UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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): AUGUST 31, 2004
CRDENTIA CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 000-31152 76-0585701
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(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation) File Number) Identification Number)
14114 DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75254
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(Address of Principal Executive Offices) (Zip Code)
(972) 850-0780
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(Registrant's telephone number, including area code)
(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 (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 8.01 OTHER EVENTS.
In connection with the August 31, 2004 closing of a Term Loan Credit
Facility provided to Crdentia Corp. (the "Company") by Bridge Opportunity
Finance, LLC ("BOF"), the Company was required to enter into a Makewell
Agreement (the "Makewell") with MedCap Partners L.P. ("MedCap"), BOF and Bridge
Healthcare Finance, LLC. Under the Makewell, MedCap agreed to contribute to the
Company a cash amount equal to any "EDITDA Shortfall" (as defined in the
Makewell). Such contributions are in the form of purchases of additional shares
of Series C Convertible Preferred Stock. The Makewell terminates upon the
earlier of (i) the termination of the Loan Agreements (as defined in the
Makewell), (ii) the date on which an aggregate of $1,000,000 in contributions
have been made under the Makewell, or (iii) January 25, 2005. The foregoing
description of the Makewell is qualified in its entirety by reference to the
Makewell Agreement filed with this report on Form 8-K as Exhibit 10.1.
Pursuant to the Makewell, the Company issued to MedCap (i) 3,090 shares
of Series C Convertible Preferred Stock on September 25, 2004, (ii) 1,250 shares
of Series C Convertible Preferred Stock on October 12, 2004, (iii) 5,000 shares
of Series C Convertible Preferred Stock on October 18, 2004 and (iv) 1,417
shares of Series C Convertible Preferred Stock on October 25, 2004. Such shares
of Series C Convertible Preferred Stock were issued at a cash price per share of
Series C Convertible Preferred Stock of $60.00. C. Fred Toney, a member of the
Company's Board of Directors, is the Managing Member of MedCap Management &
Research LLC, the General Partner of MedCap. Each such share of Series C
Convertible Preferred Stock is convertible into 100 shares of the Company's
Common Stock. The rights, preferences and privileges of the Series C Convertible
Preferred Stock are described in the report on Form 8-K filed by the Company on
September 7, 2004.
Pursuant to the terms of the Company's Series C Convertible Preferred
Stock offering, the Company is obligated to issue warrants to purchase 2.5
shares of Series C Convertible Preferred Stock for each share of Series C
Convertible Preferred Stock purchased (the "Series C Warrant Coverage"). As a
result, in connection with the Company's issuances of the shares of Series C
Convertible Preferred Stock described above, MedCap was granted (i) a warrant to
purchase 7,725 shares of Series C Convertible Preferred Stock on September 25,
2004, (ii) a warrant to purchase 65,685 shares of Series C Convertible Preferred
Stock on October 18, 2004, and (iii) a warrant to purchase 17,712 shares of
Series C Convertible Preferred Stock on October 25, 2004. Such warrants are
exercisable for a period of five years at a price per share of Series C
Convertible Preferred Stock of $60.00. The foregoing description of the warrants
is qualified in its entirety by reference to the form of Warrant to Purchase
Shares of Series C Convertible Preferred Stock of Crdentia Corp., filed as
Exhibit 4.1 to this report on Form 8-K.
In connection with the Makewell, the Company agreed that, for every
share of Series C Convertible Preferred Stock over 4,333 shares purchased by
MedCap under the Makewell, the Company would grant MedCap an extraordinary
warrant to purchase 10 shares of Series C Convertible Preferred Stock. Any such
warrants would be in addition to the Series C Warrant Coverage and were intended
as a penalty and a disincentive to the Company generating negative adjusted
earnings.
Negative operating results have required the Company to issue 10,757
shares of Series C Convertible Preferred Stock to MedCap under the Makewell
since August 31, 2004, exceeding the 4,333 share threshold by 6,424 shares. As a
result, 64,240 shares of Series C Convertible Preferred Stock (convertible into
6,424,000 shares of the Company's common stock) covered by the warrants granted
on October 18, 2004 and October 25, 2004 are extraordinary warrant shares that
were issued pursuant to the arrangements described in the previous paragraph.
The Company currently anticipates that it is likely that MedCap will
purchase an additional 5,910 shares of Series C Convertible Preferred Stock
under the Makewell (so that an aggregate of $1,000,000 would be contributed to
the Company by MedCap under the Makewell). This would result in the issuance of
extraordinary warrants to purchase an additional 59,100 shares of Series C
Convertible Preferred Stock (convertible into 5,910,000 shares of the Company's
common stock). The exercise of these extraordinary warrants would result in
significant further dilution in the percentage ownership of the Company's
stockholders.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
EXHIBIT NO. DESCRIPTION
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4.1 Form of Warrant to Purchase Shares of Series C
Convertible Preferred Stock of Crdentia Corp.
10.1 Makewell Agreement dated August 31, 2004 between
Crdentia Corp., MedCap Partners L.P., Bridge
Opportunity Finance, LLC and Bridge Healthcare
Finance, LLC.
SIGNATURES
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.
CRDENTIA CORP.
October 25, 2004 By: /s/ James D. Durham
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James D. Durham
Chief Executive Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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4.1 Form of Warrant to Purchase Shares of Series C Convertible
Preferred Stock of Crdentia Corp.
10.1 Makewell Agreement dated August 31, 2004 between Crdentia
Corp., MedCap Partners L.P., Bridge Opportunity Finance, LLC
and Bridge Healthcare Finance, LLC.