SEC Filing Summary: Amedica Corporation (8-K)
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Amedica Corporation (not Sintx Technologies, Inc.) on January 4, 2018, covering events occurring on January 2 and January 3, 2018. The Company is an emerging growth company based in Salt Lake City, Utah.
Key Financial Metrics and Debt Structure
The filing details a significant restructuring of existing debt rather than reporting standard operating metrics like revenue or cash flow.
- Debt Assignment: Hercules Capital assigned $2,264,622.80 of outstanding debt to accredited investors (Assignees).
- New Instrument: The Company issued Senior Secured Convertible Promissory Notes ("Exchange Notes") with an aggregate principal of $2,264,622.80.
- Interest Rate: 15% per annum (guaranteed).
- Maturity Date: February 3, 2019.
- Amortization: Monthly payments of 1/12th of the face amount plus interest, beginning January 17, 2018.
- Conversion Terms:
- Standard Conversion Price: $3.87 per share.
- Default Conversion Price: 70% of the lowest traded price (10-day average), with a floor of $1.75 per share.
- Maximum Dilution Cap: Assignees cannot receive more than 19.99% of outstanding Common Stock.
Material Changes and Corporate Actions
Debt Restructuring: The Company exchanged the Hercules Note held by Assignees for the new Exchange Notes. This transaction includes strict covenants prohibiting the Company from issuing securities below $1.75 per share or engaging in certain equity financing activities while the notes are outstanding.
NASDAQ Compliance Issue: On January 2, 2018, the Company received notice from NASDAQ regarding non-compliance with Listing Rule 5620(a) for failing to hold an annual shareholder meeting within 12 months of the fiscal year ended December 31, 2016. The Company has until February 16, 2018, to submit a compliance plan.
Guidance, Risks, and Contingencies
Prepayment and Trigger Events:
- The Company may prepay the notes with a 15% premium.
- If the Company raises at least $3 million in gross proceeds from a financing transaction, it must immediately repay the Assignees 115% of the principal and accrued interest.
Risks:
- Delisting Risk: There is no assurance the Company will regain NASDAQ compliance or avoid delisting.
- Liquidity Constraints: The new debt structure imposes monthly amortization payments and restricts future financing options below $1.75 per share.
- Dilution Risk: Conversion of the notes could result in the issuance of up to approximately 604,113 shares of Common Stock under default scenarios.
Investor Verification Checklist
- Verify the Company's plan to regain NASDAQ compliance by the February 16, 2018 deadline.
- Confirm the Company's ability to meet monthly amortization payments starting January 17, 2018, given the 15% interest rate.
- Monitor the stock price relative to the $1.75 floor and $3.87 conversion price to assess potential dilution.
- Review the full text of the Assignment Agreement (Exhibit 10.1) and Exchange Notes (Exhibits 10.4 and 10.5) for additional covenants.
- Check for any upcoming financing attempts that might trigger the mandatory 115% repayment clause.