Business Context and Reporting Period
This Form 6-K filing by Naked Brand Group Limited (not Cenntro Inc.) covers the month of June 2020. The report discloses the entry into a material definitive agreement on June 10, 2020, regarding the amendment of Convertible Promissory Notes.
Key Financial Metrics
- Debt Outstanding: As of June 8, 2020, the aggregate outstanding balance of the Amended Notes was approximately $7,300,000.
- Share Price: The closing price of the Company's ordinary shares on June 8, 2020, was $0.679.
- Conversion Terms: The fixed conversion price for the Affiliated Holder is $4.00 per share. The new amendment allows the Holder to convert at a price equal to 75% of the lowest 20-day volume-weighted average price, subject to a floor price.
- Recent Conversions: The Affiliated Holder previously converted the entire October Note and $665,000 of the November Note into 9,223,969 ordinary shares.
The filing text does not provide clear values for revenue, profit, cash flow, margins, or overall liquidity beyond the specific note balances mentioned.
Material Changes
The primary material change is the Global Amendment entered into with St. George Investments LLC. This amendment modifies the conversion mechanics for the Convertible Promissory Notes issued in December 2019 and January 2020. Unlike the Affiliated Holder, the Holder now requires Company approval to convert, and the conversion price is variable based on market performance rather than fixed.
Outlook, Risks, and Contingencies
- Regulatory Condition: The effectiveness of the Amendment is conditioned upon the staff of the Nasdaq Capital Market reviewing the document and not raising any objection.
- Dilution Risk: The amendment introduces a variable conversion price that could result in significant share issuance if the stock price declines, as the conversion price is tied to a percentage of the lowest daily volume-weighted average price.
- Legal Disclaimer: The filing notes that representations and warranties in the agreement were made solely for the benefit of the parties and may be subject to limitations.
Investor Verification Checklist
- Verify the exact floor price specified in the Amendment, as the text states it exists but does not disclose the specific value.
- Confirm the status of the Nasdaq Capital Market review regarding the Amendment's effectiveness.
- Review the full text of Exhibit 10.1 for complete terms regarding the variable conversion price calculation.
- Assess the potential dilution impact of the $7,300,000 outstanding balance converting at a price potentially below the current $0.679 market price.