Sernova Biotherapeutics Secures $1 Million Convertible Debt Financing

Rhea-AI Summary

Sernova Biotherapeutics (SEOVF) has secured a CAD$1 million unsecured convertible debenture financing from board member Dr. Steven Sangha. The debenture, maturing on March 4, 2027, carries a 15% interest rate and is convertible into common shares at CAD$0.20 per share.

The company also issued 5 million non-transferable share purchase warrants, exercisable at CAD$0.20 per share until March 4, 2028. The financing proceeds will be used for working capital. The transaction, classified as a 'related party transaction,' is exempt from formal valuation and minority shareholder approval requirements as it represents less than 25% of the company's market capitalization.

Positive

• Secured CAD$1M additional working capital
• Support from insider investor shows confidence

Negative

• High 15% interest rate indicates expensive financing
• Potential dilution at CAD$0.20 conversion price
• Related party transaction raises governance concerns

LONDON, Ontario and BOSTON, March 05, 2025 (GLOBE NEWSWIRE) -- Sernova Biotherapeutics, (TSX: SVA) (OTCQB: SEOVF) (FSE/XETRA: PSH), a leading regenerative medicine company focused on developing its Cell Pouch Bio-hybrid Organ as a functional cure for type 1 diabetes, today announced a CAD$1,000,000 unsecured convertible debenture financing with Dr. Steven Sangha, a current Sernova shareholder and board member. Proceeds from the financing will be used to fund working capital.

The debenture is repayable on March 4, 2027, unless earlier converted or redeemed, and carries a 15% interest rate. The Company also issued 5,000,000 non-transferable share purchase warrants, each warrant being exercisable into one common share at a price of CAD$0.20 per share up to March 4, 2028. The debenture holder will have the right to convert the principal amount of the debenture into common shares of Sernova at a conversion price of CAD$0.20 per share. The debenture and warrants are subject to a four-month hold period under securities regulations.

The issuance of debentures and warrants to Dr. Sangha is a "related party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on exemptions from the formal valuation requirements of MI 61-101 pursuant to section 5.5(a) and the minority shareholder approval requirements of MI 61-101 pursuant to section 5.7(1)(a) in respect of issuance of debentures and warrants to Dr. Sangha as the fair market value of the transaction does not exceed 25% of the Company's market capitalization. The Company has closed this financing without filing a material change report beforehand as the Company wished to secure this financing as soon as terms were settled.

ABOUT SERNOVA BIOTHERAPEUTICS

Sernova Biotherapeutics is a clinical-stage company developing regenerative medicine therapeutics combining its Cell Pouch with human donor cells or stem cell-derived cell therapies to create bio-hybrid organs to treat chronic diseases. A bio-hybrid organ is comprised of non-biomaterials, such as the Cell Pouch, integrated with living tissues to restore or enhance the function of a compromised organ. This innovative approach aims to deliver a potentially revolutionary treatment for patients with chronic diseases, initially focusing on type 1 diabetes and thyroid disorders.

FOR FURTHER INFORMATION, PLEASE CONTACT:

David Burke VP, Investor Relations (917) 751-5713 Email: David.Burke@sernova.com Website: https://sernova.com/

The TSX has not reviewed this news release and does not accept responsibility for the accuracy or adequacy of this news release.

FAQ

What are the key terms of Sernova's (SEOVF) March 2025 convertible debenture financing?

CAD$1 million debenture with 15% interest rate, convertible at CAD$0.20 per share, maturing March 4, 2027, plus 5 million warrants exercisable at CAD$0.20 until March 4, 2028.

How will Sernova (SEOVF) use the proceeds from the $1M convertible debenture?

The proceeds will be used to fund working capital.

What is the conversion price for Sernova's (SEOVF) March 2025 convertible debenture?

The conversion price is CAD$0.20 per common share.

Who provided the $1M convertible debenture financing to Sernova (SEOVF)?

Dr. Steven Sangha, a current Sernova shareholder and board member.