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Subsequent Events
3 Months Ended
Mar. 31, 2023
Subsequent Events [Abstract]  
Subsequent Events

Note 10 - Subsequent Events

 

Conversion of Principal on Convertible Note

 

On April 14, 2023, the holder of the March 15, 2022, convertible note converted $10,000 of principal of interest at $0.28 per share into 35,716 shares of common stock.

 

On April 28, 2023, the holder of the March 15, 2022, convertible note converted $21,314 of principal and $6,586 of interest at $0.18 per share into 155,000 shares of common stock.

 

On May 10, 2023, the holder of the March 15, 2022, convertible note converted $6,001 of principal and $489 of interest at $0.054 per share into 120,000 shares of common stock.

 

April 28, 2023

 

On April 28, 2023, the Company entered into a Securities Purchase Agreement with two affiliated accredited investors pursuant to which the Company issued and sold the investors a non-convertible Original Issue 30% Discount Senior Secured Promissory Note in the principal amount of $285,714 and 452,964 Common Stock Purchase Warrants for a total purchase price of $200,000. The Company received total consideration of $200,000.

 

 

ADHERA THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2023 and 2022

(unaudited)

 

The Company also agreed to increase the principal amount of prior Original Issue Discount Promissory Notes issued to the investor in May 2022 and January 2023 by 30% as a loan inducement fee. The principal increases totaled $461,904.

 

All of the Warrants issued with promissory notes listed above are exercisable for a 66-month period (five years and six months) at an exercise price of $0.82 per share, subject to certain adjustments.

 

The Notes are due on the earlier of (i) the 12 month anniversary of the issuance date, and (ii) the date on which the Company completes a public offering for cash of common stock and/or common stock equivalents which results in the listing of the Company’s common stock on a “national securities exchange” as defined in the Securities Exchange Act of 1934 (a “Qualified Financing”), provided that unless there is an event of default, the Company may extend the maturity date by six months in its discretion. The Notes bear interest at 8% per annum, payable monthly, subject to an increase to 15% in case of an event of default as provided for therein. Furthermore, at any time before the 12 month anniversary of the date of issuance of a Note, the Company may, after providing written notice to the holder, prepay all of the then outstanding principal amount of the Note for cash in an amount equal to the sum of 105% of the then outstanding principal amount of the Note, accrued but unpaid interest and all liquidated damages and other amounts due in respect of the Note (if any).

 

The Notes may, at the discretion of the Company, be converted into shares of a new class of convertible preferred stock of the Company (the “Convertible Preferred Stock”) on the closing date of the Qualified Financing. In the event of the conversion, the holder will receive a number of shares of Convertible Preferred Stock equal to the quotient obtained by dividing (i) the unpaid principal amount of this Note (together with any interest accrued but unpaid thereon) by (ii) the closing price of the securities issued in the Qualified Financing on the closing date of the Qualified Financing. Upon issuance, the conversion price of the Convertible Preferred Stock will be equal to the closing price of the securities issued in the Qualified Financing, subject to adjustment.

 

The Company will record a debt discount related to the original issue discount and issuance costs for each note and will evaluate the note terms for derivative accounting treatment.

 

Stock Option Expirations

 

On May 2, 2023, 19,000 stock options expired. As a result, the Company has no stock options currently outstanding.

 

Default on 2022 Term Loan

 

On May 11, 2023, the Company defaulted on the 2022 Term Loan and the interest rate reset to 15%.

 

Warrant Expirations

 

On May 17, 2023, 1,453,028 warrants issued with the Series E Preferred stock and 67,252 other warrants expired.