Business Context and Reporting Period
This Form 8-K filing by BioRestorative Therapies, Inc. reports unregistered sales of equity securities and debt instruments occurring between November 13, 2018, and December 18, 2018. The report was filed on December 19, 2018, with the earliest event date of December 13, 2018.
Key Financial Metrics and Transactions
- Convertible Notes Issued: The Company issued convertible promissory notes with an aggregate principal of $780,000, generating $756,280 in cash proceeds.
- Debt Prepayment: $299,811 of the net proceeds from the new notes was used to prepay outstanding convertible notes.
- Debt-for-Equity Swap: The Company issued 464,510 shares of common stock to settle $180,357 of outstanding indebtedness (including accrued interest and fees).
- Note Exchange: A $318,493 promissory note was exchanged for a new convertible note with a 12% annual interest rate and a maturity in November 2019.
- Service Compensation: 56,250 shares of common stock were issued to a consultant to satisfy $45,000 of accrued services.
Material Changes and Terms
The filing details significant changes in the Company's capital structure through the issuance of new debt and equity. Key terms for the new convertible notes include:
- Interest Rate: 12% per annum payable at maturity.
- Maturity Dates: Ranging between September 2019 and December 2019.
- Conversion Terms:
- $120,000 principal convertible after 180 days at 58% of the fair value of common stock.
- $660,000 principal convertible at a fixed price of $1.00 or $2.00 per share for the first six months, thereafter at 58% of fair value.
- The $318,493 exchanged note is convertible at 65% of the fair value of common stock.
Guidance, Risks, and Unusual Items
The filing does not provide forward-looking guidance, management commentary on future operations, or specific risk factors beyond the standard disclosure of unregistered securities. The transactions were conducted under exemptions from registration under Section 4(a)(2) and Section 3(a)(9) of the Securities Act of 1933. The Company represented that no general solicitation was used and that investors were accredited.
Investor Verification Checklist
- Verify the dilution impact of the 520,760 total shares issued (464,510 for debt and 56,250 for services) on existing shareholders.
- Confirm the current fair value of the Company's common stock to assess the potential conversion price impact (58% or 65% discounts).
- Review the Company's cash position to ensure it can service the remaining debt principal and 12% interest obligations maturing in 2019.
- Check subsequent filings for any further debt refinancing or equity issuances given the high volume of capital activity in late 2018.