KLY Kalytera Therapeutics Inc

Claritas Pharmaceuticals, Inc. (TSX VENTURE: CLAS and OTC: CLAS.V) (the "Company" or "Claritas") is pleased to announce that it has closed the first tranche of a private placement offering (the “Offering”) of convertible debentures with Obsidian Global GP, LLC (“Obsidian”) for net proceeds of USD $930,000.

Highlights

• Claritas received aggregate proceeds of approximately CAD $1,247,000 (the “Aggregate Proceeds”) from the closing.
• Subject to the satisfaction of certain equity conditions, entry into the relevant agreements between the parties, and TSXV approval, a second tranche of the Offering may close in 90 days to provide additional proceeds of USD $750,000 (“Tranche 2”) and a third tranche may close 120 days following the closing of Tranche 2 to provide additional proceeds of approximately USD $1,250,000 (“Tranche 3”).
• The Aggregate Proceeds will be allocated primarily to the cost of the Phase 1 clinical study of R-107, as well as for general corporate purposes.

Terms of the OfferingOn closing of the first tranche of the Offering, the Company received gross proceeds of USD $1,000,000 (the “Loan Amount”) and issued to Obsidian a zero-interest, unsecured convertible debenture (the “First Tranche Debenture”) with a face value of USD $1,175,000 (the “Principal Amount”). The transaction closed and the First Tranche Debenture was issued effective October 14, 2021. From the Loan Amount, B. Riley Financial, Inc., was paid a 7% cash commission in the amount of USD $70,000. The First Tranche Debenture is convertible at the option of Obsidian into common shares of the Company (the “Common Shares”) at any time prior to October 14, 2022 (the “First Tranche Maturity Date”) at a conversion price of CAD $0.355 (the “First Tranche Conversion Price”). The First Tranche Debenture and any Common Shares issuable upon conversion of the First Tranche Debenture will be subject to a statutory hold period of four months ending on February 15, 2022. Beginning on February 15, 2022, the Company is obligated to begin making monthly amortization payments to Obsidian in an amount equal to one-eighth of the outstanding Principal Amount (the “First Tranche Amortization Payments”). At the option of the Company, and subject to the approval of the TSX Venture Exchange (the “TSXV”), the First Tranche Amortization Payments may be paid in Common Shares if certain equity conditions are met, including minimum average daily trading volume of CAD $50,000 and a market capitalization of at least CAD $15,000,000 (the “Equity Conditions”). If the Company elects to pay any First Tranche Amortization payments in Common Shares, such Common Shares will be issued at a price equal to a 5% discount from the lowest daily VWAP during the 10-days prior to the date on which such issuance shall occur. As a condition of the Offering, Robert Farrell, the Company’s Chairman, President and CEO, and Salzman Group, Inc., the Company’s largest shareholder, pledged Common Shares owned by them as collateral to secure 50% of the value of the Principal Amount calculated as of the effective closing date of the First Tranche Debenture, amounting to 2,742,849 pledged Common Shares. In support of the transaction, the Company entered into indemnification agreements with Mr. Farrell and Salzman Group, Inc. under which, subject to TSXV approval, the Company will be obligated to issue new Common Shares to each of them to replace any of their pledged Common Shares that are realized as security by Obsidian for the payment of the debenture as a result of any uncured default by the Company under the terms of the First Tranche Debenture.

“We are delighted to announce this transaction with Obsidian, which will enable the Company to move forward with and accelerate our Phase 1 clinical study of R-107,” said Robert Farrell, Claritas’ President and CEO. “We expect to complete the Phase 1 clinical study by Q1 next year, and thereafter we will initiate a Phase 2a clinical study of R-107 in treatment of pulmonary arterial hypertension (“PAH”), and seek funding under a BARDA contract from the U.S. Department of Health and Human Services for a Phase 2a clinical study of R-107 in hospitalized patients diagnosed with COVID-19 related sepsis.”

The securities offered in the Offering have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws, and were not offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.About Claritas PharmaceuticalsClaritas Pharmaceuticals, Inc. is a clinical stage biopharmaceutical company focused on developing and commercializing therapies for patients with significant unmet medical needs. Claritas leverages its expertise to find solutions that will improve health outcomes and dramatically improve people's lives.

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Cautionary StatementsNeither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation in respect of the Company’s planned clinical study of R-107, the possibility of undertaking and closing Tranche 2 and/or Tranche 3, regulatory approval prospects (including approval of the indemnification agreement and the shares to be issued thereunder), intellectual property objectives, and other statements containing the words "believes", "anticipates", "plans", "intends", "will", “may”, "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risk that future clinical studies may not proceed as expected or may produce unfavorable results or that the Company may not complete Tranche 2 or Tranche 3. Unless required by applicable law, Claritas undertakes no obligation to comment on analyses, expectations or statements made by third parties, its securities, or financial or operating results (as applicable). Although Claritas believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond Claritas’ control. The forward-looking information contained in this press release is expressly qualified by this cautionary statement and is made as of the date hereof. Claritas disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. 

Contact InformationRobert FarrellPresident, CEO(888) 861-2008info@claritaspharma.com