price); Lenders have a conversion option to convert up to their pro rata share of $4.0M of loan principal into common stock at a Conversion Price equal to 120% of the Lender Warrants’ exercise price (i.e., 120% of $0.90). Lender fees to Wainwright are 6% of committed debt plus expenses.
• Parent debt subordination and promissory note changes: Citius Pharmaceuticals (the Parent) agreed to subordinate its claims (including a promissory note originally $3,800,111) to the new lender obligations until 91 days after the senior debt is paid; the promissory note was amended to align maturity and to add a voluntary conversion right at $0.90 per share (subject to company approval).

Why It Matters
For investors, the transactions provide near-term liquidity (≈$11.5M cash from the warrant inducement and an immediate $10M draw under the $25M loan facility) to fund commercialization and operations, but they also introduce potential dilution and secured debt risk. The company issued or committed to issue many warrants (tens of millions of potential shares) at sub-$1.10 prices and granted lenders conversion and warrant rights that could convert debt into equity. The loans are secured by company assets and subordinate existing parent-related claims, which reduces flexibility but supports immediate financing. Several warrant exercises and lender conversions require stockholder approval and are subject to beneficial ownership limits, so timing and actual dilution will depend on future approvals and holder actions.