Business Context and Reporting Period
Company: Bone Biologics Corp (Emerging Growth Company)
Filing Type: Form 8-K (Current Report)
Date of Report: May 14, 2018
Principal Activity: Biotechnology research and development, specifically focused on NELL-1 protein development and patent extension.
Key Financial Metrics
This filing reports a specific financing event rather than periodic financial performance. Key metrics disclosed include:
- Debt Issued: $600,000 secured promissory note.
- Interest Rate: 8.5% per annum.
- Maturity Date: December 31, 2018.
- Collateral: First priority security interest on all company assets.
- Revenue/Profit/Cash Flow: The filing text does not provide a clear value for revenue, profit, operating cash flow, or margins.
Material Changes
The primary material change is the entry into a Material Definitive Agreement with Hankey Capital, LLC. The company has increased its debt obligations by $600,000. This note includes a conversion feature: if the company completes a "Qualified Note Financing" raising at least $2,000,000 in aggregate gross proceeds (including this note), the principal and accrued interest of this note will convert into the new convertible notes.
Guidance, Outlook, and Risks
Use of Proceeds: Funds are designated for working capital, protein development, laboratory and testing equipment, regulatory and clinical expenses, and extending the patent life of NELL-1.
Risks and Contingencies: The debt is secured by a first priority lien on all company assets, which limits the company's ability to secure additional secured financing without lender consent. The note is unregistered, issued under Section 4(a)(2) of the Securities Act to an accredited investor.
Investor Verification Checklist
- Verify the total outstanding debt load of the company as of May 14, 2018, to assess leverage relative to cash reserves.
- Confirm the status of the "Qualified Note Financing" to determine if the $600,000 note will convert to equity or remain as debt maturing in December 2018.
- Review the full Note Purchase Agreement (Exhibit 10.1) for specific default provisions and covenants.
- Assess the company's runway for NELL-1 development given the reliance on future financing for patent extension.