Debt Agreements |
9 Months Ended | ||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||
| Debt Agreements [Abstract] | |||||||||||||||||||||
| DEBT AGREEMENTS | 8. DEBT AGREEMENTS
Note Payable
On June 2, 2025, the Company borrowed $1,000,000 from an unrelated lender. The note payable was due in full on December 2, 2025 with interest at 15% compounded monthly. Leonard Mazur (Chairman and Chief Executive Officer of the Company) personally guaranteed repayment of the note.
On December 2, 2025, we extended the due date to January 2, 2026 and the note was paid in full on January 5, 2026. As consideration for the extension, we issued a five-year warrant to purchase 75,000 shares of our common stock at $1.26 per share. The $68,597 fair value of the warrant was charged to interest expense during the nine months ended June 30, 2026.
Interest expense on the note payable was $0 and $11,507 for the three months ended June 30, 2026 and 2025, respectively. Interest expense, including the fair value of the warrant was $109,697 and $11,507 for the nine months ended June 30, 2026 and 2025, respectively.
Term Loan Agreement
On May 5, 2026, Citius Oncology entered into a term loan agreement with two lenders for up to $25.0 million, with $10.0 million funded on May 6, 2026, up to $7.0 million available between October 1 and December 31, 2026, if certain net revenue and liquidity milestones are achieved, and up to $8.0 million available between January 1 and March 31, 2027, if certain additional net revenue milestones are achieved and a loan was drawn between October 1 and December 31, 2026.
The loans bear interest at the greater of the prime rate plus 6% or 12.75% and are secured by all of Citius Oncology’s assets, subject to agreed exceptions. The Company will pay interest only through November 2027 with subsequent monthly principal payments until maturity on November 1, 2029. A final payment of $1,062,500 is due at maturity. Interest expense for the loan for the three months ended June 30, 2026 was $198,333.
Citius Oncology issued five-year warrants to the lenders to purchase 1,111,111 shares of common stock at an exercise price of $0.90 per share. The warrant shares were calculated based on 10% of the initial funding divided by $0.90 per share. The Company will issue additional warrant shares under the same formula, if additional funds are drawn under the agreement. The estimated fair value of the warrants issued to the lenders on May 5, 2026 was approximately $749,280 and was charged to deferred financing costs.
The lenders have the right, while any loan is outstanding, to convert up to $4.0 million of the outstanding loans into shares of common stock at $1.08 per share, subject to certain terms and conditions.
In addition, Citius Oncology granted the lenders the right to invest up to $1.0 million in any issuance of equity securities on the same terms offered to other investors in such financing transaction. The right terminates 30 days after the repayment in full of all of the obligations under the loan agreement.
In connection with the loan agreement, Citius Oncology incurred deferred financing costs totaling $3,769,331. Deferred financing costs consist of commitment fees of $250,000, legal fees of $207,551, a final payment of $1,062,500, placement fees of $1,500,000, and the $749,280 fair value of the lenders’ warrants. Deferred financing costs are being amortized on a straight-line basis over the 42-month life of the loan agreement. Amortization expense for the three months ended June 30, 2026 was $179,492. |
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