form8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): November 19, 2009
ReGen
Biologics, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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000-20805
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23-2476415
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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411
Hackensack Avenue
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Hackensack,
NJ
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07601
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(Address
of principal executive offices)
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(Zip
Code)
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(201)
651-5140
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(Registrant’s
telephone number, including area code)
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Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Forward-Looking
Statements
This
Current Report on Form 8-K contains forward-looking statements within the
meaning of the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995. Such statements are based on the current
expectations and beliefs of the Registrant and its management and are subject to
a number of factors and uncertainties that could cause actual results to differ
materially from those described in such forward-looking statements, including
those discussed in the Risk Factors section of the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 2008, its Quarterly Report on Form
10-Q for the quarter ended June 30, 2009 and its additional filings with the
Securities and Exchange Commission. There can be no assurance that
any assumptions and other factors set forth herein or therein will occur and the
Registrant undertakes no obligation to update such forward-looking information
in the future except as required by law.
Item
1.01. Entry Into a Material Definitive Agreement.
ReGen
Biologics, Inc. (OTC: RGBO) (the “Registrant”) entered into an Amended and
Restated Subscription and Security Agreement, dated November 19, 2009 (the
“Subscription Agreement”), among the Registrant and the investors named therein
(the “Investors”) for the private placement of an aggregate principal amount of
up to $3,000,000 of the Registrant’s secured convertible notes (the
“Notes”). The Subscription Agreement amends and restates the
Subscription and Security Agreement, dated October 2, 2009 (the “Old
Subscription Agreement”), which included substantially similar
terms.
Under the
terms of the financing, the Registrant received $450,000 in immediately
available funds and aggregate commitments for $2,600,000, which includes
$600,000 that has already been funded in October 2009, and issued $450,000
aggregate principal amount of the Notes. The Notes accrue interest at
an annual rate of 8% until April 2, 2010 and 12% thereafter until paid, are
secured by a first priority lien on all unencumbered assets of the Registrant
and a second priority lien on all encumbered assets of the Registrant and are
subject to a premium equal to 300% of the principal amount of the Notes then
outstanding in the event the Registrant consummates certain fundamental
transactions or repays the Notes without the consent of the
Investors. After April 2, 2010, the Investors may foreclose on the
collateral securing the Notes. At the option of the holders, the
Notes may be converted into (a) securities issued in and at the price of a
future private placement, or (b) common stock, par value $0.01 per share of the
Registrant calculated at a discount to the market price in the event that a
future private placement is not consummated by the due date. In
connection with the financing, the Registrant issued five year warrants that
provide for each investor to purchase a number of shares of common stock of the
Registrant equal to the amount of shares into which such investor’s Note would
be repaid in a future private placement at an exercise price per share of 1% of
the purchase price of the securities offered in such future private
placement. If no future private placement is consummated prior to
April 2, 2010, the warrants issued provide for each Investor to purchase a
number of shares of common stock of the Registrant equal to the principal amount
of such investor’s note divided by $0.03 at an exercise price of $0.01 per
share. Pursuant to their terms, the Notes and the warrants are not
currently convertible and will only become convertible upon a future private
placement or at the due date of the Notes.
The
Registrant has agreed to register the securities into which the Notes and the
warrants will convert on one or more registration statements to be filed with
the Securities and Exchange Commission upon request by the
investors.
In
connection with financing, the Registrant and the Investors entered into a
funding schedule, which is attached hereto as Exhibit 99.1, pursuant to which
the Investors have agreed to fund their remaining commitments. Upon each funding
by the Investors, the Registrant will issue Notes and warrants in accordance
with the terms of the Subscription Agreement. If an Investor does not intend to
fund its commitment in accordance with the funding schedule, then each has
agreed to notify the Registrant in writing at least 10 days in advance of the
next scheduled funding date that such Investor does not intend to fund the
scheduled amount for such applicable funding date.
Item 3.02. Unregistered Sales of
Equity Securities.
The
information contained above in Item 1.01 is hereby incorporated by reference.
The issuance of the Notes and the warrants was not registered, in reliance on
Section 4(2) under the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder, because both were only offered to accredited
investors. In accordance with the Subscription Agreement, the
Registrant will issue additional Notes and warrants to Investors upon receipt of
additional funds.
Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
The
Registrant intends to appoint Gerald E. Bisbee, Jr., Ph.D., the President and
Chief Executive Officer of the Registrant, to serve as the Registrant’s
principal financial officer in addition to fulfilling his duties as principal
executive officer. Dr. Bisbee, 66, has served as President and Chief
Executive Officer from 1989 to 1997 and from 2002 to present, Chairman of the
Board from 1989 through 1997, and December 2000 to present, and director since
1989. Dr. Bisbee served as Chairman and CEO of RBio, Inc. from 1998
to 2002. Dr. Bisbee was chairman and CEO of APACHE Medical Systems, Inc., a
company providing clinical trial and FDA advisory services to device and
pharmaceutical companies, and an industry-leading information management system
for high-cost, high-risk patients. In 1988, Dr. Bisbee became Chairman and CEO
of Sequel Corporation, an orthopedic rehabilitation practice management and
manufacturing company. Dr. Bisbee holds a Ph.D. from Yale University in chronic
epidemiology with an emphasis in muscular-skeletal disease. His dissertation is
part of the development of Diagnostic Related Groups, or DRGs. Dr. Bisbee is a
co-author of the first national orthopedic study entitled, Musculoskeletal Disorders: Their
Frequency of Occurrence and Their Impact on the Population of the U.S. He
also holds an M.B.A. in finance and health care systems from University of
Pennsylvania’s Wharton School. Dr. Bisbee is also a director of Cerner
Corporation and Care Investment Trust.
The
Registrant previously disclosed the termination of Brion D. Umidi as Senior Vice
President and Chief Financial Officer. The Registrant continues to
retain Mr. Umidi as a consultant; however, Mr. Umidi will no longer serve as the
Registrant’s principal financial officer.
Item 8.01. Other
Events.
The
Registrant recently provided notice on Form 12b-25 of its inability to timely
file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2009
(the “Third Quarter Report”). The Registrant was unable to file the
Quarterly Report due to its inability to obtain adequate external financing and
the reduction of personnel necessary to complete the necessary accounting and
internal control procedures required for preparing the Third Quarter
Report. Further, management could not complete the interim financial
statements and Management’s Discussion and Analysis of the financial and other
information required to be included in the Third Quarter Report. The
Registrant does not expect to file the Third Quarter Report until after it has
secured adequate external financing, completed its internal processes and
obtained the approval of its Audit Committee. The Registrant does not
expect that the financing disclosed under Item 1.01 of this Form 8-K will be
sufficient to allow the Registrant to complete the Third Quarter Report and the
Registrant does not know when it will be in a position to file the Third Quarter
Report, if at all. Given the Registrant’s cash restraints, the
Registrant also may not be able to file its other reports as required by the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). The
Registrant’s failure to file its Exchange Act reports, including the Third
Quarter Report, will prevent it from registering securities pursuant to certain
investors’ registration rights and may have a material adverse effect on the
Registrant’s business and the price of its securities.
In order
to reduce its cash requirements, the Registrant has initiated various personnel
and other expense reductions and implemented a temporary employee furlough
program for U.S.-based employees. These initiatives are expected to
have a significant impact on the Registrant’s ability to conduct its
operations.
Given the
limitations on available cash to support operations, the Registrant has
accumulated significant financial obligations to its vendors and other third
parties and does not expect to be in a position to meet these obligations on a
timely basis, if at all. Provided that the financing contemplated by
the Subscription Agreement is funded pursuant to that certain agreed upon
funding schedule, attached to this Form 8-K as Exhibit 99.1, the Registrant does
not intend to voluntarily file for bankruptcy under the United States Bankruptcy
Code. However, given the Registrant’s current financial position, its
dependence on external funding to support its operations and its significant
indebtedness, if such funds are not provided in accordance with such agreed upon
funding schedule or under certain other circumstances, the Registrant may need
to file for bankruptcy under the United States Bankruptcy Code. The
Registrant’s liquidity position and inability to meet its financial and other
obligations on a timely basis, if at all, may expose the Registrant to
additional risk of being subject to litigation, investigation, enforcement
action or other proceedings, private or otherwise.
Item 9.01. Financial Statements And
Exhibits.
(d)
Exhibits
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Form
of Amended and Restated Subscription and Security Agreement by and among
ReGen Biologics, Inc. and the Investors named therein, dated as of
November 19, 2009.
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Form
of Secured Convertible Note of ReGen Biologics, Inc., dated as of November
19, 2009.
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Form
of Warrant Certificate by and between ReGen Biologics, Inc. and the
Individuals named therein, dated as of November 19,
2009.
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Funding
Schedule, dated November 19,
2009.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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REGEN
BIOLOGICS, INC.
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By:
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/s/
Gerald E. Bisbee, Jr. |
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Name:
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Gerald
E. Bisbee, Jr., Ph.D.
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Title:
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President
and
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Chief
Executive Officer
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Dated:
November 25, 2009