Amedica (AMDA): Shoring Up the Balance Sheet by Selling Stock Comes with a Price


Shares of medical device maker Amedica (NASDAQ:AMDA) are collapsing – down nearly 50% as of this writing. The reason? Amedica announced this morning that it will be selling 15 thousand units consisting of convertible preferred stock and warrants, for gross proceeds of $15 million (excludes underwriting discounts and commissions and offering expenses payable by Amedica) or $1,000 per unit.

Each unit consists of one share of Series B Convertible Preferred Stock, with a stated value of $1,100, and warrants to purchase up to  758 shares of common stock (the “Warrants”). The Warrants are initially exercisable at an exercise price of $1.60 per share  and expire 5 years from the date of issuance.

The Series B Preferred Stock is convertible into shares of common  stock by dividing the stated value of $1,100 by:  (i) for the first 40 trading days following the closing of this offering, $1.45  (the “Conversion Price”), (ii) after 40 trading days but prior to the 81st trading day, the lesser of (a) the Conversion Price and (b) 87.5% of the lowest volume weighted average price for our Common Stock as reported at the close of trading on the market reporting trade prices for the Common Stock during the five trading days prior to the 41st trading day, and (iii) after 80 trading days, the lesser of (a) the Conversion Price and (b) 87.5% of the lowest volume weighted average price for our Common Stock as reported at the close of trading on the market reporting trade prices for the Common Stock during the five trading days prior to the date of the notice of conversion. In the case of (ii)(b) and (iii)(b) above, the share price shall not be less than $0.48 (the “Floor Price”).  Each of the Conversion Price and Floor Price is subject to adjustment is certain circumstances.

Analyst Ratings

TipRanks reveals AMDA as a stock that has not drawn a vote of confidence among Wall Street opinion. Out of  4 analysts polled in the last 3 months, all 4 are sidelined on the stock.

Maxim analyst Jason McCarthy recently wrote, “Our Hold rating is not based on fundamentals of the company but rather its capital needs, which the company is working to address.”

Apparently, the analyst was right.

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