NLS Pharmaceutics Ltd. Announces Closing of Private Placement and Expected Compliance with Nasdaq Continued Listing Rules

Rhea-AI Summary

NLS Pharmaceutics (NASDAQ:NLSP) has announced the closing of a private placement offering, raising $3.2 million through the issuance of 806,452 common shares and warrants at $3.97 per unit. The company also closed a debt purchase agreement, converting $4.0 million of debt into 806,452 convertible preferred shares at $4.96 each.

Additionally, NLS believes it has regained compliance with Nasdaq's minimum bid price requirement and expects to meet the stockholders' equity requirement for continued listing on the Nasdaq Capital Market. The securities were offered under exemptions from registration requirements and have not been registered under the Securities Act.

Positive

• Raised $3.2 million through private placement offering
• Converted $4.0 million of debt into convertible preferred shares
• Regained compliance with Nasdaq's minimum bid price requirement
• Expected to meet Nasdaq's stockholders' equity requirement for continued listing

Negative

• Potential dilution of existing shareholders due to new share issuance
• Warrants and convertible preferred shares may lead to further dilution if exercised or converted

Insights

Financial Analyst

NLS Pharmaceutics has made significant moves to strengthen its financial position and maintain its Nasdaq listing. The company raised $3.2 million through a private placement of common shares and warrants, priced at $3.97 per unit. Additionally, they converted $4 million of debt into convertible preferred shares at $4.96 per share. These actions have likely improved their balance sheet and cash position.

The potential for an additional $10 million investment in convertible preferred shares provides a future funding option, which could be important for a clinical-stage biopharmaceutical company. The company's belief that it has regained compliance with Nasdaq's minimum bid price and stockholders' equity requirements is positive for maintaining its listing, which is vital for investor access and liquidity.

However, the dilutive effect of these transactions on existing shareholders should be considered. The private placement and debt conversion will increase the share count, potentially impacting earnings per share. The warrants and convertible preferred shares also represent potential future dilution. Investors should monitor the company's progress in its CNS disorder therapies development, as clinical success will be important for long-term value creation.

Legal Expert

The private placement and debt conversion transactions NLS Pharmaceutics has undertaken are structured to comply with securities regulations, specifically relying on exemptions under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D. This approach allows the company to raise capital without the time and expense of a registered public offering.

However, it's important to note that these securities are restricted and cannot be freely traded without registration or another applicable exemption. This limitation could affect their liquidity and value for the investors involved.

The company's efforts to regain compliance with Nasdaq listing requirements are important from a legal and regulatory standpoint. Maintaining a Nasdaq listing provides numerous benefits, including increased visibility, liquidity and access to capital markets. The apparent success in meeting the minimum bid price and stockholders' equity requirements should help stabilize the company's position on the exchange.

Investors should be aware that while the company believes it has met these requirements, final confirmation from Nasdaq is typically required. Additionally, ongoing compliance will be necessary to maintain the listing in the future.

ZURICH, SWITZERLAND / ACCESSWIRE / October 15, 2024 / NLS Pharmaceutics Ltd. (NASDAQ:NLSP)(NASDAQ:NLSPW) ("NLS" or the "Company"), a Swiss clinical-stage biopharmaceutical company focused on the discovery and development of innovative therapies for patients with rare and complex central nervous system disorders, today announced the closing of a private placement offering consisting of the issuance and sale of 806,452 common shares, par value CHF 0.80 per share and common share purchase warrants to purchase 806,452 common shares, at a combined purchase price of $3.97, for aggregate gross proceeds of $3.2 million. The warrants have a term of five years and have an exercise price of $4.25 per share.

In addition, the Company closed a debt purchase agreement, with an accredited investor, pursuant to which in exchange for the satisfaction of the Company's debt in the aggregate amount of $4.0 million held by the investor, the Company agreed to issue 806,452 newly designated convertible preferred shares, at a purchase price of approximately $4.96. The preferred shares contain a conversion price of $4.96 per share. Pursuant to the debt purchase agreement, the Company agreed to grant the investor the right to purchase up to an additional $10.0 million worth of convertible preferred shares beginning six months after the closing and continuing for as long as the investor owns preferred shares.

NLS also announced that it believes it has regained compliance with the minimum bid price requirement pursuant to Nasdaq Listing Rule 5550(a)(2), due to the fact that its common shares have traded above $1.00 for ten consecutive trading days. In addition, due in part to the foregoing transactions, NLS announced that it believes that it satisfies the stockholders' equity requirement of at least $2.5 million pursuant to Nasdaq Listing Rule 5550(b)(1) for continued listing on the Nasdaq Capital Market.

The securities described above were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506(b) of Regulation D promulgated thereunder. The securities have not been registered under the Securities Act or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About NLS Pharmaceutics Ltd.

NLS is a global development-stage biopharmaceutical company, working with a network of world-class partners and internationally recognized scientists, focused on the discovery and development of innovative therapies for patients with rare and complex central nervous system disorders who have unmet medical needs. Headquartered in Switzerland and founded in 2015, NLS is led by an experienced management team with a track record of developing and commercializing product candidates. For more information, please visit www.nlspharma.com.

Safe Harbor Statement

This press release contains expressed or implied forward-looking statements pursuant to U.S. Federal securities laws, including statements related to the timing and completion of the offering, the satisfaction of customary closing conditions related to the offering and the intended use of proceeds therefrom. For example, the Company is using forward-looking statements when discussing the potential conversion of preferred shares or exercise of warrants and that it believes it is in compliance with applicable Nasdaq rules. These forward-looking statements and their implications are based on the current expectations of the management of NLS only and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Except as otherwise required by law, NLS undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. More detailed information about the risks and uncertainties affecting NLS is contained under the heading "Risk Factors" in NLS' annual report on Form 20-F for the year ended December 31, 2023 filed with the Securities and Exchange Commission, or SEC, which is available on the SEC's website, www.sec.gov, and in subsequent filings made by NLS with the SEC.

For additional information:

Elena Thyen, CFO
NLS Pharmaceutics Ltd.
+41(0) 44 512 21 50
etp@nls-pharma.com
www.nls-pharma.com

SOURCE: NLS Pharmaceutics Ltd.

View the original press release on accesswire.com

FAQ

How much did NLS Pharmaceutics (NLSP) raise in its recent private placement?

NLS Pharmaceutics (NLSP) raised $3.2 million in gross proceeds through its recent private placement offering.

What was the purchase price per unit in NLSP's private placement?

The combined purchase price per unit in NLSP's private placement was $3.97, which included one common share and one warrant.

How did NLS Pharmaceutics (NLSP) address its debt in the recent transaction?

NLS Pharmaceutics (NLSP) converted $4.0 million of debt into 806,452 convertible preferred shares at a purchase price of approximately $4.96 per share.

Has NLS Pharmaceutics (NLSP) regained compliance with Nasdaq listing requirements?

NLS Pharmaceutics (NLSP) believes it has regained compliance with Nasdaq's minimum bid price requirement and expects to meet the stockholders' equity requirement for continued listing.