Business Context and Reporting Period
Company: Bone Biologics Corp (Emerging Growth Company)
Filing Type: Form 8-K (Current Report)
Date of Report: June 11, 2018
Event: Entry into a Material Definitive Agreement and unregistered sales of equity securities.
Key Financial Metrics and Transaction Terms
This filing details a financing arrangement with Hankey Capital LLC rather than standard periodic financial results. Key terms include:
- Equity Component: Agreement to purchase up to 3,869,979 shares of Common Stock at $1.00 per share (post-reverse split).
- Debt Component: Up to $2,000,000 principal amount of a Convertible Secured Note.
- Note Interest Rate: Greater of the Prime Rate or 8.5% per annum.
- Note Maturity: December 31, 2019.
- Conversion Price: $1.00 per share (at holder's option).
- Collateral: Secured by a security interest in all Company assets and a pledge of collateral shares to maintain a loan-to-value ratio of no greater than 50%.
- Existing Debt Amendments: Conversion price on existing notes (issued 2014, 2015, 2016) reduced from $1.58 to $1.00 per share; maturity extended to December 31, 2019.
Note: The filing text does not provide current revenue, profit, cash flow, or total debt figures.
Material Changes and Conditions
- Reverse Stock Split: Closing of the Purchase Agreement is conditioned on the completion of a 1-for-10 reverse split of outstanding common shares.
- Rights Offering Obligation: The Company is obligated to effect a Rights Offering to stockholders regarding the new Shares and Note. The size of the new issuance will be reduced based on stockholder participation in this Rights Offering.
- Debt Restructuring: Significant modification of terms for existing convertible promissory notes, lowering conversion prices and extending maturities.
Outlook, Risks, and Unusual Items
- Unregistered Sales: Securities are issued under Section 4(a)(2) of the Securities Act of 1933, relying on the purchaser being an accredited investor and the absence of a public offering.
- Security Interest: The new Note is secured by all Company assets, indicating a high-risk financing structure where the lender has broad collateral rights.
- Management Commentary: The filing contains no forward-looking guidance or management commentary beyond the transaction terms.
Investor Verification Checklist
- Verify the successful completion of the 1-for-10 reverse stock split.
- Confirm the final closing amount of the $2,000,000 Note and share issuance after the Rights Offering.
- Review the full text of Exhibits 10.1 through 10.5 for specific covenants and default provisions.
- Assess the impact of the 50% loan-to-value collateral requirement on future capital raising ability.
- Check subsequent filings for the actual cash proceeds received and the status of the Rights Offering.