Redwoods Acquisition (RWOD) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Klotho Neurosciences, Inc.'s unaudited condensed consolidated financial statements and management's analysis for the period ended March 31, 2025 Financial Statements Klotho Neurosciences, Inc.'s unaudited financial statements as of March 31, 2025, reveal increased net loss, higher liabilities from new debt, and a going concern warning Condensed Consolidated Balance Sheets Total assets increased to $2.99 million, liabilities grew to $2.35 million due to notes payable, and stockholders' equity decreased to $0.64 million Condensed Consolidated Balance Sheet Summary (Unaudited) | Account | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $565,869 | $63,741 | | Total current assets | $687,712 | $157,811 | | Total assets | $2,987,266 | $2,457,365 | | Liabilities & Equity | | | | Total current liabilities | $2,337,586 | $1,247,534 | | Total liabilities | $2,348,557 | $1,272,020 | | Total stockholders' equity | $638,709 | $1,185,345 | | Total liabilities and stockholders' equity | $2,987,266 | $2,457,365 | Unaudited Condensed Consolidated Statements of Operations The company reported a net loss of $2.23 million for Q1 2025, significantly higher than the prior year, driven by increased operating and interest expenses Statement of Operations Summary (Unaudited) | Account | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Total operating expenses | $1,586,968 | $672,045 | | Net operating loss | $(1,586,968) | $(672,045) | | Interest Expense | $(553,937) | $0 | | Net loss | $(2,233,982) | $(672,044) | | Net loss per share (Basic and Diluted) | $(0.08) | $(0.04) | | Weighted average common shares outstanding | 27,523,678 | 15,130,393 | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) Stockholders' equity decreased to $0.64 million by March 31, 2025, primarily due to a $2.23 million net loss, partially offset by equity issuances - Key activities impacting stockholders' equity in Q1 2025 included $495,500 in share-based compensation, $466,169 from issuing shares for note conversions, and $679,577 related to equity warrants issued with convertible debt, offset by a net loss of $2,233,982[12] Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operating activities surged to $1.55 million, offset by $2.06 million from financing, resulting in a $0.5 million net cash increase Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,553,747) | $(21,976) | | Net cash (used in) provided by investing activities | $0 | $(123,496) | | Net cash provided by financing activities | $2,055,875 | $175,000 | | Net change in cash | $502,128 | $29,528 | | Cash - End of period | $565,869 | $32,336 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's business, reverse merger, a significant going concern warning, new debt, a planned acquisition, and Nasdaq non-compliance - The company's business involves developing medicines for cancer, cardiovascular, and neurodegenerative disorders through licensed platforms and proprietary gene therapy, having completed a reverse merger with Redwoods Acquisition Corp. on June 21, 2024, and subsequently changing its name to Klotho Neurosciences, Inc.[17][19][20] - There is substantial doubt about the Company's ability to continue as a going concern, with cash of approximately $566,000 and an accumulated deficit of $12.8 million as of March 31, 2025, requiring additional funding to continue operations[30] - The company entered into a Share Exchange Agreement to acquire SB Security Holdings, LLC, an internet-connected video doorbell service company, in exchange for 90% of the company's post-acquisition shares on a fully-diluted basis, subject to stockholder and Nasdaq approval[93] - The company received multiple delinquency notices from Nasdaq for non-compliance with minimum Market Value of Publicly Held Shares, Market Value of Listed Securities, and minimum bid price rules, with continued listing contingent upon completing the acquisition of SB Security Holdings, LLC by August 13, 2025[94][96][97] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the increased $2.23 million net loss to higher operating expenses and reiterates substantial doubt about the company's going concern status Comparison of Results of Operations | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Operating Expenses | $1,586,968 | $672,045 | | Net Loss | $2,233,982 | $672,044 | - Net cash used in operating activities increased significantly to $1.55 million in Q1 2025 from $22,000 in Q1 2024, primarily due to expenses related to the business combination and ongoing operations[116] - The company's ability to continue as a going concern is in substantial doubt, with cash of approximately $566,000 and an accumulated deficit of $12.8 million as of March 31, 2025, requiring additional funding to sustain operations[120] Quantitative and Qualitative Disclosures about Market Risk The company is a smaller reporting company and is not required to provide disclosures for this item - As a smaller reporting company, disclosures under this item are not required[124] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were ineffective due to material weaknesses in accounting resources and segregation of duties - Management concluded that disclosure controls and procedures were ineffective as of the end of the period[125] - Material weaknesses were identified due to inadequate accounting resources and a lack of segregation of duties, leading to the conclusion that internal controls over financial reporting were ineffective[126][131] PART II. OTHER INFORMATION This section provides other required information, including legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits Legal Proceedings The company reported no legal proceedings - None[135] Risk Factors As a smaller reporting company, the company is not required to provide disclosures for this item - As a smaller reporting company, disclosures under this item are not required[136] Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities for the period - None[137] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[138] Mine Safety Disclosures This item is not applicable to the company - Not applicable[139] Other Information During the quarter, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter ended March 31, 2025[140] Exhibits This section lists the exhibits filed as part of the quarterly report, including certifications by the CEO and CFO, and XBRL data files