Scorpius Holdings secures $600,000 through promissory note

Scorpius Holdings, Inc., a pharmaceutical company with a market capitalization of $1.36 million, has entered into a material definitive agreement through the issuance of a non-convertible promissory note to an institutional investor, as per the company’s recent 8-K filing with the Securities and Exchange Commission.

According to InvestingPro data, the company’s short-term obligations currently exceed its liquid assets, with a current ratio of 0.62. The note, issued on Thursday, has a principal amount of $600,000 with an annual interest rate of 5.0%.

The note is set to mature on the earliest of three potential dates: March 31, 2025, upon a Corporate Event as defined in the note, or after an event of default. Furthermore, upon maturity, redemption, or prepayment, the company will pay a premium of 5% of the principal amount alongside any other principal and interest due.

The agreement specifies that if Scorpius Holdings or any of its subsidiaries fails to pay any third-party indebtedness exceeding $150,000, subject to certain conditions, or if an event of default occurs on any other outstanding company note, it will constitute an event of default.

Additionally, if Scorpius Holdings undertakes a subsequent financing while the note is outstanding, the holder has the right to demand redemption of the full balance using up to 100% of the financing proceeds.

This financial obligation was created in accordance with an exemption from registration under Section 4(a)(2) of the Securities Act of 1933 and/or Regulation D. The company’s actions reflect a strategic approach to securing funds in the short term, with the promissory note representing a direct financial obligation.

Investors and stakeholders in Scorpius Holdings, previously known as NightHawk Biosciences and earlier as HEAT BIOLOGICS, INC., may view this latest financial maneuver as part of the company’s broader financial strategy. The details of this transaction are outlined in the attached Exhibit 4.1 of the 8-K filing, which provides the full text of the promissory note for reference.

This financial move comes as the Morrisville, North Carolina-based Scorpius Holdings continues to navigate the pharmaceutical preparations sector under the leadership of Jeffrey Wolf, Chairman, President, and Chief Executive Officer. Despite challenging market conditions, the company has achieved remarkable revenue growth of 351% over the last twelve months.

The company’s common stock is traded on the NYSE American LLC under the ticker SCPX, and InvestingPro analysis suggests the stock is currently undervalued. Subscribers to InvestingPro can access 13 additional investment tips and comprehensive financial metrics to better evaluate this opportunity.

In other recent news, Scorpius Holdings Inc., a pharmaceutical company, is urgently seeking additional capital to continue its operations, as disclosed in a recent SEC filing. The company’s current ratio of 0.62 indicates that its short-term obligations exceed its liquid assets, underscoring the need for more funding. Scorpius Holdings is considering various financing options, including equity and debt financings, equipment sale leasebacks, and potential partnerships or collaborations.

The company’s late filing of its 2023 Annual Report and its Quarterly Report for the quarter ended March 31, 2024, has limited its ability to raise capital through securities sales. The company’s EBITDA in the last twelve months was -$24.13 million, and the total debt stands at $14.9 million. The company warned that failure to secure additional financing could lead to restructuring, including workforce reductions or even asset liquidation.

In a recent development, Scorpius issued a non-convertible promissory note valued at $225,000 to an institutional investor. This move created a direct financial obligation for the company, which carries an interest rate of 5.0% per annum and is set to mature on the earliest of December 15, 2024. The agreement includes standard events of default, such as failure to pay debts exceeding $150,000 to any third party or an event of default under any other outstanding promissory note of the company.

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