Business Context and Reporting Period
Company: Bone Biologics Corp.
Filing Type: Form 8-K (Current Report)
Date of Report: May 4, 2015
Event: Entry into a Material Definitive Agreement involving the issuance of a Convertible Secured Term Note and Warrant to Hankey Capital, LLC.
Key Financial Metrics
This filing reports a specific financing transaction rather than periodic financial performance. Key metrics related to the transaction include:
- Principal Amount: $2,000,000
- Interest Rate: Prime rate + 4.0% (minimum 8.5% per annum), payable monthly in arrears.
- Maturity Date: May 4, 2018
- Warrant Details: 1,898,734 shares exercisable at $1.58 per share, expiring May 4, 2018.
- Collateral: Secured by Common Stock (maintaining a loan-to-value ratio of no greater than 50%) and assignments of all license agreements.
- Use of Proceeds: Working capital and general corporate purposes.
Note: The filing text does not provide values for revenue, profit, cash flow, margins, or existing debt levels outside of this new obligation.
Material Changes
The primary material change is the creation of a new direct financial obligation of $2,000,000. This represents a significant increase in the company's debt load and potential equity dilution through the attached warrant and conversion features. The company has also pledged all license agreements as collateral.
Guidance, Outlook, and Risks
Management Commentary: The company intends to utilize the proceeds for working capital and general corporate purposes.
Risks and Contingencies:
- Collateral Risk: The note is secured by a significant portion of the company's equity (maintained at a 50% loan-to-value ratio) and all license agreements.
- Dilution Risk: The note is convertible at a rate of the greater of $1.58 or 70% of the 60-day average daily price, which could result in significant dilution if the stock price rises. Additionally, the warrant grants the right to purchase nearly 1.9 million shares.
- Prepayment Terms: The loan is prepayable without penalty, but partial prepayments require the return of collateral shares to maintain the 50% loan-to-value ratio.
Investor Verification Checklist
- Verify the current market price of Bone Biologics common stock to assess the immediate conversion value and dilution impact of the $1.58 floor price.
- Confirm the total number of shares pledged as collateral and the impact on the float.
- Review the specific terms of the license agreements pledged as collateral to understand potential operational risks if default occurs.
- Check subsequent filings for any partial conversions or prepayments of the $2,000,000 note.