Business Context and Reporting Period
Company: BioRestorative Therapies, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: October 14, 2021
Event: Entry into Material Definitive Agreements regarding the exchange of convertible promissory notes and warrants for units of common stock and warrants in a contemplated underwritten public offering.
Key Financial Metrics and Transaction Details
This filing details specific debt and warrant exchange agreements rather than standard periodic financial performance metrics (revenue, profit, cash flow). The filing does not provide current revenue, profit, or liquidity figures.
| Counterparty | Convertible Notes Principal | Warrants Exchanged (Shares) | Warrant Valuation |
|---|---|---|---|
| Auctus Fund, LLC | $8,826,952 | 13,766,343,425 | ~$7,342,000 |
| Other Holders (3 parties) | $419,945 | 745,643,250 | ~$398,000 |
| Total | $9,246,897 | 14,511,986,675 | ~$7,740,000 |
Material Changes and Agreements
- Exchange Mechanism: Holders exchanged outstanding convertible notes and warrants for "Units" (common stock and warrants) to be issued in a Public Offering.
- Beneficial Ownership Cap: If the exchange results in a holder owning more than 4.99% of outstanding common stock, the Company will issue Series A preferred stock instead. This preferred stock converts to common stock at the public offering price but is capped at the 4.99% beneficial ownership limit.
- Lock-Up Agreements:
- Holders agreed to a 4-month lock-up period following the Public Offering completion.
- Exception: Up to 130,000,000 shares may be sold by Auctus.
- Early Termination: Lock-up ends after two months if the stock price exceeds 200% of the public offering price for five consecutive trading days.
- Restriction: Holders cannot exercise warrants or sell stock prior to January 31, 2022, or the completion of the Public Offering, whichever is earlier.
- Termination Condition: If the Public Offering does not occur by January 31, 2022, the agreements terminate and the exchanges will not occur.
Guidance, Risks, and Contingencies
- Contingency: The entire transaction is contingent upon the successful completion of the Public Offering. No assurances are given that the offering will be completed.
- Risk: If the offering fails by the January 31, 2022 deadline, the debt and warrants revert to their original status, and the exchange agreements become void.
- Series A Preferred Stock Rights:
- Dividends: Pari passu with common stock.
- Voting: Based on conversion to common stock, capped at 4.99% of outstanding shares.
- Liquidation: Preferential distribution of $0.001 per share, then pari passu with common stock.
- Redemption: Not redeemable by the Company or holder.
Investor Verification Checklist
- Verify the status of the contemplated Public Offering and whether it has been completed.
- Confirm the final issuance of common stock versus Series A preferred stock based on the 4.99% beneficial ownership cap.
- Review the full text of the Exchange Agreements (Exhibits 10.1 through 10.4) for specific terms not summarized here.
- Monitor the stock price relative to the public offering price to determine if lock-up agreements have terminated early.
- Check for subsequent filings regarding the January 31, 2022 deadline for the Public Offering.