Business Context and Reporting Period
This Form 8-K Current Report was filed by MRI Interventions, Inc. on July 1, 2016, reporting events that occurred on June 30, 2016. The filing details material modifications to the rights of security holders regarding specific debt instruments and warrants, as well as the results of a special stockholder meeting.
Key Financial Metrics and Debt Structure
The filing does not provide revenue, profit, cash flow, or margin data. It focuses on the modification of existing debt obligations:
- 2019 Notes: Two 12% Second-Priority Secured Non-Convertible Promissory Notes with an aggregate principal balance of $3,000,000.
- 2019 Warrants: Warrants associated with the 2019 Notes entitling holders to purchase up to 900,000 shares of common stock.
- Brainlab Note: A Second Amended and Restated Secured Note Due 2018 with a principal balance of $2,000,000 held by Brainlab AG.
- Brainlab Warrant: A Series A Warrant entitling Brainlab AG to purchase up to 1,398,288 shares of common stock.
Material Changes Versus Prior Period
The primary material changes involve amendments to debt and warrant terms contingent upon the closing of a "Qualified Public Offering":
- 2019 Notes and Warrants:
- $1,500,000 of the principal balance (50%) plus accrued interest will automatically convert into the security offered in a Qualified Public Offering.
- The exercise price for 450,000 shares (50%) of the 2019 Warrants will be reduced to the greater of the public offering price or the highest price per share for which common stock is issuable upon conversion/exercise of other securities in the offering.
- Brainlab Note and Warrant:
- $500,000 of the principal balance plus accrued interest will automatically convert into the security offered in a Qualified Public Offering.
- The exercise price for all 1,398,288 shares under the Brainlab Warrant will be reduced to the greater of the public offering price or the highest price per share for which common stock is issuable upon conversion/exercise of other securities in the offering.
Stockholder Vote and Corporate Actions
On June 30, 2016, the Company held a special meeting of stockholders. With 67,285,327 shares present or represented out of 95,914,044 entitled to vote, the following proposals were approved:
- Reverse Stock Split: Stockholders approved an amendment to the Certificate of Incorporation to effect a reverse stock split at a ratio to be determined by the Board of Directors from options ranging from 1-for-15 to 1-for-40.
- Adjournment: Stockholders approved the authority to adjourn the meeting to solicit further proxies if necessary.
Voting Results:
| Proposal | For | Against | Abstain |
|---|---|---|---|
| Reverse Stock Split | 56,860,396 | 10,141,414 | 283,517 |
| Adjournment | 56,813,498 | 9,948,592 | 523,237 |
Investor Verification Checklist
- Verify the specific reverse stock split ratio selected by the Board of Directors, as the filing only authorized a range (1-for-15 to 1-for-40).
- Confirm the definition of a "Qualified Public Offering" in the full text of the Omnibus Amendments (Exhibits 10.1 and 10.2) to understand the trigger for debt conversion and warrant price reductions.
- Monitor the Company's progress toward a public offering, as the debt modifications are contingent on this event.
- Review the impact of the reverse stock split on the number of shares outstanding and the trading price of the common stock.