China SXT Pharmaceuticals Inc. (NASDAQ: SXTC) completed a registered direct offering of 66,666,666 Class A ordinary shares at $0.15 per share, raising approximately $10 million in new capital. The transaction, which closed on January 12 2026, was executed under a shelf registration statement on Form F‑3 that became effective on December 1 2025, with Univest Securities, LLC serving as the sole placement agent.
The capital raise comes at a time when the company’s financials are under pressure. FY2025 revenue fell 9.7% to $1.74 million, while net loss widened to $3.30 million, reflecting higher operating expenses and a shift toward lower‑margin Regular Traditional Chinese Medicine Product (TCMP) lines. Cash and cash equivalents rose to $5.2 million as of March 31 2025, largely due to financing activities, underscoring the company’s reliance on external funding to sustain operations.
Management said the proceeds will support ongoing operations and the Strategic Artificial Intelligence Insights Initiative, which aims to embed AI into the company’s TCM portfolio and expand offline consultation services. The initiative is intended to improve product development efficiency and create new revenue streams, but the immediate need for liquidity suggests that the company is still working through cash burn and margin compression issues.
The market reacted sharply to the offering. Investors viewed the $0.15 per share price—well below the trading price of $0.36 at the time of the announcement—as a deep discount that would dilute existing shareholders. The large number of shares issued amplified the dilution concern, leading to a steep sell‑off in the stock. The reaction highlights the tension between the company’s strategic ambitions and the cost of raising capital at a discount.
The offering signals that China SXT Pharmaceuticals will likely need additional financing in the near term to fund its AI initiative and cover operating losses. While the capital injection provides working capital, the dilution and market reaction may pressure the company to demonstrate stronger financial performance and clearer path to profitability in future filings. Investors will be watching subsequent earnings releases for evidence that the AI strategy translates into revenue growth and margin improvement.
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