Ondas Holdings Inc. 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Ondas Holdings Inc. (Nevada) on October 9, 2018. The Company is classified as an emerging growth company. The report details a financing event involving its subsidiary, Ondas Networks Inc.
Key Financial Metrics
- Debt Financing: Ondas Networks drew down the remaining $5 million (Tranche B) of a $10 million total credit facility with Steward Capital Holdings LP.
- Total Outstanding Principal: $10 million (comprising a prior $5 million Tranche A and the new $5 million Tranche B).
- Interest Rate: The greater of 11.25% per annum or 11.25% plus the Prime Rate less 3.25%.
- Repayment Fee: A $250,000 "End of Term Charge" (2.5% of the maximum loan amount) is due upon repayment or prepayment.
- Collateral: All amounts are secured by a lien on the Company's assets.
- Liquidity Use: Proceeds are designated primarily for operating capital.
Material Changes
The primary material change is the full utilization of the credit facility established on March 9, 2018. The Company has now accessed the full $10 million principal amount available under the Loan and Security Agreement.
Outlook, Risks, and Contingencies
- Maturity Date: The loan is due on the earlier of September 19, 2019, or the completion of a capital raise with minimum proceeds of $20.0 million.
- Default Provisions: Upon an event of default, the lender may require immediate prepayment of principal, accrued interest, and the End of Term Charge.
- Covenants: The agreement includes customary affirmative and negative covenants.
- Regulatory Status: The Tranche B Loan was completed via private placement exempt from registration under Section 4(2) of the Securities Act of 1933.
Investor Verification Checklist
- Verify the Company's ability to raise the required $20.0 million in capital to trigger the alternative maturity date.
- Confirm the current status of the lien on Company assets and any restrictions on asset usage.
- Monitor compliance with the affirmative and negative covenants to avoid an event of default.
- Assess the impact of the 11.25%+ interest rate and $250,000 fee on future cash flow projections.