Aclarion, Inc. (NASDAQ:ACON), a medical laboratories company, announced on Monday that it has entered into a material definitive agreement with certain note holders to exchange approximately $930,000 of outstanding debt for equity. The agreement, dated August 14, 2024, involves the issuance of 930 shares of newly created Series B convertible preferred stock to accredited investors.
The Series B Preferred Stock, with a purchase price of $1,000 per share, holds a senior rank to Aclarion’s common stock concerning dividends and liquidation rights.
This preferred stock does not carry voting rights except as required by law or for specific approvals. It comes with a 10% annual dividend, payable quarterly, which the company has the option to pay in common stock or to accumulate.
Conversion of the preferred stock into common stock is set at an initial price of $0.234 per share, subject to certain anti-dilution adjustments. The company may also convert the preferred stock into common stock provided specific conditions are met, including the common stock’s closing price being at least 300% of the conversion price for a consecutive 20-day period.
The agreement includes a beneficial ownership limitation, preventing conversions that would result in any holder owning more than 4.99% of the outstanding common stock, subject to adjustment up to 9.99% with prior notice.
In the event of default or triggering events, such as bankruptcy or failure to comply with Nasdaq’s listing rules, the dividend rate increases to 18%, and the conversion price may be adjusted to a lower “Alternate Conversion Price.”
Furthermore, Aclarion reserves the right to redeem the Series B Preferred Stock in cash at a 25% premium under certain conditions. Upon the company’s liquidation, dissolution, or winding-up, the holders of the Series B Preferred Stock are entitled to a preferential cash payout.
This strategic move allows Aclarion to manage its debt by converting it into equity, potentially easing the financial burden on the company. The transaction was disclosed in a recent SEC filing, providing investors with the latest financial maneuver by Aclarion as it continues to navigate its fiscal strategy.
In other recent news, Aclarion, Inc. has secured $116,000 through a sale of 400,000 shares of its common stock. The company also secured its 23rd U.S. patent, pertaining to techniques that enhance the quality of spectral data from Magnetic Resonance Spectroscopy (MRS) exams. Ascendiant Capital initiated coverage on Aclarion’s stock, rating it a ‘Buy’ and setting a price target of $1.60, emphasizing the potential of the company’s proprietary NOCISCAN technology.
Aclarion has also released its updated Nociscan 2.7 platform, which includes user-friendly features and additional scalability and security measures. These developments have been part of Aclarion’s recent efforts to establish Nociscan as a standard decision support tool in the diagnosis and treatment of chronic low back pain.
InvestingPro Insights
Aclarion, Inc.’s recent move to manage debt through equity conversion comes at a time when the company’s financial metrics reflect certain challenges. According to InvestingPro data, Aclarion’s market capitalization stands at a modest $1.89 million, with a negative P/E ratio of -0.13, indicating that the company is not currently profitable. Additionally, the company has experienced a significant revenue decline of over 35% in the last twelve months as of Q2 2024, further underscoring the financial difficulties it faces.
InvestingPro Tips suggest that while Aclarion holds more cash than debt on its balance sheet, which is a positive sign for liquidity, the stock has suffered notable declines over various periods, with a one-week total return of -18.13% and a staggering one-year total return of -97.03%. These metrics highlight the volatility and high-risk nature of the investment at present. Furthermore, with gross profit margins in the negative at -51.53%, Aclarion’s ability to generate income from its sales is currently weak.
For investors considering Aclarion’s financial strategy and future outlook, it’s worth noting that there are 11 additional InvestingPro Tips available, which can provide deeper insights into the company’s performance and valuation. These tips can be accessed through the dedicated InvestingPro platform.
The inclusion of these insights and tips from InvestingPro aims to provide investors with a more comprehensive understanding of Aclarion’s current financial health and market position, aiding in making more informed investment decisions.
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