10-Q: Klotho Neurosciences Reports Q3 Loss, Raises Capital Amidst Going Concern Warning

Sentiment:

Quarterly Report 13 November 2025 3:14 PM

📋All filings for Klotho Neurosciences, INC

Klotho Neurosciences, Inc. reported a significant net loss for Q3 2025 and the nine months ended September 30, 2025, while substantially increasing cash reserves through financing activities, but faces a 'going concern' warning and Nasdaq compliance issues.

Capital raiseNet cash provided by financing activities for the nine months ended September 30, 2025, was $11,894,683, primarily from sales of common and preferred shares and warrants.The company initiated a warrant exercise inducement program, reducing the exercise price from $3.49 to $1.35, leading to 11.0 million warrants exercised for gross proceeds of $11.4 million.Proceeds from stock subscriptions totaled $500,000.Proceeds from the sale of 500 preferred B shares amounted to $500,000, which were subsequently converted into 6,250,000 common shares.An At-the-Market (ATM) sales agreement was entered into with A.G.P./Alliance Global Partners, allowing the company to sell up to $50,000,000 of common stock.Subsequent to September 30, 2025, the company settled 2,201,930 common shares under its ATM facility for net proceeds of approximately $1,076,000.

Worse than expectedThe company explicitly states 'substantial doubt about the Company's ability to continue as a going concern for twelve months from the date of these financial statements' without additional funding.The company received a Nasdaq delinquency notification for failing to maintain a minimum bid price of $1 per share, indicating a significant operational and market challenge.The accumulated deficit significantly increased to $19.79 million, reflecting continued and growing losses.Net cash used in operating activities increased substantially, indicating a higher cash burn rate.Interest expense saw a massive increase, negatively impacting the overall financial performance.

Summary

Klotho Neurosciences, Inc. (formerly ANEW Medical, Inc.) develops essential medicines for chronic diseases, including cancer, cardiovascular, and neurodegenerative disorders, utilizing generic drug, biosimilar biologics, and proprietary gene therapy platforms.
The company reported a net loss of $2,895,585 for the three months ended September 30, 2025, a slight decrease from $2,959,426 in the prior year period.
For the nine months ended September 30, 2025, the net loss significantly increased to $9,222,798, compared to $4,083,109 for the same period in 2024.
Cash and cash equivalents increased substantially to $7,348,034 as of September 30, 2025, from $63,741 at December 31, 2024.
Total current liabilities decreased significantly to $92,891 as of September 30, 2025, from $1,247,534 at December 31, 2024.
The accumulated deficit grew to $19,785,597 as of September 30, 2025, from $10,562,799 at December 31, 2024.
Research and development (R&D) costs increased to $509,845 for the nine months ended September 30, 2025, from $0 in the prior year period, including $150,000 expensed for a license related to the KLTO-202 product.
Net cash used in operating activities increased to $4,610,390 for the nine months ended September 30, 2025, up from $2,002,358 in the prior year period.
Net cash provided by financing activities was $11,894,683 for the nine months ended September 30, 2025, primarily from stock and warrant sales, and convertible note proceeds.
The company received a Nasdaq delinquency notification for failing to maintain a minimum bid price of $1 per share and has until March 18, 2026, to regain compliance.
Management identified material weaknesses in internal controls as of December 31, 2024, due to inadequate accounting resources and lack of segregation of duties, but implemented improvements by September 30, 2025.

Sentiment

Score: 2

Explanation: The 'going concern' warning, significant accumulated deficit, increased cash burn, and Nasdaq compliance issue are severe negative indicators. While capital was raised, it appears to be funding ongoing losses rather than achieving profitability, leading to substantial dilution. The slight improvement in Q3 net loss and EPS is overshadowed by the overall negative financial health and operational risks.

Positives

Cash and cash equivalents increased significantly to $7.35 million as of September 30, 2025, from $0.06 million at December 31, 2024, providing improved short-term liquidity.
Total current liabilities decreased substantially to $0.09 million as of September 30, 2025, from $1.25 million at December 31, 2024, indicating improved financial health.
Net loss for the three months ended September 30, 2025, slightly decreased to $2.90 million from $2.96 million in the comparable prior year period.
Net loss per share improved for both the three-month ($0.05 vs $0.18) and nine-month ($0.23 vs $0.25) periods ended September 30, 2025, despite an increased share count.
Increased research and development spending to $509,845 for the nine months ended September 30, 2025, from $0 in the prior year, signaling active development of its drug pipeline.
Successful capital raising activities, including $11.4 million from warrant exercises and $1.0 million from stock subscriptions and preferred B share sales, demonstrate access to funding.
The company initiated an At-the-Market (ATM) sales agreement for up to $50 million, providing a flexible mechanism for future capital raises.

Negatives

The company has incurred significant operating losses and negative cash flows from operations since inception, with an accumulated deficit of $19.79 million as of September 30, 2025.
A 'going concern' warning indicates substantial doubt about the company's ability to continue operations for the next twelve months without additional funding.
Net loss for the nine months ended September 30, 2025, significantly increased to $9.22 million from $4.08 million in the prior year period.
Interest expense dramatically increased to $3.49 million for the nine months ended September 30, 2025, from $0.06 million in the prior year, impacting profitability.
Net cash used in operating activities increased to $4.61 million for the nine months ended September 30, 2025, indicating a higher cash burn rate.
The company is in a pre-revenue state and has not generated any operating revenues to date.
The common stock failed to maintain a minimum bid price of $1, leading to a Nasdaq delinquency notification and potential delisting risk.
Significant shareholder dilution occurred, with common shares outstanding increasing to 70,334,792 as of September 30, 2025, from 27,080,915 at December 31, 2024.

Risks

Substantial doubt exists about the company's ability to continue as a going concern for twelve months from the date of these financial statements without additional funding.
The company is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities to execute its development plans and continue operations.
Failure to maintain a minimum bid price of $1 per share could lead to delisting from The Nasdaq Stock Market LLC.
The company has incurred significant operating losses and negative cash flows from operations since inception, with no revenue generated to date.
Material weaknesses in internal controls over financial reporting were identified as of December 31, 2024, due to inadequate accounting resources and lack of segregation of duties, which could lead to misstatements.
The company's ability to realize deferred tax assets is uncertain, as a valuation allowance is provided due to the likelihood that some or all deferred tax assets will not be realized.
The company's intangible assets (licenses and patents) are not currently in use and their ultimate recoverability is subject to future development and commercialization success.

Future Outlook

The company expects net cash used in operating activities to increase in the coming periods until its products generate meaningful revenue. It is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities to continue executing its development plans and operations. The company aims to regain compliance with Nasdaq's minimum bid price rule by March 18, 2026.

Management Comments

Management believes the company's financial statements for the quarter ended September 30, 2025, are fairly stated, in all material respects, in accordance with GAAP.
Management believes that equity awards provide executive officers with a strong link to the company's long-term performance, create an ownership culture, and help align interests with stockholders.
Management is not aware of any other impairment charges that may currently be required for long-lived and intangible assets, but cannot predict future adverse events.

Industry Context

Klotho Neurosciences operates in the highly competitive and capital-intensive biotechnology and pharmaceutical industry, focusing on chronic diseases like cancer, cardiovascular, and neurodegenerative disorders. Its strategy involves both acquiring licensed generic and biosimilar platforms and developing proprietary gene therapies. The significant R&D spending and ongoing capital raises are typical for pre-revenue biotech companies, but the 'going concern' warning and Nasdaq compliance issues highlight the inherent risks and challenges in bringing new therapies to market and maintaining public company status in this sector.

Comparison to Industry Standards

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Executive Officer	NA	Joseph A. Sinkule	2024-10-24	Appointment under an Employment Agreement for a three-year term.
Chief Financial Officer	NA	Jeffrey LeBlanc	2024-08-15	Appointment under an Employment Agreement for a three-year term.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Deficiencies	Identified inadequate accounting resources, lack of segregation of duties, and need for a stronger internal control environment as of December 31, 2024.	2024-12-31	These deficiencies could result in a misstatement of account balances. Management believes improvements were implemented by September 30, 2025, including risk assessment, enhanced controls, and testing.
Equity Incentive Plan	The company's Board adopted, and stockholders approved, the Equity Incentive Plan in connection with the Business Combination.	2024-06-21	Aims to link executive officers to long-term performance, create an ownership culture, align interests with stockholders, and promote executive retention through time-based vesting features.

Legal Proceedings

No material legal proceedings or claims were reported that management believes would have a material effect on the company's business, financial condition, results of operations, or cash flows.

Related Party Transactions

A promissory note issued to a member of management for $31,000 (accrued one-time interest fee of $2,460) was paid off as of September 30, 2025.
Employment agreements were entered into with Dr. Joseph Sinkule (CEO) for an annual base salary of $360,000 and 1,000,000 immediately vesting options, and with Mr. Jeffrey LeBlanc (CFO) for an annual base salary of $325,000 and 500,000 shares (100,000 immediate, 400,000 vesting over two years).

Stakeholder Impact

Shareholders face significant dilution due to substantial increases in common shares outstanding from debt conversions and warrant exercises.
Shareholders are exposed to the risk of delisting from Nasdaq due to the minimum bid price deficiency.
Creditors (holders of convertible notes) have seen their debt converted into equity, reducing the company's liabilities but increasing share count.
Employees (management) have received significant equity awards as part of their compensation, aligning their interests with company performance.

Next Steps

Regain compliance with Nasdaq's minimum bid price rule by March 18, 2026, by achieving a closing bid price of at least $1 for a minimum of ten consecutive business days.
Obtain additional working capital funding from the sale of equity and/or debt securities to continue executing development plans and operations.
Continue research and development efforts for its licensed platforms and proprietary gene therapy platform.
Increase the number of employees to implement adequate segregation of duties within the internal control framework as the company grows.

Key Dates

Date	Description
2022-09-12	Company acquired five market-approved anti-cancer drugs approved for sale in Germany and issued a $1,308,270 promissory note for this acquisition.
2022-12-15	Annual license fee of 10,000 Euros began for the exclusive world-wide License Agreement with the University of Barcelona.
2023-03-05	Company signed a Non-Exclusive License Agreement with Heidelberg University for various licenses, including modified AAV capsid polypeptides for muscular diseases.
2023-05-30	Redwoods Acquisition Corp. and ANEW Medical, Inc. entered into a Business Combination Agreement, later amended on November 4, 2023.
2023-12-01	Company signed a license agreement with TransferTech Sherbooke for rights to develop and commercialize Needleless Syringe technology.
2023-12-12	Company issued a promissory note to a member of management for $31,000, which was paid off as of September 30, 2024.
2024-03-04	Company entered into a convertible promissory note and Securities Purchase Agreement with Redwoods PIPE Investors for up to $2,000,000.
2024-04-22	ANEW Medical (Wyoming) entered into a convertible promissory note and Securities Purchase Agreement with ANEW PIPE Investors for up to $2,000,000.
2024-06-13	RWOD and Klotho entered into a forward purchase agreement with Meteora Capital Partners, LP and related entities.
2024-06-21	Closing Date of the Business Combination between Redwoods Acquisition Corp. and ANEW Medical, Inc., with Redwoods changing its name to ANEW Medical, Inc. (later Klotho Neurosciences, Inc.).
2024-07-24	Company changed its legal name from ANEW Medical, Inc. to Klotho Neurosciences, Inc. (also stated as September 17, 2024, in MD&A).
2024-08-15	Mr. Jeffrey LeBlanc entered into an Employment Agreement as Chief Financial Officer.
2024-09-17	Effective date of the company's legal name change from ANEW Medical, Inc. to Klotho Neurosciences, Inc. (as stated in MD&A).
2024-09-19	Company modified the settlement amount price of the Meteora Forward Purchase Agreement to $2.00.
2024-10-24	Dr. Joseph Sinkule entered into an Employment Agreement as Chief Executive Officer.
2024-12-04	Company entered into a convertible promissory note with Austria Capital LLC for $1,200,000.
2024-12-10	Company signed a loan agreement with Red Road Holdings for $203,324.
2025-01-03	Company signed a loan agreement with Red Road Holdings for $137,715.
2025-01-23	Company entered into a Securities Purchase Agreement with an institutional investor (3i LP) for two senior convertible promissory notes totaling $2,173,914 and warrants.
2025-02-10	Registration statement for shares issuable to 3i LP upon conversion/exercise was declared effective by the SEC.
2025-02-13	3i LP purchased a second Note in the principal amount of $1,086,957 and a second Warrant.
2025-03-26	Company entered into a Share Exchange Agreement to acquire SB Security Holdings, LLC, which was later terminated.
2025-04-04	Company signed a loan agreement with Red Road Holdings for $106,534.
2025-04-30	Company made installment payments totaling $232,608 on both 3i Notes.
2025-05-15	Meteora terminated an additional 550,214 shares under the Forward Purchase Agreement for proceeds of $94,472.
2025-06-05	Company entered into a securities purchase agreement with an accredited investor, issuing 6,250,000 shares for $500,000.
2025-06-09	Company conducted a private offering, issuing 500 preferred B shares for $500,000, which were later converted into 6,250,000 common shares.
2025-06-13	Company terminated the Share Exchange Agreement to acquire SB Security Holdings, LLC.
2025-07-03	Company entered into a sales agreement with A.G.P./Alliance Global Partners for an At-the-Market (ATM) facility of up to $50,000,000.
2025-09-19	Company received a Nasdaq delinquency notification for failing to maintain a minimum bid price of $1 per share.
2025-09-30	End of the quarterly reporting period.
2025-10-01	735,428 common shares initiated for sale on September 30, 2025, were settled for net proceeds of approximately $339,000.
2025-11-13	Date of filing of the 10-Q report and the number of common shares outstanding was 72,536,722.
2026-03-18	Deadline for the company to regain compliance with Nasdaq's minimum bid price rule.

Recommendation

strong sell

The filing presents a dire financial situation with an explicit 'going concern' warning, indicating substantial doubt about the company's ability to continue operations. This is compounded by recurring and increasing net losses, a high cash burn rate, and a Nasdaq delinquency notice for failing to meet the minimum bid price requirement. While the company has raised capital, this appears to be funding ongoing losses and has led to significant shareholder dilution. The fundamental risks outweigh any minor positives, making the stock a 'strong sell' for most investors due to the high probability of further value erosion or delisting.

Keywords

Klotho Neurosciences, 10-Q, Quarterly Report, Biotechnology, Neurodegenerative Diseases, Cancer Treatment, Gene Therapy, Drug Development, SEC Filing, Financial Results, Going Concern, Nasdaq Compliance, Capital Raise, Biologics, Generic Drugs

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