8-K/A: NAYA Biosciences Completes Merger with NAYA Therapeutics, Secures Financing

NAYA Biosciences finalized its merger with NAYA Therapeutics, resulting in a new combined entity and significant changes to its capital structure.

Summary

• NAYA Biosciences, formerly INVO Bioscience, completed its merger with NAYA Therapeutics on October 11, 2024.
• Legacy NAYA common stock was converted into the right to receive 118,148 shares of NAYA Biosciences common stock and 30,375 shares of Series C-1 Convertible Preferred Stock.
• Certain debt obligations of Legacy NAYA, totaling $8,575,833, were converted into 669,508 shares of NAYA Biosciences common stock and 8,576 shares of Series C-2 Convertible Preferred Stock.
• A $3,934,146 debt was exchanged for a 7.0% Senior Secured Convertible Debenture due December 11, 2025.
• Legacy NAYA stock options and restricted stock units were converted into NAYA Biosciences options and restricted stock units, respectively, using an exchange ratio of 8.9108.
• The company is required to hold a stockholder meeting to approve the merger, increase authorized shares, approve the issuance of common stock upon conversion of preferred stock, and approve a reverse stock split between 1-for-2 and 1-for-20.
• The company agreed to file a registration statement with the SEC to register for resale the shares issued in the merger and those issuable upon conversion of preferred stock and the debenture within 30 days of the closing date.
• The 7.0% Senior Secured Convertible Debenture has a conversion price of $0.93055 per share and monthly redemptions of $437,127.24 starting March 14, 2025.
• The company acquired Wisconsin Fertility Institute (WFI) on August 10, 2023, for $10 million, with $2.5 million paid at closing and the remainder in installments.
• Pro forma financial statements for the nine months ended September 30, 2024, and the year ended December 31, 2023, give effect to the merger and acquisition as if they occurred on January 1, 2023.

Sentiment

Score: 4

Explanation: The document highlights a significant merger and financing activity, but the substantial pro forma losses and reliance on future capital raises temper the positive aspects. The need for stockholder approval and the mandatory redemption clauses introduce uncertainty, resulting in a moderately negative sentiment.

Positives

• The merger creates a combined entity with a broader portfolio and potential synergies.
• The conversion of debt into equity and preferred stock reduces the company's debt burden.
• The new debenture provides a structured repayment plan with monthly redemptions.
• The acquisition of Wisconsin Fertility Institute expands the company's presence in the fertility market.
• The company is taking steps to register shares for resale, which could improve liquidity.

Negatives

• The company has incurred significant net losses in both the nine months ended September 30, 2024, and the year ended December 31, 2023.
• The conversion of preferred stock into common stock is contingent on stockholder approval.
• The debenture has a mandatory redemption clause tied to future financing, which could create pressure to raise capital.
• The company is required to hold a stockholder meeting to approve several key items, which could introduce uncertainty.
• The company has a significant accumulated deficit of $63,541,125.

Risks

• The company's ability to convert preferred stock into common stock depends on stockholder approval.
• The company's ability to meet the mandatory redemption requirements of the debenture depends on future financing.
• The company's financial performance is subject to the risks associated with the biotechnology and healthcare industries.
• The company's ability to successfully integrate the acquired businesses and realize synergies is not guaranteed.
• The company's ability to raise additional capital in the future is not guaranteed.

Future Outlook

The company is required to hold a stockholder meeting to approve the merger and related transactions, and to file a registration statement with the SEC to register shares for resale. The company will also need to manage the monthly redemptions of the debenture and continue to integrate the acquired businesses.

Management Comments

• Dr. Daniel Teper, Legacy NAYA's current Chairman and Chief Executive Officer, was appointed President of the Company.
• Dr. Teper will remain as Legacy NAYA's Chief Executive Officer.
• The combined company will be led by NAYA Chief Executive Officer Steven Shum, NAYA Chief Financial Officer Andrea Goren, and Dr. Teper.
• Dr. Teper and Ms. Lyn Falconio have been appointed to the Company's board of directors.

Industry Context

The merger and acquisition activity reflects a trend in the biotechnology and healthcare industries towards consolidation and expansion of service offerings. The company is positioning itself to compete in the oncology and fertility markets.

Comparison to Industry Standards

• The pro forma losses are significant and may be concerning to investors, especially when compared to more established companies in the biotechnology and healthcare sectors.
• The reliance on debt financing and the need for stockholder approval for key transactions are common in early-stage companies but can introduce risks.
• The acquisition of Wisconsin Fertility Institute is a strategic move to expand into the fertility market, similar to other companies seeking growth through acquisitions.
• The terms of the convertible debenture, including the monthly redemptions and mandatory redemption clauses, are typical for financing agreements with early-stage companies.
• The company's need to file a registration statement for resale of shares is a standard practice for companies that have recently completed a merger or acquisition.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders will experience a change in their ownership structure due to the merger and conversion of shares.
• Employees of both NAYA Biosciences and NAYA Therapeutics will be integrated into the new combined entity.
• Customers of Wisconsin Fertility Institute will become part of the NAYA Biosciences customer base.
• Creditors of Legacy NAYA will have their debt obligations restructured as part of the merger.
• Suppliers of both companies will need to adapt to the new combined entity.

Next Steps

• Hold a stockholder meeting to approve the merger and related transactions.
• File a registration statement with the SEC to register shares for resale.
• Manage the monthly redemptions of the 7.0% Senior Secured Convertible Debenture.
• Continue to integrate the acquired businesses.
• Seek additional financing to support operations and meet debt obligations.

Key Dates

Keywords

Merger, Acquisition, Convertible Preferred Stock, Convertible Debenture, Pro Forma Financial Statements, Stockholder Meeting, Reverse Stock Split, Fertility Institute, Biotechnology, Healthcare