AtheroNova Inc. (OTCPK:AHRO) announced a private placement of 6% senior subordinated convertible notes for gross proceeds of $1,400,000 on January 13, 2014. The transaction will include participation from two accredited investors, including existing investor Europa International, Inc., a fund managed by Knoll Capital Management, L.P. The company will also issue warrants to the investors to purchase a number of common shares equal to 50% of the shares of common stock issuable upon conversion of the notes as of the date of issuance at an exercise price of $0.23 per share for a period of 10 years from the date of issuance. The notes will bear interest at the rate of 6% per annum and will mature on the third anniversary of the date of issuance. The notes are convertible into shares of common stock of the company at a conversion price equal to the lesser of $0.23 and 70% of the average of the three lowest daily volume weighted average prices occurring during the 20 consecutive trading days immediately preceding the conversion date. Conversion of the note and exercise of the warrant are subject to a beneficial ownership cap of 4.99%. The notes will automatically convert and the applicable beneficial ownership limitation will be deemed to be automatically removed upon the later of 65 days after the company delivers to the investors a notice that the company has submitted to a national securities exchange an application satisfying the initial criteria to list or have quoted its securities on such national securities exchange, and the date immediately prior to the effective date of a listing of its securities on the applicable national securities exchange. The company may prepay the entire remaining outstanding principal amount of each note at any time after the 12-month period immediately following the issuance date in an aggregate amount of 150% of the outstanding principal plus interest. The company will issue securities pursuant to exemption provided under Regulation D.

On the same date, the company issued the convertible note for gross proceeds of $300,000 in the first tranche. Europa International, Inc. purchased the note for $300,000 in this tranche and received warrants to purchase 652,174 shares. The note issued in this tranche will be convertible into 1,304,348 shares of common stock.

On January 14, 2014, the company announced that it has received $50,000 in second tranche closing. The notes issued in the two tranches are convertible into 1,521,740 shares of common stock of the company at a conversion price equal of $0.23 per share as of the date of issuance. The notes will mature on January 12, 2017. The warrants issued in the tranches will be exercisable for an aggregate of 760,870 shares until January 12, 2024. The company has received $350,000 from two investors in the transaction till date.

On February 4, 2014, the company amended the terms of the transaction. The company amended the terms to remove the subordination provisions from the notes. The company will now receive $2,000,000 in funding from the transaction.

On February 12, 2014, the company received $1,906,500 in funding. The funding included the $350,000 received initially from the issuance of the notes to its two accredited investors. The transaction involved participation from a total of 31 investors. The company also issued warrants as part of the tranche closing. The company has also paid sales commission of $68,720 in cash and 65,351 shares of common stock. Philadelphia Brokerage Corporation acted as a placement agent to the company.