RELATED PARTY CONVERTIBLE NOTES PAYABLE |
6 Months Ended |
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Jun. 30, 2024 | |
Related Party Convertible Notes Payable | |
RELATED PARTY CONVERTIBLE NOTES PAYABLE | 5. RELATED PARTY CONVERTIBLE NOTES PAYABLE
On February 20, 2024, March 27, 2024, and May 8, 2024, the Company issued convertible promissory notes in the amount of $3,000,000, $1,500,000, and $1,000,000, respectively, to Bios Clinical Opportunity Fund, LP, a fund affiliated with two members of the board of directors of the Company and a majority shareholder, which notes accrue interest at a rate of 7% per annum and mature on August 16, 2024, as amended (“Maturity Date”). Principal and accrued interest are due and payable on the Maturity Date, subject to an automatic conversion upon a Qualified Financing (as defined below) or the Company’s first firm commitment underwritten initial public offering of its common stock or at the option of the holder, convertible into shares of Series C Redeemable Convertible Preferred Stock.
In the event the Company either completes a financing of at least $5 million in gross proceeds (“Qualified Financing”) or closes the Company’s first firm commitment underwritten initial public offering of its common stock before the Maturity Date, the Related Party Convertible Notes Payable will automatically convert into (i) in the case of a Qualified Financing, that number of shares of capital stock issued in such Qualified Financing (the “Qualified Financing Securities”) equal to the quotient obtained by dividing the outstanding principal amount of the Related Party Convertible Notes Payable plus all accrued and unpaid interest thereon by eighty percent (80%) of the per share price at which shares are to be sold in such Qualified Financing or (ii) in the case of an initial public offering, such number of shares of common stock equal to the outstanding principal amount of the Related Party Convertible Notes Payable plus all accrued and unpaid interest thereon, divided by eighty percent (80%) of the initial public offering price.
In the event a Qualified Financing or an initial public offering does not occur prior to the Maturity Date, then on or after the Maturity Date, the holder may elect to either (i) convert the Related Party Convertible Notes Payable into such number of shares of Series C Redeemable Convertible Preferred Stock equal to the principal amount plus the accrued but unpaid interest thereon divided by $7.848 or (ii) elect that the Related Party Convertible Notes Payable become fully due and payable in cash.
Transaction fees of the related party in the amount of $50,000 that were withheld by the related party were expensed as incurred in accordance with ASC 825.
In connection with the closing of the Company’s IPO on August 14, 2024, the Company issued Bios Clinical Opportunity Fund, LP shares of common stock of the Company upon the conversion of the Related Party Convertible Notes Payable, including accrued interest thereon.
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