By Laura Lutz
Des Moines, Dec. 10 - HC Innovations, Inc. raised $6 million from the first tranche of a $7 million private placement of secured convertible notes and warrants, according to an 8-K filing with the Securities and Exchange Commission.
The notes mature in one year and bear interest at 10% per year. They are convertible at 70% of the average of the lowest bid prices of HC's stock for the 20 trading days before the conversion date. The conversion price is subject to a floor of $1.00 per share.
If HC completes another financing for at least $10 million, holders will have a right to either demand repayment of the notes or exchange the outstanding principal amount for the securities issued in that financing.
If the notes are exchanged, the exchange price will be equal to the lower of a 30% discount to the price of the securities in the financing and the then-current conversion price of the notes.
Three investors participated in the placement.
The investors also received five-year warrants with an exercise price equal to the price per share in the future financing. If that financing is not completed before the notes mature, the exercise price of the warrants will be equal to the average of the lowest bid prices for the 20 trading days before the maturity date.
Each investor's warrants will be exercisable for a number of shares equal to 10% of the principal amount of that investor's notes divided by the exercise price.
Based in Shelton, Conn., HC operates Enhanced Care Initiatives, a provider of services for HMOs, nursing homes and insurance companies.
| Issuer: | HC Innovations, Inc.
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| Issue: | Secured convertible notes
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| Amount: | $7 million
|
| Maturity: | One year
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| Coupon: | 10%
|
| Price: | Par
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| Yield: | 10%
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| Conversion price: | 70% of average of lowest bid prices for 20 trading days before conversion, floor of $1.00
|
| Warrants: | For shares equal to 10% of principal amount of notes divided by exercise price
|
| Warrant expiration: | Five years
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| Warrant strike price: | Price per share in future financing; if no such financing before maturity date, average of lowest bid prices for 20 trading days before maturity date
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| Settlement date: | Dec. 5
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| Stock symbol: | OTCBB: HCNV
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| Stock price: | $1.20 at close Dec. 5
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