ReShape Lifesciences Inc. (NASDAQ:RSLS), a micro-cap pharmaceutical company with a market capitalization of $3.26 million, has amended the terms of its senior secured convertible note with institutional investor Ascent Partners Fund LLC. The modification, effective Monday, January 14, 2025, extends the note's maturity date and adjusts the prepayment conditions. According to InvestingPro data, the company maintains a current ratio of 1.33 and holds more cash than debt on its balance sheet.
Initially entered into on October 16, 2024, the securities purchase agreement included the issuance of a convertible note with an original principal amount of $833,333.34. The recent amendment extends the note's maturity to the earlier of the completion of ReShape's impending merger with Vyome Therapeutics, Inc., or 90 days post-amendment. Additionally, the investor is no longer required to convert any portion of the note at the merger's closing.
The amendment also reduces the mandatory prepayment percentage from 66% to 50% for funds the company may raise in future financings. Furthermore, ReShape Lifesciences will pay a $45,000 cash extension fee upon the note's maturity.
This strategic merger aims to further Vyome's immuno-inflammatory assets and explore additional opportunities in the Indian innovation corridor and the U.S. market. Simultaneously, ReShape has entered an asset purchase agreement with Biorad Medisys, contributing to the net cash consideration for the merger's post-closing ownership allocation.
ReShape Lifesciences has also been facing an equity shortfall, putting its Nasdaq listing at risk. In response, the company has 45 days to submit a plan to regain compliance. In terms of financial performance, ReShape Lifesciences reported a 16.6% revenue increase in its third-quarter earnings for 2024, totaling $2.3 million and marking a 6.4% year-over-year growth.
In addition, the company has announced strategic mergers and an asset sale to Biorad, which are aimed at enhancing shareholder value. These recent developments highlight ReShape's proactive approach towards growth and compliance.
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