Business Context and Reporting Period
This Form 6-K filing by LOBO EV Technologies Ltd. (a British Virgin Islands corporation listed on Nasdaq) is dated December 16, 2024. The report discloses the company's election to utilize home country practice rules exemptions under Nasdaq Listing Rule 5615(a)(3)(A) regarding shareholder approval for certain securities issuances. Additionally, the filing details the entry into a material definitive agreement involving a convertible debt instrument.
Key Financial Metrics and Transaction Details
The filing does not provide standard financial statements (revenue, profit, cash flow, or margins) for the period. The primary financial activity disclosed is a private placement transaction closed on December 13, 2024:
- Investor: Streeterville Capital, LLC.
- Purchase Price: $1,500,000.
- Instrument: Unsecured convertible promissory note with an original principal amount of $1,635,000.
- Original Issue Discount (OID): $120,000.
- Transaction Fees: $15,000 allocated for investor fees and costs.
- Interest Rate: 7% per annum simple interest.
- Maturity: Twelve months from the purchase price date.
- Equity Component: Issuance of 850,000 Ordinary Shares ("Pre-delivery Shares") at par value ($0.001 per share).
- Conversion Floor: $1.00 per share.
Material Changes and Terms
The filing outlines specific terms that alter the company's capital structure and obligations compared to prior periods:
- Prepayment Penalty: The company may prepay the note at any time by paying 110% of the outstanding balance.
- Trigger Events: Upon a "Major Trigger Event," the note balance increases by 15%; upon a "Minor Trigger Event," it increases by 10%.
- Default Provisions: In the event of default, the interest rate accelerates to the lesser of 18% per annum or the maximum rate permitted by law.
- Share Repurchase Obligation: Upon full repayment of the note, the investor must return the 850,000 Pre-delivery Shares to the company at $0.001 per share within 15 trading days.
- Registration Rights: The company agreed to file a Form F-1 to register the resale of shares converted from the note and the Pre-delivery Shares.
Guidance, Risks, and Contingencies
The filing does not contain forward-looking guidance, revenue outlook, or management commentary regarding operational performance. Key risks and contingencies identified include:
- Dilution Risk: The conversion of the note and the issuance of Pre-delivery Shares may dilute existing shareholders, subject to the $1.00 conversion floor.
- Liquidity and Default Risk: The company faces potential liquidity strain if it cannot repay the note at maturity, triggering a 15% or 10% balance increase or an 18% default interest rate.
- Listing Maintenance: The company is contractually obligated to maintain its Nasdaq listing and adequate public information while the note is outstanding.
Investor Verification Checklist
- Verify the exact definition of "Major Trigger Event" and "Minor Trigger Event" in the attached Note (Exhibit 99.2) to assess dilution risk.
- Confirm the company's current cash position to evaluate its ability to service the 7% interest and potential prepayment penalties.
- Review the status of the Form F-1 registration statement required for the resale of converted shares.
- Assess the impact of the 850,000 Pre-delivery Shares on current share count and earnings per share.
- Check for any subsequent filings regarding the company's compliance with Nasdaq listing standards post-transaction.