NLS Pharmaceutics to Absorb Kadimastem as Subsidiary After Agreeing to Merger

By Denny Jacob

NLS Pharmaceutics and Kadimastem entered a binding term sheet to merge in which the latter business will become a subsidiary of the former company.

The combined company, which remains subject to shareholder approval from both sides, is expected to operate under the name Kadimastem and be traded on the Nasdaq Capital Market. Existing Kadimastem shareholders will hold 85% of the issued and outstanding shares of the merger company, and the existing shareholders of NLS will hold the remaining 15% of the issued and outstanding shares of NLS.

NLS shares jumped 11% to 21 cents in premarket trading. The stock was halted at 6:56 a.m. ET ahead of the news and resumed trading at 7:30 a.m. ET.

The agreement is expected to be executed in September. The transaction is expected to close before Dec. 31.

Kadimastem, a clinical-stage cell therapy company, will be required to have $3.5 million of cash on hand, while NLS, a biopharmaceutical company, will be required to have $600,000 of cash on hand at the closing of the deal. The liabilities of NLS to its vendors and insiders will be settled and removed from its balance sheet as a condition of the merger.

All but one of the NLS officers and directors is expected to resign from their positions at the company.