WENA 10-Q: Equity-heavy Merger, Limited Cash, Dilution Risk
ANEW Medical, Inc. (WENA) completed a business combination and began Nasdaq trading after receiving net cash proceeds of approximately $181,339 related to the merger and related PIPE financings. The merger consideration included 6,000,000 shares valued at $60.0 million (implied $10 per share) and contingent consideration of 2,000,000 shares subject to share-price triggers. The company reported recurring losses, negative operating cash flows, an accumulated deficit of about $16.9 million, and stated there is substantial doubt about its ability to continue as a going concern for 12 months without additional funding. For the three and six months ended June 30, 2025, material items disclosed include net loss per share of $(0.12) and $(0.21) in comparative periods, weighted average common shares outstanding of 33,952,418 (three months) and 30,755,807 (six months) for 2025 vs 15,678,898 in comparable 2024 periods, representative warrant liabilities of $132,447 (June 30, 2025), and significant non-cash share-based compensation and warrant fair value changes. The company holds intangible license and patent assets (licenses totaling $2,251,134 across categories) and disclosed multiple convertible notes, financings, and conversions into common stock during the periods presented.
Positive
- Completed business combination and Nasdaq listing with Common Stock and Warrants trading under WENA / WENAW, expanding public-market access
- PIPE financings closed and certain convertible notes were converted, eliminating several outstanding debt balances (net liability from specified notes reduced to $0)
- Intangible assets documented (licenses and patents totaling $2,251,134) supporting product and technology portfolio
Negative
- Substantial doubt about going concern due to recurring losses, negative operating cash flows, and an accumulated deficit of approximately $16.9 million
- Limited cash at closing (approximately $181,339 received) with much of PIPE proceeds used to settle transaction costs
- Material dilution risk from contingent consideration (2,000,000 shares), converted notes, and warrant exercises (11.0 million exercised for $11.4M proceeds)
Insights
TL;DR: Post-merger liquidity is limited; recurring losses and contingent equity create dilution risk.
The filing documents a business combination that materially changed capital structure through issuance of Consideration Shares and PIPE financings while providing only modest net cash (~$181k) at closing. The company reports recurring operating losses, negative cash flows, and an accumulated deficit (~$16.9M), and explicitly states substantial doubt about going concern for the next 12 months without additional financing. Multiple convertible notes and warrant exercises converted to equity, increasing outstanding shares (shared weighted averages rose materially versus prior year). Representative warrant liabilities rose to $132,447, reflecting market-driven fair value volatility. For investors, the material considerations are the company's dependence on equity/debt raises, potential dilution from contingent shares and convertibles, and limited immediate cash runway.
TL;DR: The merger used stock consideration and PIPEs but provided minimal cash; earnouts and contingencies remain meaningful.
The Merger Consideration was equity-heavy: 6,000,000 shares valued at $60M and 2,000,000 contingent shares tied to future stock price performance. Redwoods and ANEW PIPE financings were structured to settle transaction costs, with much of proceeds used for fees, leaving limited net cash into operations. Several notes were converted into equity and warrants were exercised (11.0 million warrants for gross proceeds of $11.4M), materially increasing share count and dilutive potential. The structure shifts financing risk to future equity issuance and contingent equity payouts, which can be dilutive and may require governance/stockholder approvals for conversions or triggers. Impactful for capital structure and future financing plans.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
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Indicate by check mark whether the registrant
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KLOTHO NEUROSCIENCES, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2025
TABLE OF CONTENTS
| Page | |||
| PART I. FINANCIAL INFORMATION | 1 | ||
| ITEM 1. | Financial Statements | 1 | |
| Condensed Consolidated Balance Sheets at June 30, 2025 (Unaudited) and December 31, 2024 | 1 | ||
| Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 | 2 | ||
| Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2025 and 2024 | 3 | ||
| Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 | 4 | ||
| Notes to Unaudited Condensed Consolidated Financial Statements | 5 | ||
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | |
| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | 24 | |
| ITEM 4. | Controls and Procedures | 25 | |
| PART II. OTHER INFORMATION | 26 | ||
| ITEM 1. | Legal Proceedings | 26 | |
| ITEM 1A. | Risk Factors | 26 | |
| ITEM 2. | Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities | 26 | |
| ITEM 3. | Defaults Upon Senior Securities | 26 | |
| ITEM 4. | Mine Safety Disclosures | 26 | |
| ITEM 5. | Other Information | 26 | |
| ITEM 6. | Exhibits | 26 | |
| SIGNATURES | 27 | ||
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KLOTHO NEUROSCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Other assets: | ||||||||
| Licenses | ||||||||
| Patents | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Notes payable to related parties | - | |||||||
| Notes payable | - | |||||||
| Total current liabilities | ||||||||
| Warrant liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 10) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, par value $ | - | - | ||||||
| Common stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
1
KLOTHO NEUROSCIENCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Professional fees | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Research and development | - | - | ||||||||||||||
| Share-based compensation | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest Expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on conversion of debt | ( | ) | - | ( | ) | - | ||||||||||
| Other income (expense) | ( | ) | ( | ) | ||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | - | - | - | - | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share: Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding | ||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
2
KLOTHO NEUROSCIENCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
| Common Stock | Preferred Stock (Series B, C and D) | Additional Paid-in | Common Stock | Accumulated | Total Stockholder’s Equity | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | to be Issued | Deficit | (Deficit) | |||||||||||||||||||||||||
| Balance, January 1, 2024* | $ | $ | $ | - | ( | ) | ||||||||||||||||||||||||||
| Share-based compensation | - | - | - | $ | - | $ | - | - | ||||||||||||||||||||||||
| Cancelled preferred B shares | - | - | ( | ) | $ | ( | ) | $ | ( | ) | - | - | ( | ) | ||||||||||||||||||
| Stock dividends | - | - | - | $ | - | $ | - | - | ( | ) | ( | ) | ||||||||||||||||||||
| Adjustment from reverse merger application* | - | - | - | $ | - | $ | - | - | ||||||||||||||||||||||||
| Net loss | - | - | - | $ | - | $ | - | - | ( | ) | ( | ) | ||||||||||||||||||||
| Balance at March 31, 2024* | $ | $ | $ | $ | $ | - | $ | ( | ) | $ | ||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | |||||||||||||||||||||||||||
| Adjustment from reverse merger application* | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||||||||||||||||
| Public warrants assumed from SPAC | - | - | - | - | - | ( | ) | - | ||||||||||||||||||||||||
| Private warrants assumed from SPAC | - | - | - | - | ( | ) | - | - | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at June 30, 2024 | $ | - | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Balance, January 1, 2025 | $ | - | $ | - | $ | - | $ | ( | ) | $ | ||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Issuance of shares for note payable conversions | - | - | - | - | ||||||||||||||||||||||||||||
| Issuance of equity warrants in connection with convertible debt | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Termination of shares issued during merger under FPA agreement | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at March 31, 2025 | $ | - | $ | - | $ | $ | - | $ | ( | ) | $ | |||||||||||||||||||||
| Share-based compensation | - | - | - | - | ||||||||||||||||||||||||||||
| Issuance of common shares in connection with note conversions | - | - | - | - | ||||||||||||||||||||||||||||
| Issuance of common shares in connection with warrant exercises | - | - | - | - | ||||||||||||||||||||||||||||
| Issuance of common shares in connection with stock subscriptions | - | - | - | - | ||||||||||||||||||||||||||||
| Termination of shares issued during merger under FPA agreement | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Issuance of Preferred B stock for cash | - | - | - | - | - | |||||||||||||||||||||||||||
| Deemed dividend - warrant modification | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | - | $ | $ | - | $ | ( | ) | $ | ||||||||||||||||||||||
| * |
See accompanying notes to the unaudited condensed consolidated financial statements.
3
KLOTHO NEUROSCIENCES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Changes in fair value of warrant liability | ||||||||
| Commitment fee | - | |||||||
| Interest expense | - | |||||||
| Loss on conversion of note payable | - | |||||||
| Share-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses | ( | ) | ||||||
| Related party payable | ( | ) | ( | ) | ||||
| Other Liabilities | - | |||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Acquisition of drug license | - | ( | ) | |||||
| Net cash used in (provided by) investing activities | $ | - | $ | ( | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from convertible promissory note, net of issuance cost | ||||||||
| Proceeds from sales of stocks and warrants, net | ||||||||
| Proceeds from stock subscriptions | - | |||||||
| Proceeds from sale of preferred B shares | - | |||||||
| Payments on notes payable | ( | ) | - | |||||
| Payments for deferred financing costs | ( | ) | - | |||||
| Proceeds from FPA settlement | - | |||||||
| Payments on financed director and officer insurance | ( | ) | - | |||||
| Merger proceeds net of transaction cost | - | |||||||
| Net cash provided by financing activities | $ | $ | ||||||
| NET CHANGE IN CASH | ||||||||
| Cash - Beginning of period | ||||||||
| Cash - End of period | $ | $ | ||||||
| SUPPLEMENTAL NON-CASH FINANCING AND INVESTING ACTIVITIES: | ||||||||
| Note payable settled with issuance of common stock | $ | $ | ||||||
| Reversal of OID | - | |||||||
| Non-cash directors and officers insurance | - | $ | ||||||
| Non-cash PIPE Funds used for merger transaction close | - | $ | ||||||
| Commitment fee paid in stock | - | $ | ||||||
| Assumed income tax payable from merger | - | $ | ||||||
| Assumed warrant liability from merger | - | $ | ||||||
| Interest payable settled with issuance of common stock | $ | - | ||||||
| Issuance of warrants | $ | - | ||||||
| Repurchase of warrants | ( | ) | $ | - | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Interest Paid | $ | $ | ||||||
| Taxes Paid | $ | - | $ | - | ||||
See accompanying notes to the unaudited condensed consolidated financial statements.
4
KLOTHO NEUROSCIENCES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION AND BUSINESS DESCRIPTION
Klotho Neurosciences, Inc. (“The Company” or “Klotho”), formerly known as ANEW Medical, Inc., develops essential medicines for the treatment of chronic diseases – cancer, cardiovascular, and neurodegenerative disorders. The Company currently has acquired two licensed platforms: a generic drug portfolio and a biosimilar biologics platform that uses biologic therapies to treat cancer, and a proprietary, patented gene therapy platform that uses a gene therapy approach to introduce a therapeutic protein called “Klotho” inside the body to treat neurodegenerative diseases.
On September 12, 2022, the Company acquired five market-approved anti-cancer drugs approved for sale in Germany. The Market Authorizations (MA’s) are for four of the drugs that comprise the “FOLFOX” and “FOLFIRI” multi-drug regimens used in treatment of metastatic colorectal and gastric cancer and in two of the drugs that are used to treat metastatic lung cancer. The drugs are important in the treatment of many solid tumors in both childhood and adult cancers. Previously, the Company acquired two off-patent bio generic antibodies from Reliance Life Sciences (RLS), the life science arm of Reliance Industries Pvt Ltd. of Navi Mumbai, India.
Effective July 24, 2024, the Company changed its legal name from ANEW Medical, Inc. to Klotho Neurosciences, Inc. This name change was approved by the Company’s Board of Directors to better reflect the strategic focus of its proprietary products. Throughout these financial statements, references to the “Company” refer to Klotho Neurosciences, Inc., formerly known as ANEW Medical, Inc (ANEW). Under certain circumstances, references to ANEW have remained useful when describing the sequence of events that occurred during the merger between Redwoods and ANEW.
Business Combinations
As of May 30, 2023, Redwoods Acquisition Corp., a Delaware corporation and a special purpose acquisition company (“Redwoods”), ANEW Medical Sub, Inc., a Wyoming corporation (“Merger Sub”) and ANEW Medical, Inc., a Wyoming corporation (“ANEW”) entered into a Business Combination Agreement, which was amended as of November 4, 2023 (the “Business Combination Agreement”). On June 21, 2024 (the “Closing Date”), Merger Sub merged with and into ANEW, with ANEW continuing as the surviving corporation and as a wholly owned subsidiary of Redwoods (the “Business Combination”). In connection with the Business Combination, on June 21, 2024, Redwoods filed its Second Amended Certificate of Incorporation with the Delaware Secretary of State and adopted the amended and restated bylaws (the “Amended and Restated Bylaws”), which replaced Redwoods’ Charter and Bylaws in effect as of such time. In connection with the closing of the Business Combination (the “Closing”), Redwoods changed its name to “ANEW Medical, Inc.”
For accounting purposes, the transactions contemplated by the Business Combination are treated as a reverse acquisition and, as such, the historical financial statements of the accounting acquirer ANEW (Wyoming) will become the historical financial statements of the Company. Under this method of accounting, Redwoods was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Merger was treated as the equivalent of the Company issuing shares for the net assets of Redwoods, accompanied by a recapitalization. The net assets of Redwoods were stated at historical cost with no goodwill or other intangible assets recorded.
5
Recapitalization
In connection with the merger, the Company issued
Immediately after giving effect to the Business
Combination,
At Closing, pursuant to the terms of the Business Combination Agreement and after giving effect to the redemptions of shares of Redwoods Common Stock:
| ● | The total consideration paid at Closing (the “Merger Consideration”) by Redwoods to ANEW Medical, Inc. security holders was |
| ● | Each share of ANEW Medical Common Stock, if any, that was owned by Redwoods, Merger Sub, ANEW Medical, Inc. or any other affiliate of Redwoods immediately prior to the effective time of the Merger (the “Effective Time”) was automatically cancelled and retired without any conversion or consideration; |
| ● | Each share of Merger Sub common stock, par value $ |
In connection with the Merger, the Company
entered into a convertible promissory note and Securities Purchase Agreement (“SPA”) with certain accredited investors (the
“Redwoods PIPE Investors”) for an aggregate of
In connection with the Merger, the Company
entered convertible promissory note and Securities Purchase Agreement (“SPA”) with certain accredited investors (the “ANEW
PIPE Investors”) for an aggregate of
6
Certain ANEW stockholders may be entitled to up
to an additional
| (i) |
| (ii) |
In accordance with guidance applicable to these
circumstances, the equity structure has been restated in all comparable periods up to June 21, 2024 and reflected as such as of December
31, 2024, to reflect the number of shares of the Company’s common stock, $
For accounting purposes, the Merger was
treated as the equivalent of the Company issuing shares for the net assets of Redwoods, accompanied by a recapitalization.
The net assets of Redwoods were stated at historical cost with no goodwill or other intangible assets recorded. In connection
with the Merger, in addition to the warrants, ANEW Medical assumed $
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
The accompanying unaudited condensed consolidated financial statements
have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating losses and negative
cash flows from operations since inception. As of June 30, 2025, the Company had cash of approximately $
Basis of Presentation and Principles of Consolidation
The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. The Company prepared the Financial Statements, without audit, pursuant to the rules and regulations of the SEC applicable to quarterly reporting on Form 10-Q and reflect, in management’s opinion, all adjustments necessary to present fairly the financial information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been consolidated or omitted as permitted by such rules and regulations. These Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in the 2024 Annual Report. Results of operations for interim periods are not necessarily indicative of annual results.
7
Reclassification
Certain prior year amounts have been reclassified for comparative purposes to conform to the current-year financial statement presentation. These reclassifications had no effect on previously reported results of operations and were not material.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents represent cash on hand, demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of three months or less and are readily convertible to known amounts of cash.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $
8
Fair Value of Financial Instruments
The assets and liabilities are valued using a fair market basis as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) ASC 820, Fair Value Measurement. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. The Company uses a three-level hierarchy established by the FASB that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of the fair value hierarchy are described below:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. | |
| Level 2: | Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. | |
| Level 3: | Unobservable inputs with little or no market data available, which require the reporting entity to develop its own assumptions. |
The Company’s assessment of the significance
of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
| Fair value measurements at reporting date using: | ||||||||||||||||
| Fair value | Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents, June 30, 2025 | $ | $ | $ | - | $ | - | ||||||||||
| Cash equivalents, December 31, 2024 | $ | - | $ | - | $ | - | $ | - | ||||||||
| Liabilities: | ||||||||||||||||
| Representative warrant liabilities, June 30, 2025 | $ | $ | - | $ | - | $ | ||||||||||
| Liabilities: | ||||||||||||||||
| Representative warrant liabilities, December 31, 2024 | $ | $ | - | $ | - | $ | ||||||||||
The following tables present a reconciliation of the Level 3 Representative Warrants liabilities:
| Three Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Representative warrant liabilities, April 1 | $ | $ | - | |||||
| Change in fair value | - | |||||||
| Representative warrant liabilities, June 30 | $ | $ | - | |||||
Six
Months Ended | ||||||||
| 2025 | 2024 | |||||||
| Representative warrant liabilities, January 1 | $ | $ | - | |||||
| Change in fair value | - | |||||||
| Representative warrant liabilities, June 30 | $ | $ | - | |||||
9
Intangible Assets
The Company’s intangible assets consist of acquired medical licenses and patents.
The Company acquires medical licenses for the treatment of medical conditions to market and sell in the future. The initial asset cost is the cost to acquire the license. Once in use, the Company amortizes the license cost over the useful life using the straight-line method. As part of the licensing agreements, the Company acquires patents and records the cost to acquire patents as the initial asset cost. Once the patents are approved and in use, assuming no litigation expenses, the Company amortizes the patent cost over the useful life using the straight-line method. The amortization period will not exceed the lifespan of the protection afforded by the patent. If the expected useful life of the patent is even shorter, the Company will use the useful life for amortization purposes. Thus, the shorter of a patent’s useful life or legal life will be used for the amortization period.
Impairment of Long-Lived and Intangible Assets
The Company assesses the impairment of long-lived
and intangible assets periodically, or at least annually, and whenever events or changes in circumstances indicate that the carrying value
may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant underperformance
relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall
business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets
may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. Management
is not aware of any other impairment charges that may currently be required; however, the Company cannot predict the occurrence of events
that might adversely affect the reported values in the future. On an annual basis, the Company tests the long-lived and intangible assets
for impairment based on the projected net present value of cash flows for each asset. Prior to the annual impairment test, if circumstances
change and a long-lived or intangible asset is deemed impaired, an impairment loss will be immediately recognized in the statements of
operations. At December 31, 2024, the date of the last impairment test, the Company determined that the license related to Teleost Biopharmaceutic,
LLC was impaired and recognized an impairment expense of $
Revenue Recognition
The Company is in a pre-revenue state and does not generate revenue. When the Company commences to derive revenue, those contracts will be accounted in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic ASC 606).
Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASU 740, “Income Taxes”. Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company is subject to Income tax filings requirements in U.S. federal and various state jurisdictions. The Company’s tax returns for years from 2022, 2023 and 2024 are subject to U.S. federal, state, and local income tax examinations by tax authorities.
The Company reports income tax related interest and penalties within the income tax line item on the consolidated statements of operations. The Company likewise reports the reversal of income tax-related interest and penalties within such line item to the extent the Company resolves the liabilities for uncertain tax positions in a manner favorable to the accruals.
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Net Loss Per Share (Basic and Diluted)
Basic net loss per share is computed by dividing net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares outstanding, plus the number of additional shares that would have been outstanding if the common share equivalents had been issued, if dilutive.
The following table details the net loss per share calculation, reconciles between basic and diluted weighted average shares outstanding, and presents the potentially dilutive shares that are excluded from the calculation of the weighted average diluted common shares outstanding, because their inclusion would have been anti-dilutive:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average common shares outstanding, basic and diluted | ||||||||||||||||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following common share equivalents are excluded from the calculation of weighted average common shares outstanding, because their inclusion would have been anti-dilutive:
| As of June 30, | ||||||||
| 2025 | 2024 | |||||||
| Warrants | ||||||||
| Preferred Shares B | - | |||||||
| Total potentially dilutive shares | ||||||||
Research and Development Cost
Research and development (R&D) costs are expensed as incurred.
R&D costs are related to the Company’s internally funded development of the Company medical licenses and patents. The Company
R&D costs were $
Share-based Compensation
The Company accounts for share-based compensation in accordance with the fair value recognition provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 718 and No. 505. The Company issues restricted stock and stock options to employees and consultants for their services. Costs for these transactions are measured at the fair value of the equity instruments issued at the date of grant. These shares are considered fully vested and the fair market value is recognized as an expense in the period granted. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. For agreements requiring future services, the consulting expense is to be recognized ratably over the requisite service period.
The Company recorded share-based compensation of $
Warrants
As of June 30, 2025, the fair value of the Representative
Warrant liabilities was $
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Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.
Pursuant to Section 850-10-20 the related parties include (a) affiliates of the Company; (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Segment Information
Operating segments are defined as components of
an enterprise for which separate discrete information is available for evaluation by the Chief Operating Decision Maker (“CODM”)
or decision-making group in deciding how to allocate resources and in assessing performance. The Company views its operations and manages
its business as
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, which requires entities to estimate all expected credit losses for financial assets measured at amortized cost basis, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company adopted this guidance on January 1, 2023. The adoption of this accounting standard did not have an impact on the Company’s consolidated financial statements as the Company is in a pre-revenue state and does not generate revenue and has no receivables from third party.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires incremental disclosure of segment information on an interim and annual basis. This ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective application to all prior periods presented in the financial statements is required for public entities. The Company adopted ASU 2023-07 as of January 1, 2024, which resulted in additional disclosures of significant segment expenses and other segment items as well as incremental qualitative disclosures.
NOTE 3 — PREPAID EXPENSES
Prepaid expenses consist of prepayment of the
premium on Directors and Officers insurance, NASDAQ annual fees, association membership fees, and Delaware franchise taxes. As of June
30, 2025 and December 31, 2024, prepaid expenses totaled $
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NOTE 4 — INTANGIBLE ASSETS
Intangible assets consisted of the following:
| Intangible Assets | June 30, 2025 | December 31, 2024 | ||||||
| Licenses | ||||||||
| Non-Exclusive License Agreement | $ | $ | ||||||
| Various generic drugs | ||||||||
| Four generic drugs (Encore) | ||||||||
| Needleless Syringe License | ||||||||
| Patents | ||||||||
| Total intangible assets | $ | $ | ||||||
Intangible assets are as follows:
| ● | Non-Exclusive License Agreement ($ |
| ● | Various Generic Drugs ($ |
| ● | Four Generic Drugs (Encore) ($ |
| ● | Needleless Syringe License ($ |
| ● | Patents ($ |
| ● | Exclusive World-wide License Agreement - On January 24, 2022, the Company signed an exclusive, world-wide License Agreement with the University of Barcelona for a cell and/or gene therapy that has shown compelling activity in animal models of human Alzheimer’s disease and amyotrophic lateral sclerosis (“ALS” or “Lou Gehrig’s disease”). The gene therapy will also be applied to age-related diseases and rare (“Orphan”) diseases. Beginning on December 15, 2022, the annual license fee is |
These licenses and patents are not currently in use as the Company is in pre-revenue stage. Once these licenses are in use, the licenses will be amortized over its useful life. The Company expects to utilize these licenses and patents later in the year.
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NOTE 5 — ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of professional fees.
The accounts payable and accrued expenses as of June 30, 2025 and December 31, 2024 were $
NOTE 6 — NOTES PAYABLE TO RELATED PARTIES
Notes payable to related parties consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| May 2024 and December 2023 - $ | - | |||||||
| Total notes payable to related parties | $ | - | $ | |||||
May 2024 and December 2023 ($
NOTE 7 — NOTES PAYABLE
Upper Clapton Convertible Promissory Note
On September 12, 2022, the Company issued a $
Redwoods PIPE Investor Convertible Promissory Note
On March 4, 2024, in connection with the Merger,
Public ANEW entered into a convertible promissory note that bore an interest of
ANEW PIPE Investors Convertible Promissory Note
On April 22, 2024, prior to the closing of the
Business Combination Agreement, ANEW Medical (Wyoming) entered into a convertible promissory note that bore an interest of
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Austria Capital LLC Convertible Promissory Note
On December 4, 2024, the Company entered into
a convertible promissory note (“the note”) with a principal amount of $
At any time after the approval by the Company’s
stockholders, at the option of the Investor, the outstanding principal amount of the note or any portion thereof, is convertible into
shares of the Company’s common stock at a price of $
Pursuant to the terms of the Sale Purchase Agreement,
the Company issued to the Investor a total of
The note was paid off in full as of June 30, 2025
and net liability as of June 30, 2025 and December 31, 2024 was approximately $
Red Road Holdings Promissory Note
On December 10, 2024, the Company signed a loan
agreement with Red Road Holdings in the amount of $
On January 3, 2025, the Company signed a loan
agreement with Red Road Holdings in the amount of $
On April 4, 2025, the Company signed a loan agreement
with Red Road Holdings in the amount of $
3i LP Institutional Investor Securities Purchase Agreement
On January 23, 2025 (the “Closing Date”)
the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”),
pursuant to which the Investor will purchase, for an aggregate purchase price of $
15
The Notes mature on the anniversary of their date
of issuance, unless prior thereto there is an event of default, bear interest at a rate of
The Warrants expire
On April 30, 2025, the Company made installment
payments in cash totaling $
Conversions
As of June 30, 2025, investors converted convertible promissory notes
related to Austria Capital totaling $
During 2024, investors converted convertible promissory
notes totaling $
NOTE 8 — RELATED PARTIES
On October 24, 2024, Dr. Joseph Sinkule and the
Company entered into an Employment Agreement for a term of
On August 15, 2024, Mr. Jeffrey LeBlanc and the
Company entered into an Employment Agreement for a term of
On December 12, 2023, the Company issued a promissory
note to a member of management. The promissory note accrued interest at a one-time interest fee of $
At June 30, 2025 and December 31, 2024, the aggregate
related party payable was $0 and $
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NOTE 9 — STOCKHOLDER’S EQUITY
On June 21, 2024, the Business Combination was completed. The transaction was accounted as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Redwoods was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of the Combined Company represent a continuation of the financial statements of Klotho with the Transactions treated as the equivalent of Klotho issuing shares for the net assets of Redwoods, accompanied by a recapitalization. Accordingly, for accounting purposes, the Merger was treated as the equivalent of the Company issuing shares for the net assets of Redwoods, accompanied by a recapitalization. The net assets of Redwoods were stated at historical cost with no goodwill or other intangible assets recorded. See “NOTE 1 — Organization and Business Description” for detail.
Equity Incentive Plan
In connection with the Business Combination, the Company’s Board adopted, and the Company’s stockholders approved, the Equity Incentive Plan (“Equity Incentive Plan”). Although the Company does not have a formal policy with respect to the grant of equity incentive awards to the Company’s executive officers, the Company believes that equity awards provide Company’s executive officers with a strong link to the Company’s long-term performance, create an ownership culture and help to align the interests of the Company’s executives and the Company’s stockholders. In addition, Company believes that equity awards with a time-based vesting feature promote executive retention because this feature provides incentives to Company’s executive officers to remain in Klotho’s employment during the applicable vesting period. Accordingly, Company’s board of directors periodically reviews the equity incentive compensation of the Company’s executive officers and from time to time may grant equity incentive awards to them.
Warrants
During the three months ended June 30, 2025, the Company initiated
a warrant exercise inducement program, reducing the exercise price from $
Austria Note Conversion
During the three months ended June 30, 2025, $
3i Note Conversion
During the six months ended June 30, 2025, $
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Investor Share Purchase
On June 5, 2025, the Company entered into a securities purchase agreement
an accredited investor pursuant to Regulation D of the Securities Act of 1933, as amended. Under the terms of the agreement, the Company
issued
Preferred B Shares
On June 9, 2025, the Company conducted a private
offering and issued
Meteora Agreement
On June 13, 2024, RWOD and Klotho entered into a forward purchase agreement
with (i) Meteora Capital Partners, LP (“MCP”), (ii) Meteora Select Trading Opportunities Master, LP (“MSTO”),
and (iii) Meteora Strategic Capital, LLC (“MSC” and, collectively with MCP and MSTO, the “Seller”) (the
“Forward Purchase Agreement”). Redwoods is the holder of the asset and Sponsor and is also a counterparty to Klotho. Upon
Closing of the merger on June 21, 2024 and on September 30, 2024, the value of the contract was $
NOTE 10 — COMMITMENTS AND CONTINGENCIES
From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, management does not believe that any of these proceedings or other claims will have a material effect on the Company’s business, financial condition, results of operations or cash flows.
Termination of acquisition agreement of SB Security Holdings, LLC
On March 26, 2025, the Company entered into a
Share Exchange Agreement (the “SEA”) to acquire SB Security Holdings, LLC, a Delaware limited liability company (“SBSH”),
which is an internet connected video doorbell service company. Pursuant to the SEA, the Company agreed to purchase all of the issued and
outstanding membership interests in SBSH (the “Acquisition”) in exchange for a number of newly issued shares of the Company’s
common stock equal to ninety percent (
NASDAQ Deficiencies
On August 16, 2024, the Company received two delinquency notification letters (the “Notices”) from the Nasdaq Stock Market LLC (“Nasdaq”) due to the Company’s non-compliance with Nasdaq Listing Rules 5450(b)(2)(C) and 5450(b)(2)(A). The Notices cite the Company’s (a) not being in compliance with the minimum Market Value of Publicly Held Shares (“MVPHS”) requirement as set forth in Nasdaq Listing Rule 5450(b)(2)(C) and (b) not being in compliance with the minimum Market Value of Listed Securities (MVLS) requirement as set forth in Nasdaq Listing Rule 5450(b)(2)(A).
In accordance with Nasdaq Listing Rule 5810(c)(3)(D),
the Company has been provided
On October 15, 2024, the Company received a delinquency
notification letter (the “Notice”) from Nasdaq due to the Company’s non-compliance with Nasdaq Listing Rule 5450(a)(1).
The Notice cited the fact that the bid price of the Company’s common stock had closed at less than $
On June 30, 2025, subsequent to a Nasdaq Listing Qualifications Hearing conducted on March 28, 2025, the Company received notice from the Nasdaq Listing Qualifications Panel that the Panel had granted the Company’s request to continue its listing on The Nasdaq Stock Market (“Nasdaq” or the “Exchange”) subject to becoming compliant by August 13, 2025. The Company received a letter of compliance on July 14, 2025.
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NOTE 11 — SEGMENT INFORMATION
Operating segments are defined as components of
an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”)
in deciding how to allocate resources to an individual segment and in assessing performance. The Company operates as a single reporting
segment, focused on developing essential medicines for the treatment of chronic diseases – cancer, cardiovascular, and neurodegenerative
disorders. The Company currently has acquired
The Company’s measure of segment profit
or loss is net loss. The CODM is the chief executive officer (“CEO”).
The following table is representative of the significant
expense categories regularly provided to the CODM when managing the Company’s single reporting segment.
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Significant segment expenses | ||||||||||||||||
| General and administrative(1) | $ | $ | $ | $ | ||||||||||||
| Research and development | - | - | ||||||||||||||
| Professional fees - Licenses and Patents | - | - | ||||||||||||||
| Professional fees - Other | ||||||||||||||||
| Share-based compensation expense | ||||||||||||||||
| Interest expense (income) | ||||||||||||||||
| Other segment items | ||||||||||||||||
| Total operating and segment expenses | $ | $ | $ | $ | ||||||||||||
| Reconciliation of net loss | ||||||||||||||||
| Change in fair value of warrant liabilities | ||||||||||||||||
| Consolidated net loss | $ | $ | $ | $ | ||||||||||||
| 1) |
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NOTE 12 — SUBSEQUENT EVENTS
The Company has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were issued, and has determined that the following subsequent event exists:
On July 3, 2025, the U.S. Food and Drug Administration (FDA) granted Orphan Drug Designation to the company’s novel secreted-Klotho (s-KL) promoter, gene and delivery system (KLTO-202, or s-KL-AAV.myo) for the treatment of ALS. The Orphan Drug Designation provides certain incentives to the Company, such as tax credits, toward the cost of human clinical trials and a waiver for the payment of the GDUFA User Fee for market applications. Additionally, Orphan Drug Designation of the product provides developers with seven years of US market exclusivity and independent from the Company’s intellectual property protection.
On July 3, 2025, the Company entered into a sales agreement with A.G.P./Alliance
Global Partners (“A.G.P.”) relating to the sale of newly issued shares of the Company’s common stock. In accordance
with the terms of the sales agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of
up to $
On July 7, 2025, the Company filed a Form S-3 Registration Statement
with the U.S. Securities Exchange Commission (“SEC”) that allows the Company to offer shares of common stock, preferred stock,
warrants to purchase common stock or preferred stock, and/or units to purchase any of such securities, either individually or in combination
with other securities described in this prospectus, in one or more offerings from time to time, with a total value of up to $
On July 8, 2025, the Board of Directors determined that the Company
had met the criteria set forth in the Business Combination Agreement for the release of
On July 14, 2025, the Nasdaq Hearings Panel (the “Panel”) issued a letter to the Company that the Panel finds the Company in compliance with Listing Rules 5550(a)(1) and 5550(b)(1), the “Bid Price” and “Equity Rules,” respectively. On July 16, 2025, the Company issued a press release announcing that the Company regained compliance with the Nasdaq listing requirements. In addition, on July 14. 2025, Nasdaq approved the Company’s application to “phase down” the listing of its common stock and warrants from the Nasdaq Global Market to the Nasdaq Capital Market. The Company’s common stock will continue to trade under the symbol “KLTO” and the Company’s warrants will continue to trade under the symbol “KLTOW.”
On July 21, 2025, the Company signed a one-year lease in the amount
of $
On July 28, 2025, the Company filed with the SEC a Supplemental Prospectus
under the Form S-3 Registration Statement to register for resale an aggregate
On July 28, 2025, the Company filed with the SEC a Supplemental Prospectus
under the Form S-3 Registration Statement to register for the offer and sell shares of up to $
On August 6, 2025, Klotho Neurosciences, Inc. (the “Company”) entered into a Letter Agreement (“Agreement”) with AAVnerGene Inc. (“AAVnerGene”) for the manufacturing and development of its KLTO-202 gene therapy candidate using the AAVnerGene platform technology. AAVnerGene is an innovation-driven biotech renowned for its transformative technologies in adeno-associated viruses (AAV) manufacturing and tissue-targeted delivery.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Klotho Neurosciences, Inc. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report, including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the search for an initial business combination, the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its initial public offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s filings with the SEC can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
Klotho Neurosciences, Inc. (“The Company” or “Klotho”) develops essential medicines for the treatment of chronic diseases – cancer, cardiovascular, and neurodegenerative disorders. The Company currently has acquired two licensed platforms: a generic drug portfolio and a biosimilar biologics platform that uses biologic therapies to treat cancer, and two proprietary, patented technologies involving the melanocortin receptor-binding molecules and a gene therapy platform which uses a gene therapy approach to introduce a therapeutic protein called “Klotho” inside the body to treat neurodegenerative diseases.
Effective September 17, 2024, the Company changed its legal name from ANEW Medical, Inc. to Klotho Neurosciences, Inc. This name change was approved by the Company’s Board of Directors to better reflect the strategic focus of its proprietary products. Throughout these financial statements, references to the ‘Company’ refer to Klotho Neurosciences, Inc., formerly known as ANEW or ANEW Public. Under certain circumstances, references to ANEW and ANEW Public have remained when useful in describing the sequence of events that occurred during the merger between Redwoods and ANEW.
As of May 30, 2023, Redwoods Acquisition Corp., a Delaware corporation and a special purpose acquisition company (“Redwoods”), Anew Medical Sub, Inc., a Wyoming corporation (“Merger Sub”) and ANEW Medical, Inc., a Wyoming corporation (“ANEW”) entered into a Business Combination Agreement, which was amended as of November 4, 2023 (the “Business Combination Agreement”). On June 21, 2024 (the “Closing Date”), Merger Sub merged with and into ANEW, with ANEW continuing as the surviving corporation and as a wholly owned subsidiary of Redwoods (the “Business Combination”). In connection with the Business Combination, on June 21, 2024, Redwoods filed a Second Amended Certificate of Incorporation with the Delaware Secretary of State, and adopted the amended and restated bylaws (the “Amended and Restated Bylaws”), which replaced Redwoods’ Charter and Bylaws in effect as of such time. In connection with the closing of the Business Combination (the “Closing”), Redwoods changed its name to “ANEW Medical, Inc.”
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Critical Accounting Policies and Estimates
See Item 1, Note 2 – “Summary of Significant Accounting Policies.”
Results of Operations
For accounting purposes, the transactions contemplated by the Business Combination are treated as a reverse acquisition and, as such, the historical financial statements of the accounting acquirer Klotho will become the historical financial statements of Public ANEW. Under this method of accounting, Redwoods was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Merger was treated as the equivalent of the Company issuing shares for the net assets of Redwoods, accompanied by a recapitalization. The net assets of Redwoods were stated at historical cost with no goodwill or other intangible assets recorded.
We have not generated any operating revenues to date. To date, the Company’s operations have consisted of acquiring our licensed platforms and patents, and planning for the Business Combination. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as our expenses associated with planning our research and clinical testing operations.
Results of Operations for the Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024
Revenues
The Company had no revenue for the Three Months ended June 30, 2025 and 2024.
Operating Expenses
Our operating expenses for the three months ended June 30, 2025 were $1,892,852 compared to $395,607 for the three months ended June 30, 2024, an increase of $1,497,245. The increase was primarily due to increase in professional fees, general and administrative, share-based compensation expense, and commencement of research and development efforts.
Net Loss
For the three months ended June 30, 2025, we incurred a net loss of $4,093,231 compared to a net loss of $451,639 for the three months ended June 30, 2024. The increase in net loss was primarily due to increased share-based compensation expenses as well as professional fees and general operating expenses.
22
Results of Operations for the Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024
Revenues
The Company had no revenue for the six months ended June 30, 2025 and 2024.
Operating Expenses
Our operating expenses for the six months ended June 30, 2025 were $3,479,820 compared to $817,652 for the six months ended June 30, 2024, an increase of $2,662,168. The increase was primarily due to increase in professional fees, general and administrative, share-based compensation expense, and research and development efforts.
Net Loss
For the six months ended June 30, 2025, we incurred a net loss of $6,327,213 compared to a net loss of $1,123,683 for the six-month period ended June 30, 2024. The increase in net loss was primarily due to increased share-based compensation expense as well as professional fees and general operating expenses.
Liquidity and Capital Resources
| Six Months Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | $ | (3,522,178 | ) | $ | (929,399 | ) | ||
| Net cash used in investing activities | - | (123,497 | ) | |||||
| Net cash provided by financing activities | 11,889,383 | 1,895,424 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | 8,367,205 | $ | 842,528 | ||||
| Cash, beginning of period | 63,741 | 2,808 | ||||||
| Cash, end of period | $ | 8,430,946 | $ | 845,336 | ||||
Operating Activities
Net cash used in operating activities for the six months ended June 30, 2025 was $3,522,178, compared to $929,399, for the six months ended June 30, 2024.The significant increase in cash used in operating activities is primarily attributable to increases in expenses related to continued operating costs. We expect net cash used in operating activities to increase in the coming periods, until our products are able to produce meaningful revenue.
Investing Activities
Net cash used in investing activities for the six months ended June 30, 2025 was $0, compared to $123,497 for the six months ended June 30, 2024, a decrease of $123,497. The decrease in cash used in investing activities is attributable to the Company not purchasing any new licenses during the period.
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Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2025 was $11,889,383, which consisted of investments, debt paydown, as well as proceeds from sales of common and preferred shares and warrants.
Net cash provided by financing activities for the six months ended June 30, 2024 was $1,895,424, which consisted of proceeds from issuance of a convertible promissory note $950,000, proceeds from the sale of stock and warrants, net of $175,000 and merger proceeds net of transaction costs of $770,424.
Liquidity, Capital Resources and Going Concern
As of June 30, 2025, the Company had cash of $8,430,946 and net working capital of $8,483,370.
The Company has incurred and expects to continue to incur significant professional costs to remain as a publicly traded company as well as incurred significant transaction costs related to the consummation of the Business Combination.
The accompanying condensed consolidated financial statements have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating losses and negative cash flows from operations since inception. As of June 30, 2025, the Company had cash of approximately $8.4 million and an accumulated deficit of approximately $16.9 million. The Company has incurred recurring losses, has experienced recurring negative operating cash flows, and requires significant cash resources to execute its business plans. The Company is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute its development plans and continue operations. Without additional funding, there is substantial doubt about the Company’s ability to continue as a going concern for twelve months from the date of these financial statements.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2025. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Emerging Growth Company Status
We are an “emerging growth company”, as defined in the JOBS Act, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As an emerging growth company, we can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We intend to avail ourselves of these options. Once adopted, we must continue to report on that basis until we no longer qualify as an emerging growth company.
We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of our initial public offering; (ii) the first fiscal year after our annual gross revenue are $1.07 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year. We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If, as a result of our decision to reduce future disclosure, investors find our common stock less attractive, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to make disclosures under this Item.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of December 31, 2024. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2024, our disclosure controls and procedures were ineffective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified by Securities and Exchange Commission (“SEC”) rules and forms and (b) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding any required disclosure.
Management has identified control deficiencies regarding inadequate accounting resources, the lack of segregation of duties and the need for a stronger internal control environment. Management of the Company believes that these material weaknesses are due to the small size of the Company’s accounting staff. The small size of the Company’s accounting outsourced staff may prevent adequate controls in the future due to the cost/benefit of such remediation.
To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.
These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our financial statements may not be prevented or detected on a timely basis. In light of this material weakness, we performed additional analyses and procedures in order to conclude that our financial statements for the period ended June 30, 2025 and year ended December 31, 2024 included in this Annual Report on Form 10-K were fairly stated in accordance with GAAP. Accordingly, management believes that despite our material weaknesses, our financial statements for the quarter ended June 30, 2025 are fairly stated, in all material respects, in accordance with GAAP.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Securities Exchange Act of 1934 Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
| ● | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
| ● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
| ● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2025 and December 31, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the 2013 Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based upon this assessment, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2025 and December 31, 2024 our internal controls over financial reporting were ineffective.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
As a smaller reporting company, we are not required to make disclosures under this Item.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Insider Trading Arrangements and Policies
During the quarter ended June 30, 2025, none of
the Company’s directors or officers
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
| Exhibit No. | Description | |
| 19.1*** | Klotho Neurosciences, Inc. Insider Trading Policy (incorporated by reference to Exhibit 19.1 filed by Klotho Neurosciences, Inc.’s on Form 10-Q filed with the SEC on November 19, 2024). | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Accounting and Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Principal Accounting and Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 97.1*** | Clawback policy (incorporated by reference to Exhibit 97.1 filed by Redwoods on Form 10-K filed by the Registrant on April 17, 2024). | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
| * | Filed herewith. |
| ** | Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
| *** | Filed previously. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KLOTHO NEUROSCIENCES, INC. | ||
| Date: August 15, 2025 | By: | /s/ Joseph A. Sinkule |
| Name: | Joseph A. Sinkule | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: August 15, 2025 | By: | /s/ Jeffrey LeBlanc |
| Name: | Jeffrey LeBlanc | |
| Title: |
Chief Financial Officer (Principal Accounting Officer) | |
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FAQ
What cash proceeds did ANEW Medical (WENA) receive from the business combination?
Does the filing state any going concern issues for WENA?
How many contingent consideration shares were authorized related to the merger?
What was the fair value of representative warrant liabilities as of June 30, 2025?
What is the company’s accumulated deficit reported in the filing?
Did warrant holders exercise warrants during the period?
