SEC Company Response from Bone Biologics Corp (BBLG, BBLGW) (CIK 0001419554) (BBLG) — Jan 6, 2015
Bone Biologics Corp (BBLG, BBLGW) (CIK 0001419554)
Date: Jan. 6, 2015 · CIK: 0001419554 · Accession: 0001493152-15-000064
AI Filing Summary & Sentiment
File numbers found in text: 333-200156
Referenced dates: December 9, 2014
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CORRESP
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filename1.htm
Reed
Smith LLP
599
Lexington Avenue
New
York, NY 10022-7650
+1
212 521 5400
Fax
+1 212 521 5450
reedsmith.com
January
6, 2014
VIA EDGAR
Securities
and Exchange Commission
Division
of Corporate Finance
100 F Street,
N.E.
Washington,
D.C. 20549
Attn: Mara
L. Ransom, Assistant Director
Re:
Bone
Biologics, Corp.
Registration
Statement on Form S-1
Filed
November 12, 2014
File
No. 333-200156
Dear Ms.
Ransom:
On
behalf of our client, Bone Biologics, Corp., a Delaware corporation (the “Company”), we hereby provide responses
to comments (the “Comments”) of the staff of the U.S. Securities and Exchange Commission (the “Staff”)
issued in a letter dated December 9, 2014 (the “Staff’s Letter”) regarding the Company’s
above-referenced Registration Statement on Form S-1 (the “Registration Statement”), as filed with the U.S.
Securities and Exchange Commission (the “Commission”) on November 12, 2014. Following this submission, we will
file on the EDGAR system a complete copy of Amendment No. 1 to the Registration Statement (the “Amended Registration
Statement”) reflecting the responses of the Company below.
In
order to facilitate your review, we have responded, on behalf of the Company, to each of the Comments set forth in the Staff’s
Letter, on a point by point basis. The Comments are set forth below in bold font and our response follows each respective Comment.
In our response, page number references are to the Registration Statement. Terms used but not defined herein have the respective
meanings assigned thereto in the Registration Statement.
General
1. Given
the nature of the offering, the size of the offering relative to the number of shares
outstanding held by non-affiliates, and the identity and nature of the selling shareholders,
it appears that these securities may be being offered by or on behalf of the registrant.
If so, the offering is not eligible to be conducted on a continuous or delayed basis
pursuant to Rule 415(a)(1)(i) of Regulation C. Please provide us with your detailed analysis
of why this offering is not by or on behalf of the registrant, which analysis should
address all of the factors set forth in Securities Act Rules Compliance and Disclosure
Interpretation 612.09. Alternatively, please revise the registration statement to name
the selling stockholders as underwriters, disclose that such selling stockholders must
resell their shares at a fixed price throughout the offering, even after you become quoted
or listed, and make conforming changes to your prospectus accordingly, including your
cover page, summary and plan of distribution sections.
Response
to Comment No. 1
The
Company acknowledges the Staff’s comment and in response the Company will
reduce the shares registered on behalf of each selling security holder, other than Hankey
Capital LLC, by 80%. As a result, the number of shares registered for resale pursuant
to the Registration Statement will be reduced from 34,951,839 to 4,933,407 shares registered
on behalf of the selling security holders other than the 10,284,811 shares underlying
warrants and a promissory note included for registration on behalf of Hankey Capital
LLC. The Company currently has 24,269,047 shares of common stock outstanding and
a total of 34,951,839 shares outstanding on a fully diluted basis. The shares
registered on behalf of Hankey Capital LLC consists of (i) 6,329,114 shares of common
stock underlying a convertible note issued to Hankey Capital in connection with a $5,000,000
convertible note investment made by Hankey Capital LLC and (ii) 3,955,697 underlying
warrants issued to Hankey Capital LLC in connection with such $5,000,000 convertible
note investment.
The
Company respectfully submits that the proposed offering of shares of the Company’s common stock by Hankey Capital
LLC as contemplated by the Registration Statement is properly regarded as a secondary offering.
In
an effort to assist registrants in determining whether an offering by selling stockholders may be characterized as a secondary
offering that is eligible to be made on a shelf basis under Rule 415(a)(1)(i), the Staff issued Interpretation 612.09 in its Securities
Act Compliance and Disclosure Interpretations (“C&DI 612.09”). C&DI 612.09 provides that “[t]he question
of whether an offering styled a secondary one is really on behalf of the issuer is a difficult factual one, not merely a question
of who receives proceeds” and that consideration be given to the following factors:
●
how
long the selling stockholders have held the shares;
●
the
circumstances under which the selling stockholders have received the shares;
●
the
relationship of the selling stockholders to the issuer;
●
the
number of shares being sold;
●
whether
the selling stockholders are in the business of underwriting securities; and
●
whether
under all the circumstances it appears that the seller is acting as a conduit for the issuer.
For
the reasons set forth below, the Company respectfully submits that the registration and offering from time to time (the “Offering”)
of the shares described above - 4,933,407 shares for the selling stockholders other than Hankey Capital LLC and up to 10,284,811
shares (the “Shares”) of common stock of the Company on behalf of Hankey Capital LLC is not, and should not be considered,
a primary offering of the Shares to the public and that neither Hankey Captial LLC nor any other selling security holders is not,
and should not be considered to be, acting as an underwriter within the meaning of Section 2(a)(11) of the Securities Act of 1933,
as amended (the “Securities Act”). We respectfully submit that the Offering as proposed above with the reduction of
the shares to be registered by all selling security holders, other than Hankey Capital LLC, by 80% should be considered
a secondary offering under Rule 415(a)(1)(i) of the Securities Act and that no additional disclosure be required.
- 2 -
How
Long the Selling stockholders have Held the Shares
Pursuant
to Hankey Capital LLC’s $5,000,000 investment in the Company’s convertible promissory note, Hankey Capital
made specific representations to the Company that it was acquiring the securities, for its own account and not with a view towards,
or for resale in connection with, the public sale or distribution thereof. There is no evidence to suggest that those representations
are false. The fact that the Shares are now being registered for resale is not evidence that the Selling Stockholders desire to
effect an immediate distribution. In fact, Hankey Capital LLC has also not converted the promissory note and we are only registering
shares underlying the note purchased by Hankey Capital and a warrant issued to Hankey Capital in connection with its investment.
Hankey
Capital has borne for approximately 10 weeks, and continues to bear, the full economic and market risk of its investment
in the Company for the period prior to the date that the Registration Statement is ultimately declared effective and the shares
sold thereunder (or under any applicable exemption from registration). Hankey Capital LLC has already purchased and fully paid
for or otherwise given valuable consideration for the shares of common stock being registered for resale on its behalf. As a result,
Hankey Capital LLC has been subject to not only market risk, but also the risk that the registration statement would not be declared
effective promptly or for a significant period of time. In addition, due to the need to file an amended registration statement
following receipt of a response from the SEC to this letter, the Registration Statement is not likely to be declared effective
for approximately an additional month from the date hereof. The Company believes the purchase of the convertible promissory note
by Hankey Capital LLC, which is convertible into the shares being registered for resale, is inconsistent with the notion that
it is acquiring such securities with a view towards, or for resale in connection with, the public sale or distribution thereof,
but rather consistent with a further long-term investment in the Company. Each of the other selling shareholders has already held
their shares for a period of at least 4 months.
The
Circumstances under Which the Selling Stockholders Received Their Shares
Hankey
Capital LLC, and each of the other selling stockholders, acquired securities in separate private placement transactions
over the last several years pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act and/or Rule
506 of Regulation D promulgated under the Securities Act and, as noted above, have been at market risk for the Shares since their
acquisition of common stock or the securities convertible into the shares of common stock being registered on their behalf at
least as long ago as October 24, 2014. As noted above, Hankey Capital LLC and each of the other selling stockholders has
made specific representations to the Company that such Selling Stockholder is acquiring the common stock or the securities convertible
into the shares of common stock registered on their behalf in the ordinary course of business for their own account and not with
a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered
under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities
laws, and neither Hankey Capital nor any other selling stockholder has a present arrangement to effect any distribution of the
securities purchased from the Company which are convertible into the shares registered on their behalf to or through any person
or entity. The Company is not aware of any evidence that would indicate that these specific representations were false or of any
evidence that Hankey Capital LLC or any other selling stockholder has any plan to act in concert to effect a distribution of its
securities or the underlying shares. Furthermore, the Company is not aware of any evidence that a distribution would occur if
the Registration Statement is declared effective. Under the Commission’s rules, a “distribution” requires
special selling efforts. Rule 100(b) of Regulation M defines a “distribution” as “an offering of securities,
whether or not subject to registration under the Securities Act, that is distinguished from ordinary trading transactions by the
magnitude of the offering and the presence of special selling efforts and selling methods.” There is nothing to suggest
that any special selling efforts or selling methods by or on behalf of the Hankey Capital LLC or any other selling stockholder
has or would take place if the Registration Statement is declared effective. The Company also is not aware of any facts to suggest
that Hankey Capital LLC or any other selling stockholder has taken any actions to condition or prime the market for the
potential resale of the shares registered on it behalf. To do so would result in a breach of the respective representations made
by Hankey Capital and the other selling stockholders to the Company.
- 3 -
Neither
Hankey Capital LLC nor any of the Selling Stockholders is acting on the Company’s behalf with respect to the Shares
being registered for resale under the Registration Statement, and the Company has no contractual relationship with Hankey Capital
LLC or any of the Selling Stockholders that would control the timing, nature and amount of resales of the Shares or whether such
Shares are even resold at all under the Registration Statement. In addition, as set forth in the Registration Statement, the Company
will not receive any proceeds from the sale of Shares under the Registration Statement. Instead Hankey Capital and all other Selling
Stockholders will receive all proceeds received from resale of the Shares.
The Selling
Stockholders’ Relationship to the Company.
The
Company does not have an underwriting relationship with any of the selling stockholders, including Hankey Capital LLC. Each selling
stockholder, including Hankey Capital LLC, acquired the Shares or the securities convertible into the Shares in a negotiated transaction
for the fair market value on the date of issuance and represented to the Company that it was acquiring such shares for its own
account and not with a view towards distribution, and that it did not have any agreement or understanding, directly or indirectly,
with any person to distribute the Shares.
None
of the selling stockholders, including Hankey Capital LLC, had a prior relationship with the Company before the consummation
of each selling stockholders initial investment in the securities of the Company which are now Shares of common stock or convertible
into the Shares. Hankey Capital LLC does not have the right to nominate designees to the Company’s Board of Directors.
The Company will not receive any proceeds from any subsequent sale of the Shares being registered.
The
Amount of Shares Involved
The
Company acknowledges the large amount of shares of common stock involved; however, the Company has reduced the number of shares
registered pursuant to this registration statement by 80%, other than the shares underlying warrants and a promissory note being
registered on behalf of Hankey Capital LLC, and does not believe that the amount of shares being registered alone warrants re-characterizing
a valid secondary offering as a primary offering. Pursuant to C&DI 612.09, the amount of shares being offered is only one
of several factors to be considered in evaluating whether, under all the circumstances, a purported secondary offering is instead
an indirect primary offering. Furthermore, the Staff’s own interpretations support the Company’s position.
For example, Securities Act Compliance and Disclosure Interpretation 612.12 (“C&DI 612.12”) describes a scenario
in which a holder of more than 70% of the outstanding stock is able to effect a valid secondary offering. The interpretation states,
in relevant part:
“A
controlling person of an issuer owns a 73% block. That person will sell the block in a registered “at-the-market”
equity offering. Rule 415(a)(4) applies only to offerings by or on behalf of the registrant. A secondary offering by a control
person that is not deemed to be by or on behalf of the registrant is not restricted by Rule 415(a)(4).”
Additionally,
Securities Act Compliance and Disclosure Interpretation 216.14 (“C&DI 216.14”), regarding the use of Form S-3
to effect a secondary offering, also provides:
“Secondary
sales by affiliates may be made under General Instruction I.B.3 to Form S-3, even in cases where the affiliate owns more than
50% of the issuer’s securities, unless the facts and circumstances indicate that the affiliate is acting as an underwriter
by or on