Regulatory News:

SpineGuard (Paris:ALSGD) (FR0011464452 – ALSGD), an innovative company that develops and markets instruments designed to secure the placement of surgical implants by bringing real-time digital technology into the operating room, announced today that it secured 9.0 million euro of financing.

The two financings consist of:

The issuance of a 6.0 million euro bond facility with Norgine Ventures and Harbert European Fund Advisors in substitution of the company’s facility from IPF Partners is in two tranches. The first tranche of 4.5 million euro was drawn on 10 September 2018. The second tranche can be drawn between April and September 2019, upon the achievement of certain conditions.

A new equity line in the form of a 3.0 million euro convertible bond facility with Nice & Green (OCAPI) over a period of 15 months. The line has zero associated warrants.

Stéphane Bette, CEO and co-founder of SpineGuard, comments: « We are very satisfied with these two financing events that should extend our runway until August 2020 and enable us to reach our goal of profitability. We would like to thank Norgine Ventures, Herbert E.F.A and Nice & Green for their renewed confidence in SpineGuard. These financings allow for both a favorable restructuring of the company’s existing debt and an additional flexibility with the possible second tranche of 1.5 million euro. We will also strengthen our equity position at the cost of a modest dilution, spread over 15 months, but without jeopardizing further funding solutions. »

EQUITY LINE

The company has entered into a 15 months 3.0 million euro convertible bond facility as authorized by the Shareholders’ Meeting of May 17, 2018.

The financing is provided by Nice & Green, a private company that specializes in financing solutions tailored to the requirements of listed companies.

The facility provides secured and scheduled monthly draws of €200,000 each during a period of 15 months.

OBJECTIVES OF THE FACILITY

This equity line provides the funding to cover the company’s short-term cash needs.

In addition, it increases the financial resources available to develop the R&D strategic projects, in particular regarding robotics and the DSG® screw.

The facility also strengthens the company’s equity base and supports the organization in its goal to achieve operational break-even by the end of 2018. It also allows the company to engage in strategic R&D projects, in particular, the robotic applications of DSG® and the DSG screw.

Combined with the debt restructuring, the company estimates that it now has an additional 2 years of runway.

The Company continues to explore other avenues to raise finance such as equity or through partnerships similar to the recent one executed in 2017 with the exclusive licensing of dental implantology.

MAIN TERMS AND CONDITIONS

At the shareholders’ meeting held on May 17, 2018, the 17th resolution authorized the Board of Directors to issue securities providing access to capital, without preferential right of subscription (‘avec suppression du droit préférentiel de souscription’) reserved to qualified investors under the terms of paragraph II of article L.411-2 of the French ‘Code monétaire et financier’.

A meeting of the Board of Directors, held on 28 August 2018, acting upon the delegation granted by the General Shareholders Meeting has approved the concept of the facility, without preferential right of subscription, in favour of Nice & Green of one hundred and fifty (150) OCAPI with a nominal value of twenty thousand (20,000) euros each and delegated to the CEO (‘Directeur Général’) the authority to execute each of the draws contemplated under the facility agreement.

MAIN CHARACTERISTICS OF THE CONVERTIBLE BONDS (OCAPI) – SHARE DISPOSALS AFTER CONVERSION OF THE BONDS

Nominal value of the OCAPI: 20.000 € each at 100% of the par value.

Maturity and interest rate of the OCAPI: The OCAPI will bear no interest and will have a maturity 12 months starting with each issue date. Unless a case of default occurs, the non-converted OCAPI at the maturity date will then convert automatically.

In the event of a default, Nice & Green will have the right to request reimbursement by the Company for the OCAPI in cash and/or to suspend or refuse to subscribe the OCAPI not yet issued.

Identification – Timetable for the issuance of the OCAPI:

The OCAPI are numbered from 1 to 150 and shall be issued and subscribed by Nice & Green in several monthly tranches of 200.000 euro each according to the following timetable:

DATE   OCAPI   AMOUNT
Monday 5 November 2018   1 à 10   200.000 €
Tuesday 4 December 2018   11 à 20   200.000 €
Monday 7 January 2019   21 à 30   200.000 €
Tuesday 5 February 2019   31 à 40   200.000 €
Wednesday 6 March 2019   41 à 50   200.000 €
Thursday 4 April 2019   51 à 60   200.000 €
Friday 10 May 2019   61 à 70   200.000 €
Wednesday 12 June 2019   71 à 80   200.000 €
Tuesday 9 July 2019   81 à 90   200.000 €
Wednesday 7 August 2019   91 à 100   200.000 €
Friday 6 September 2019   101 à 110   200.000 €
Monday 7 October 2019   111 à 120   200.000 €
Wednesday 6 November 2019   121 à 130   200.000 €
Friday 6 December 2019   131 à 140   200.000 €
Thursday 9 January 2020   141 à 150   200.000 €

Conversion of the OCAPI: OCAPI can be converted into SpineGuard shares upon their holder request, at any time, according the following conversion formula:

N = Vn / [92% x Min [VWAPQ/10jrs]] where

« N »: the number of new ordinary shares of to be issued under one OCAPI conversion

« Vn »: the nominal value of one OCAPI

« Min [VWAPQ/10jrs] »: Lower daily VWAP of the last 10 trading stock days during the period fixation of the price of conversion (i.e. the 10 stock days immediately preceding the date of the request of conversion for a specific OCAPI).

Communication: the number of shares issued pursuant the OCAPI conversions will be communicated by the Company on its web site under the category of regulated information relative to the existing number of shares and their associated voting rights. Should the case of significant conversion of OCAPI occur, thus with a potential impact on the stock price, the Company will proceed to an ad-hoc communication in respect.

Cases of default: The agreement includes standard provisions for cases of defaults under similar contracts that allow the solicitation of an anticipated reimbursement or a stop of the OCAPI issuances and subscriptions.

Collaterals: no collateral is attached to the OCAPI.

Sale, listing of the OCAPI - Prospectus:

  • The OCAPI are non-transferable, except to companies controlled by Nice & Green.
  • The OCAPI will not trade on Euronext Growth and thus will not be listed.
  • The conversion of the OCAPI is at Nice & Green’s discretion, without a predetermined schedule.
  • The facility does not require the establishment of a prospectus requiring a visa by the AMF.

Governance:

Nice & Green policy is not to be part of the governance of the companies in which it has invested. Therefore, it will not require any seat at SpineGuard’s Board of Directors.

NEW SHARES RESULTING FROM THE OCAPI CONVERSION

The new shares issued upon the conversion of the OCAPI shall be immediately eligible for dividends, bear the same right of all others existing ordinary shares and will trade on Euronext Growth under Code ISIN FR0011464452 - ALSGD.

THEORETICAL EFFECT OF THE ISSUANCE OF THE OCAPI

The theoretical effect of the issue of the OCAPI for a total nominal amount of € 3,000,000 would be as follows:

  • Effect of the issue on the equity per share: base is the net equity per the financial statements as of 31 Dec. 2017 and of the total issued shares on the effective date of the financing i.e. 6 607 933 shares:
Equity per share (in euros)  

Base
non diluted

  

Base
diluted (1)

  Number of shares
Before the issue of the OCAPI   (€0,03)   (€0,03)   6 607 933
After the issue of 150 OCAPI   (€0,02)   (€0,02)   8 439 882
(1) Calculations are made on the assumption that all warrants, stock-options and free shares are exercised prior to the issue of the OCAPI.
  • Incidence of the issue on a 1% stake of a shareholder:
Equity per share (%)   Base
non diluted		   Base
diluted (1) 		  Number of shares
Before the issue of the OCAPI   1,00%   0,86%   6 607 933
After the issue of 150 OCAPI   0,78%   0,69%   8 439 882

The calculation of the number of new issued shares and its subsequent dilution for the shareholders has been made on the base of 10 Day VWAP as of 07 Sep. 2018 (€1.78) adding 8% discount. Should the stock price evolve, the resulting number of shares to be issued could increase or decrease in proportion.

PROFIT SHARING PROGRAM

Nice & Green has embedded a profit sharing scheme designed to grant SpineGuard a stake of the potential financial gains made by Nice & Green.

This profit sharing scheme consists in a cash allowance to SpineGuard as a percentage of realized gains from the sale by Nice & Green of shares issued from the OCAPI conversion.

Such a scheme comes out from the principle where the proper use of the resources transferred by Nice & Green to the Company will bring a favorable impact on the value creation, will improve liquidity and will make the share’s trading easier.

This profit sharing scheme is an easier-to-implement alternative compared to the modification of the discount terms for shares issued from the conversion of the OCAPI should the share price increase significantly.

Next financial press release: 2018 Half-year financial results on September 18, 2018

Modification of the financial calendar: Third quarter 2018 revenue on October 11, 2018 (vs. Oct. 4)

About SpineGuard®

Founded in 2009 in France and the USA by Pierre Jérôme and Stéphane Bette, SpineGuard’s mission is to make spine surgery safer by bringing real-time digital technology into the operating room. Its primary objective is to establish its proprietary DSG® (Dynamic Surgical Guidance) technology as the global standard of surgical care, starting with safer screw placement in spine surgery and then in other surgeries. PediGuard®, the first device designed using DSG, was co-invented by Maurice Bourlion, Ph.D., Ciaran Bolger, M.D., Ph.D., and Alain Vanquaethem, Biomedical Engineer. It is the world’s first and only handheld device capable of alerting surgeons to potential pedicular or vertebral breaches. Over 60,000 surgical procedures have been performed worldwide with DSG® enabled devices. Numerous studies published in peer-reviewed medical and scientific journals have demonstrated the multiple benefits that PediGuard® delivers to patients, surgical staff and hospitals. SpineGuard is expanding the scope of its DSG® platform through strategic partnerships with innovative medical device companies and the development of smart instruments and implants. SpineGuard has offices in San Francisco and Paris. For further information, visit www.spineguard.com.

Disclaimer

The SpineGuard securities may not be offered or sold in the United States as they have not been and will not be registered under the Securities Act or any United States state securities laws, and SpineGuard does not intend to make a public offer of its securities in the United States. This is an announcement and not a prospectus, and the information contained herein does and shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in the United States in which such offer, solicitation or sale would be unlawful prior to registration or exemption from registration.