Peak Bio, Inc. (OTC Pink:PKBO), a Delaware-based biotechnology company, has finalized a significant financing round, securing an additional $2.175 million through convertible notes, as stated in their recent 8-K filing with the Securities and Exchange Commission (SEC).
On Monday, the company confirmed the completion of its final round of convertible note financing. This follows an earlier round disclosed on June 7, 2024, which raised $1.324 million. The convertible notes, bearing a 10% annual interest rate and maturing on December 18, 2024, are secured by the company's intellectual property.
In the event of a business combination, the notes will automatically convert into common stock at a 50% discount rate based on a 30-day volume-weighted average price before conversion. The conversion is contingent on the company's common stock being exchanged for securities of a surviving entity traded on a recognized public exchange.
Peak Bio has also committed to providing the convertible note investors with registration rights similar to those offered in future equity financings. The company has agreed to pay an 8% cash commission on gross proceeds from the convertible notes to Paulson Investment Company, LLC, the placement agent for the transaction. Additionally, upon conversion of the notes, the placement agent will receive shares equivalent to 4% of the common stock obtained through the conversion by qualified investors.
The 8-K filing details the terms of the agreement, including the automatic conversion feature, the discount rate for conversion, and the security interest provided to note holders. It also outlines the commission structure agreed upon with the placement agent.
Peak Bio, previously known as Ignyte Acquisition Corp., emphasizes that the convertible notes will be automatically freed from the security interest upon conversion. This move is part of the company's broader financing strategy as it continues to develop its pipeline of biological products.
This report is based on statements from a press release and should not be considered an endorsement of Peak Bio, Inc. or its potential future performance. The information provided is for general knowledge and should not be the sole basis for investment decisions.
InvestingPro Insights
In light of Peak Bio's recent financing round, a closer look at the company's financial health through InvestingPro data reveals a challenging landscape. With a market capitalization of just $0.23M and a strikingly high revenue growth of 46.88% in the last twelve months as of Q3 2023, the company appears to be expanding its top line. However, this growth is shadowed by a gross profit margin of -282.41% and an operating income margin of -2457.49%, suggesting significant operational inefficiencies.
InvestingPro Tips indicate that Peak Bio operates with a significant debt burden and is quickly burning through cash. These two tips are particularly relevant as they directly relate to the company's recent move to secure additional financing through convertible notes. Investors should be aware that analysts expect a sales decline and a drop in net income this year, which may affect the company's ability to meet its financial obligations and could impact the future performance of these notes.
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