Business Context and Reporting Period
This Form 8-K was filed by KBL Merger Corp. IV (not Forum Markets Inc.) on September 14, 2020, reporting events occurring on September 8, 2020. The registrant is a Delaware corporation and an emerging growth company trading on the NASDAQ under the symbols KBLM, KBLMW, KBLMR, and KBLMU. The filing details the entry into a material definitive agreement to secure financing in connection with a contemplated business combination previously announced in July 2019.
Key Financial Metrics and Transaction Details
The filing discloses a specific financing transaction rather than standard operating financial metrics (revenue, profit, or cash flow), as the company is a special purpose acquisition vehicle (SPAC) in the pre-combination phase.
- Debt Issuance: Issued secured convertible promissory notes with an aggregate principal amount of $1,111,111.11.
- Proceeds: Received an aggregate purchase price of $1,000,000 (reflecting a 10% original issue discount).
- Interest Rate: Notes accrue interest at 10% per annum, guaranteed to maturity regardless of conversion timing.
- Maturity Date: April 7, 2021.
- Equity Issuance: Issued 100,000 restricted shares of Common Stock ("Commitment Shares") to investors.
- Conversion Terms: Initial conversion price is $5.28 per share. After 90 days post-business combination, the price adjusts to the lowest 5-day VWAP, with a floor of $2.00.
- Collateral: Obligations are secured by all assets of the Company and guaranteed by entities party to the Business Combination Agreement.
Material Changes Versus Prior Period
The filing does not provide comparative financial statements or operational metrics for a prior period. The material change reported is the creation of a new direct financial obligation and the issuance of unregistered equity securities to institutional investors to fund the pending business combination.
Guidance, Outlook, Risks, and Contingencies
Outlook and Management Commentary: The financing is intended to support the proposed business combination. The company notes that the ability to recognize anticipated benefits depends on factors such as cash available following stockholder redemptions and the successful closing of the transaction.
Risks and Contingencies:
- Transaction Failure: The business combination may not close due to failure to receive stockholder approvals or other closing conditions.
- Liquidity and Listing: Risks include the inability to meet NASDAQ listing standards post-combination and insufficient cash resources.
- Forward-Looking Statements: The filing includes extensive disclaimers regarding uncertainties in timing, capitalization, market size estimates, and regulatory changes.
- Default Triggers: The Notes contain covenants and events of default that could require immediate repayment of obligations.
Important Facts for Investor Verification
- Verify the identity of the registrant as KBL Merger Corp. IV, distinct from "Forum Markets Inc."
- Confirm the status of the proposed business combination announced in July 2019 and the likelihood of closing.
- Review the full text of the Securities Purchase Agreement (Exhibit 10.1) and the Registration Rights Agreement (Exhibit 10.2) for specific default triggers and covenants.
- Assess the impact of the 10% original issue discount and the potential dilution from the conversion of notes and commitment shares.
- Monitor the preliminary proxy statement/prospectus filed on Form S-4 for details on stockholder approval requirements and redemption rights.