8-K: Bollinger Innovations Secures $4.1M, Enacts 1-for-250 Reverse Split

Bollinger Innovations secured approximately $4.1 million through convertible notes and warrants, while simultaneously implementing a 1-for-250 reverse stock split to meet Nasdaq's minimum bid price requirement.

Summary

• Bollinger Innovations, Inc. (the Company) entered into a Securities Purchase Agreement on September 18, 2025, with an investor to sell approximately $4.1 million in 5% Original Issue Discount Secured Notes (Notes) and five-year warrants (Warrants).
• Approximately $368 thousand of the Notes were effectively purchased on August 27, 2025, and approximately $1.6 million on September 4, 2025, with the remaining $2.1 million purchased on September 18, 2025, for an aggregate purchase price of $3.85 million.
• The investor has the right to purchase an additional $4.1 million in Notes and Warrants on the same terms for one year following the later of registration statement effectiveness or stockholder approval.
• The Company is restricted from issuing other equity or equity-linked securities for a period ending 90 days after the later of the execution date, registration statement effectiveness, or stockholder approval.
• Notes accrue interest at 15% per annum, have a 5% original issue discount, and mature four months from issuance.
• The Company granted a continuing security interest in all its assets as security for payment under the Notes.
• Conversion prices for the Notes are variable, set at the lower of a fixed price ($12.50, $47.50, or $72.50, adjusted for reverse split) or 95% of the closing sale price or VWAP, with floors of $0.01, $0.04, and $0.06 per share (post-reverse split).
• Upon an event of default, the interest rate on the Notes automatically increases to 20% per annum.
• Warrants are exercisable for shares of Common Stock for five years and include a cashless exercise feature based on a Black Scholes value calculation.
• The Company can mandate cash exercise of warrants if certain conditions are met, including the stock price being 250% above the exercise price.
• The Notes and Warrants are not convertible if the holder would beneficially own more than 9.9% of Common Stock or if the aggregate shares issued exceed 19.9% of outstanding Common Stock as of the execution date (the Exchange Cap), unless stockholder approval is obtained.
• The Company agreed to hold a stockholder meeting within 40 days of the execution date to obtain approval for shares exceeding the Exchange Cap.
• A Registration Rights Agreement was also entered into, requiring the Company to file a registration statement for resale of registrable securities within 10 days and have it effective within 40 days (or 15 days for additional statements).
• Liquidated damages of 1.5% of the committed purchase price, plus 10% monthly interest, are payable for registration delays or failures, up to a maximum of 12 payments.
• On September 19, 2025, the Company filed a Certificate of Amendment to effect a 1-for-250 reverse stock split, effective September 22, 2025, at 12:01 a.m. Eastern Time.
• The reverse stock split reduced the number of outstanding Common Stock shares from approximately 126,229,870 to 506,088.
• The primary purpose of the reverse stock split is to regain compliance with Nasdaq's $1.00 minimum bid price requirement.
• Fractional shares resulting from the reverse stock split will be rounded up to the nearest whole share.
• Proportional adjustments will be made to outstanding equity awards, warrants, and convertible notes, but not to shares reserved under the 2022 Equity Incentive Plan.

Sentiment

Score: 3

Explanation: While the capital raise provides short-term liquidity, the terms are highly unfavorable, including a high interest rate, asset-backed security, and significant potential for dilution. The extreme 1-for-250 reverse stock split is a strong indicator of severe financial distress and a last-ditch effort to maintain Nasdaq listing, which typically leads to further shareholder value erosion. The combination of these factors points to a very negative outlook for existing shareholders.

Positives

• Secured approximately $4.1 million in new capital, providing short-term liquidity.
• The investor has the right to provide an additional $4.1 million in financing, indicating potential for future capital infusion.
• Efforts are being made to maintain the Nasdaq listing through the reverse stock split, which is crucial for market visibility and liquidity.

Negatives

• The 1-for-250 reverse stock split is an extreme measure, often indicative of significant financial distress and can lead to further stock price decline.
• The convertible notes carry a high annual interest rate of 15%, increasing to 20% upon default, signaling high risk for the Company.
• The conversion prices for the notes are highly dilutive, with variable terms and very low floor prices ($0.01, $0.04, $0.06 post-split), which could significantly dilute existing shareholders.
• The Company granted a continuing security interest in all its assets, including those of Bollinger Motors, Inc., to the investor, limiting future financing flexibility.
• The Company is restricted from issuing other equity or equity-linked securities for a significant period, potentially hindering other capital-raising efforts.
• Liquidated damages for registration delays are substantial (1.5% of committed purchase price every 30 days plus 10% monthly interest), adding financial burden if regulatory requirements are not met promptly.

Risks

• There is no guarantee the Company will meet the Nasdaq minimum bid price requirement, potentially leading to delisting.
• Significant dilution risk for existing shareholders due to the convertible notes and warrants, especially with variable conversion prices tied to market performance and low floor prices.
• The high interest rate on the Notes (15%, 20% on default) increases the Company's debt burden and risk of default.
• The Company's assets are pledged as security, which could complicate future financing or asset sales.
• Failure to obtain stockholder approval for shares exceeding the Exchange Cap could limit the investor's ability to convert all notes and warrants, potentially triggering default events.
• The Company's ability to attract and retain qualified employees and key personnel may be impacted by financial instability.
• Adverse effects of increased competition in the electric vehicle market could impact the Company's business and financial performance.
• Changes in government licensing and regulation could adversely affect the Company's business.

Future Outlook

The Company stated that this will be the last reverse stock split it initiates for the next three years, though it acknowledges there is no guarantee it will meet the Nasdaq minimum bid price requirement. The Company anticipates subsequent events and developments may cause its plans, intentions, and expectations to change and disclaims any obligation to update forward-looking statements except as required by law.

Management Comments

• "This will be the last reverse stock split Bollinger Innovations initiates for the next three years."

Industry Context

Bollinger Innovations operates in the electric vehicle (EV) manufacturing sector, a capital-intensive industry often requiring significant financing. Maintaining a Nasdaq listing is crucial for EV companies to access capital markets and maintain investor confidence. The reverse stock split and capital raise reflect common challenges faced by smaller EV manufacturers in securing funding and meeting listing requirements amidst competitive and evolving market conditions.

Corporate Governance

Stakeholder Impact

• Shareholders: Face significant dilution risk from the convertible notes and warrants, especially given the low conversion price floors. The 1-for-250 reverse stock split drastically reduces the number of shares held, which can be perceived negatively and may not guarantee long-term price stability. Fractional shares are rounded up.
• Company: Gains short-term capital of approximately $4.1 million and potential for an additional $4.1 million, which is crucial for operations. However, this comes at a high cost with a 15% interest rate and a pledge of all company assets. The reverse stock split is a critical step to maintain Nasdaq listing, which is vital for market access and investor confidence.
• Investor (Esousa Group Holdings LLC): Benefits from a high interest rate (15%, 20% on default), a security interest in all company assets, and highly favorable conversion terms that allow for significant equity upside through variable conversion prices tied to market performance and low floor prices. Also has the option for additional investment.

Next Steps

• Hold a meeting of stockholders within 40 days of September 18, 2025, to obtain approval for the issuance of shares exceeding the 19.9% Exchange Cap.
• Prepare and file one or more registration statements with the SEC covering the resale of all registrable securities no later than 10 days after the closing date.
• Use best efforts to have the initial registration statement declared effective by the SEC within 40 days after the closing date (or 2 business days after SEC notification).

Key Dates

Recommendation

The 1-for-250 reverse stock split is an extreme measure to maintain Nasdaq listing, often a precursor to further stock price declines and indicative of severe financial distress. The accompanying capital raise, while providing short-term liquidity, comes with highly dilutive terms, including a high 15% interest rate (20% on default) and variable conversion prices with very low floors ($0.01, $0.04, $0.06 post-split). The Company also pledged all its assets as security, severely limiting future financial flexibility. These factors collectively suggest a high probability of significant shareholder value destruction, making the stock a strong sell.

Keywords

Reverse Stock Split, Convertible Notes, Warrants, Capital Raise, Nasdaq Compliance, Dilution, Secured Debt, Electric Vehicle Manufacturer, BINI, Bollinger Innovations