Nuo Therapeutics Announces Recapitalization and Exchange Agreement that Simplifies Capital Structure

Rhea-AI Summary

Nuo Therapeutics, Inc. (OTC Pink: AURX) announced the closing of a recapitalization and exchange agreement that simplifies its capital structure. The agreement involved an exchange of Series A Preferred Stock for 2.7 million common shares and conversion of approximately $330,000 of secured notes into 838,487 shares. The transaction leaves the company with no debt and around 29.2 million shares outstanding. The CEO noted potential improvements pending a decision from CMS regarding national coverage for the Aurix product, crucial for the company's future viability.

Positive

• Successful recapitalization simplifies capital structure by eliminating debt.
• Conversion of secured notes helps reduce financial obligations, strengthening balance sheet.
• Potential CMS decision on Aurix coverage could enhance market accessibility.

Negative

• Uncertainty surrounding CMS's coverage decision may affect future operations.
• Company risks ceasing operations without a viable path forward for Aurix.
• Rapid depletion of cash resources raises concerns about financial stability.

HOUSTON, Oct. 6, 2020 /PRNewswire/ -- Nuo Therapeutics, Inc. (OTC Pink: AURX) ("Nuo" or the "Company"), today announced the closing of a recapitalization and exchange agreement between the Company, Deerfield Management and affiliates thereof (Deerfield Investors), and senior secured noteholders (Noteholders) whereby the Series A Preferred Stock held by the Deerfield Investors was exchanged for 2,700,000 shares of common stock concurrent with the cancellation and conversion of the senior secured notes into 838,487 shares of common stock and the purchase of 487,500 of shares of common stock for cash by members of the Noteholder group.   In addition, Lawrence S. Atinsky, the Deerfield Investors' representative on the Company's board resigned his board position concurrent with the closing of the transaction.   The shares of Series A preferred stock were cancelled in full and the Company now has only common stock outstanding and no debt outstanding.  The conversion of the approximately $330,000 of senior secured note principal and accrued interest and purchase of shares of common stock were transacted at $0.40 per share.   Five-year warrants with a strike price of $0.40 to purchase approximately 3,977,961 shares of common stock were issued in conjunction with the conversion of the senior notes and the purchase of common stock for cash.  The original warrants issued in 2019 in conjunction with the issuance of the senior notes were cancelled.  Following the closing of the transaction, the Company's total shares of common stock outstanding are approximately 29.2 million shares.  Further details are available in a Current Report on 8-K filing made today with the Securities and Exchange Commission.

"The Company is pleased to reach agreement with the Deerfield Investors and the Noteholders to dramatically simplify the Company's capital structure," commented David Jorden, Nuo's Chief Executive Officer.  In addition, the raise of a modest amount of capital to be potentially used for corporate and operational needs provides some valuable but limited resources.   The Company awaits the release of the Center for Medicare & Medicaid's (CMS) proposed decision memorandum concerning the potential national coverage of autologous blood-based products for chronic non-healing wounds.  The reconsideration request was officially opened on April 3, 2020 with the initiation of a 30-day public comment period and the proposed decision is expected in early October per the standard guidelines followed by CMS national coverage determinations.  Finally, I would like to express my appreciation to the Deerfield organization for working cooperatively with the Company to achieve an outcome that could position Nuo for possible success if the Aurix product becomes accessible to chronic wound patients and their caregivers in a manner which we have long believed to be in these patients' best interests."

As the Company disclosed previously, in the absence of a viable path forward for Aurix as an accessible product option for physicians treating Medicare beneficiaries with chronic wounds, the Company will likely proceed to cease any and all operations.

About Nuo Therapeutics

Nuo Therapeutics, Inc. is a biomedical company offering biodynamic therapies for chronic wound care. The Company's Aurix System is a biodynamic hematogel that harnesses a patient's innate regenerative abilities for the management of a variety of wounds.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words "anticipate," "believe," "estimate," "expect," "intend," "the facts suggest," "will be," "will continue," "will likely result" or, in each case, their negative, or words or expressions of similar meaning.

These statements reflect the Company's current view of future events and are subject to certain risks and uncertainties, which include, among others, the following:

• the Company's ability to receive a favorable national coverage decision from CMS for Aurix in time to prevent the Company from ceasing its operations;
• significant uncertainty surrounding an agreed path forward for Aurix as an accessible product option for physicians treating Medicare beneficiaries with chronic wounds – in the absence of such a path, the Company will likely have to cease operations;
• the continuing rapid depletion of the Company's cash resources, the Company's need for immediate and substantial additional financing and its ability to obtain that financing, including in light of the low share price and significant volatility with respect to its common stock - if the Company were required to liquidate today, the holders of its common stock would not receive any consideration for their common stock;
• the fact that the Company has no significant assets left to monetize other than the Aurix System itself;
  

as well as other risks and uncertainties referenced in the Company's SEC filings.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from those anticipated in these forward-looking statements, and the Company's business, results of operations, financial condition and cash flows may be materially and adversely affected.  Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.  Except to the extent required by applicable law or rules, the Company undertakes no obligation and does not intend to update, revise or otherwise publicly release any revisions to its forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events.

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SOURCE Nuo Therapeutics, Inc.

FAQ

What is the recent recapitalization announcement by Nuo Therapeutics?

Nuo Therapeutics announced a recapitalization that simplifies its capital structure, exchanging Series A Preferred Stock for common shares and converting secured notes.

How many shares are outstanding for Nuo Therapeutics (AURX) after the recapitalization?

After the recapitalization, Nuo Therapeutics has approximately 29.2 million shares of common stock outstanding.

What impact does the CMS decision have on Nuo Therapeutics?

The CMS decision on coverage for the Aurix product is critical; if unfavorable, it could force the company to cease operations.

What financial obligations has Nuo Therapeutics eliminated?

Nuo Therapeutics has eliminated its debt through the recapitalization, simplifying its financial obligations.

What risks does Nuo Therapeutics face following the recapitalization?

Nuo Therapeutics faces risks related to cash resource depletion and dependency on CMS's coverage decision for its future.