Business Context and Reporting Period
This Form 8-K is filed by Bond Laboratories, Inc. (referred to in metadata as FITLIFE BRANDS, INC.) on January 22, 2009, reporting events occurring on December 31, 2008. The company is a Nevada corporation headquartered in Solana Beach, California.
Key Financial Metrics and Capital Structure
- Financing Proceeds: The company raised $1.25 million in gross proceeds through a Series B Preferred Stock financing.
- Securities Issued: 125 shares of 10% Cumulative Perpetual Series B Preferred Stock were issued at $10,000 per share.
- Common Stock Issuance: 7,500,000 shares of Common Stock were issued to the investor as part of the transaction.
- Investor Ownership: Vicis Capital Master Fund now owns approximately 9.8 million shares of Common Stock, representing approximately 29.4% of issued and outstanding Common Stock.
- Use of Proceeds: Funds are designated for working capital purposes.
- Dividend Obligation: Series B Shares carry a cumulative cash dividend rate of 10% per annum on the $10,000 stated value and accrued unpaid dividends.
Material Changes and Agreements
On December 31, 2008, the company entered into a Series B Preferred Purchase Agreement with Vicis Capital Master Fund. The company amended its Certificate of Incorporation to designate 1,000 shares of preferred stock as Series B Preferred Stock. The Series B Shares are non-convertible and rank senior to Common Stock and Series A Convertible Preferred Stock upon liquidation. The company is prohibited from creating equity securities ranking senior or pari-passu to the Series B Shares without the consent of holders of at least three-fourths of the Series B Shares.
The agreement includes an option for the company to issue additional Series B Shares at $10,000 per share, potentially generating an additional $8.75 million in gross proceeds.
Guidance, Risks, and Contingencies
The filing contains forward-looking statements regarding operations, cash flows, and financial condition, which are subject to risks and uncertainties. The company disclaims any duty to update these statements. The securities were sold in a private placement to a single accredited investor under Section 4(2) of the Securities Act and Rule 506 of Regulation D, without general solicitation.
Key Facts for Investor Verification
- Verify the exact terms of the 10% cumulative dividend obligation and the company's ability to service this debt-like equity instrument.
- Confirm the dilution impact of the 7.5 million common shares issued to Vicis Capital Master Fund.
- Review the conditions required to exercise the option for the additional $8.75 million financing.
- Assess the liquidity position of the company given the reliance on this specific financing for working capital.
- Examine the attached Exhibits 10.1 and 4.1 for the full legal text of the Preferred Purchase Agreement and Certificate of Designations.