Klotho Neurosciences, Inc. (NASDAQ:KLTO), currently valued at $10.57 million in market capitalization, has entered into a financial agreement securing a convertible promissory note valued at $1.2 million with Austria Capital LLC.
The note, which was agreed upon on December 4, 2024, is set to mature on the same date in 2025 and carries a zero-interest rate with a 20% original issuance discount. According to InvestingPro data, the company's shares have declined 95% year-to-date, reflecting significant market challenges.
The company will allow the investor to convert the outstanding principal amount into common stock at a conversion price of $0.25 per share, subject to certain conditions. With the current stock price at $0.45, InvestingPro analysis suggests the stock is fairly valued.
This conversion is contingent upon stockholder approval and is limited to ensure that the investor does not exceed ownership of 4.99% of the company's outstanding common stock. The conversion price may be adjusted based on specific corporate actions like stock splits.
The note is unsecured and ranks equally with other unsecured debt of Klotho Neurosciences. It has been issued as part of a private placement under an exemption from the Securities Act of 1933, indicating that the offering was not made to the public. The agreement includes standard clauses for events of default, which would allow the investor to demand immediate repayment. InvestingPro analysis reveals concerning financial health indicators, with a current ratio of 0.16 indicating short-term obligations exceed liquid assets.
In addition to the note, Klotho Neurosciences has issued 2 million shares of common stock to the investor as an inducement to enter into the agreement. This equity issuance is also part of a private placement relying on the same exemption as the note.
In other recent news, Klotho Neurosciences has been making significant changes in its corporate structure. The biotech firm has reported a major shift in its share composition following a merger with a subsidiary of 03 Life Sciences, resulting in 15,130,393 issued and outstanding shares of common stock. The company is also facing potential delisting from the Nasdaq Stock Market due to non-compliance with the minimum bid price requirement, with a deadline set for April 14, 2025.
In governance developments, seasoned healthcare executive Riad El-Dada has been appointed to Klotho Neurosciences' Board of Directors. El-Dada, who has held various senior positions within the pharmaceutical industry, will serve until the next Annual Meeting of Stockholders. The company has yet to determine which Board committees El-Dada will join.
On the financial front, Klotho Neurosciences terminated its relationship with its former accounting firm, Yusufali & Associates, due to the firm's disqualification by the Public Company Accounting Oversight Board. BCRG Group has been appointed as the new independent registered public accounting firm.
In executive news, the company has entered into a new three-year contract with its CEO, Dr. Joseph Sinkule, who will receive an annual base salary of $360,000 and an equity award of 1,000,000 stock options under the company’s 2023 Incentive Plan. Additionally, Jeffrey LeBlanc and Peter Moriarty have been welcomed as the new Chief Financial Officer and Chief Operating Officer, respectively.
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