Business Context and Reporting Period
Company: Bone Biologics Corp.
Filing Type: Form 8-K (Current Report)
Date of Report: October 24, 2014
Event: Entry into a Material Definitive Agreement involving a convertible secured term note and warrant issuance 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: $5,000,000 Convertible Secured Term Note.
- Interest Rate: Prime rate plus 4.0%, with a minimum floor of 8.5% per annum.
- Maturity Date: October 24, 2017.
- Warrant Issuance: 3,955,697 shares at an exercise price of $1.58 per share.
- 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 clear values for revenue, profit, cash flow, margins, or total debt levels outside of this specific transaction.
Material Changes
The primary material change is the creation of a direct financial obligation of $5,000,000 and the issuance of unregistered equity securities (warrants) on October 24, 2014. This represents a new liability and potential dilution to existing shareholders.
Guidance, Outlook, and Risks
- Conversion Terms: The note is convertible at the lender's discretion into common stock at a rate equal to the greater of $1.58 per share or 70% of the average daily price over the 60 days prior to conversion.
- Prepayment: The principal is prepayable in whole or in part at any time without premium or penalty.
- Registration Rights: Hankey Capital received demand and unlimited piggyback registration rights for shares underlying the note and warrant.
- Lock-Up Period: A six-month lock-up period applies to public sales of equity securities following the Company's merger with Bone Biologics, Inc. (effective September 19, 2014).
- Risks: The note is secured by collateral shares and license agreements. Failure to maintain the loan-to-value ratio may require adjustments to collateral.
Investor Verification Checklist
- Verify the current market price of Bone Biologics Corp. common stock to assess the conversion price floor ($1.58) and potential dilution.
- Confirm the status of the collateral shares pledged to Hankey Capital and the current loan-to-value ratio.
- Review the Registration Rights Agreement (Exhibit 10.3) for specific terms regarding the lock-up period and demand registration triggers.
- Assess the impact of the 8.5% minimum interest rate on the company's future cash flow obligations.
- Check subsequent filings for any partial prepayments or conversions of the note.