UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): January 20, 2016
Registrant’s Telephone Number, Including Area Code: (720) 437-6580
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 1.01. | Entry into a Material Definitive Agreement. |
On January 20, 2016, we entered into subscription agreements with Joshua R. Disbrow, our Chief Executive Officer, and Jarrett T. Disbrow, our Chief Operating Officer, pursuant to which each officer agreed to purchase 153,846 shares of our common stock at a price of $0.65 per share. The stock sales were consummated the same day, resulting in gross proceeds to the company of $199,999.80.
The form of subscription agreement entered into by our officers is filed herewith as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the subscription agreement is not complete and is qualified in its entirety by reference to Exhibit 10.1.
The shares of common stock were sold in a transaction exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(2) thereof and Regulation D promulgated thereunder.
| Item 2.04. | Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
As previously reported, during July and August of 2015 we sold convertible promissory notes in the aggregate principal amount of $5,175,000 to certain institutional and high net worth individual investors. The notes have both automatic and optional conversion features. The sales of common stock described in Item 1.01 of this Current Report have triggered our obligation to notify the noteholders of such sales and a resulting conversion option of the noteholders under the notes.
The mandatory conversion feature of the notes provides that a holder of notes will be obligated to convert on the terms of our next public offering of our stock resulting in proceeds to us of at least $5,000,000 in gross proceeds (excluding indebtedness converted in such financing) prior to the maturity date of the notes, referred to as a Qualified Financing. The principal and accrued interest under the notes will automatically convert into a number of shares of such equity securities of our company sold in such financing equal to 120% of the principal and accrued interest under such note divided by the lesser of (i) the lowest price paid by an investor in such Qualified Financing or (ii) $4.63. Our sales of common stock on January 20, 2016 do not constitute a Qualified Financing.
However, in the event that we sell equity securities to investors at any time while the notes are outstanding in a financing transaction that is not a Qualified Financing, then the noteholders have the option, but not the obligation, to convert in whole the outstanding principal and accrued interest as of the closing of such financing into a number of shares of our capital stock in an amount equal to 120% of the number of such shares calculated by dividing the outstanding principal and accrued interest by the lesser of (a) the lowest cash price per share paid by purchasers of shares in such financing, or (b) $4.63. As a result of our sales of common stock on January 20, 2016, we are obligated to provide notice to the above-referenced noteholders of such stock sales. In accordance with the convertible note’s terms, for a period of ten (10) business days following receipt of our notice, noteholders have the option to convert their entire note balance (inclusive of accrued but unpaid interest) into a number of shares of our common stock equal to 120% of the number of shares calculated by dividing such note balance by $0.65, which was the per share purchase price paid in the equity financing described under Item 1.01 of the Current Report.
Noteholders are urged to consult their professional and financial advisors in making a determination of whether to exercise the conversion option, and neither the notice to noteholders nor anything contained herein should be construed as a recommendation by the company regarding the noteholder’s election option.
The form of convertible promissory note is attached hereto as Exhibit 4.1 and is incorporated herein by reference. The foregoing description of the notes is not complete and is qualified in its entirety by reference to Exhibit 4.1.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information contained in Item 1.01 is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits.
| Exhibit No. |
Description of Exhibit
|
| 4.1 | Form of Convertible Note (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on July 24, 2015). |
| 10.1 | Form of Subscription Agreement. |
SIGNATURE
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.
| Date: January 20, 2016 | AYTU BIOSCIENCE, INC. |
| /s/ Gregory A. Gould | |
| Name: Gregory A. Gould | |
| Title: Chief Financial Officer |
Exhibit 10.1
THE SECURITIES SUBJECT TO THIS SUBSCRIPTION AGREEMENT ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933 (the “ 1933 Act ”), AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
NAME OF SUBSCRIBER: ________________
Aytu BioScience, Inc.
SUBSCRIPTION AGREEMENT
The undersigned (the “ Purchaser ”) hereby subscribes to and agrees to purchase One Hundred Fifty-Three Thousand Eight Hundred Forty-Six (153,846) shares of Common Stock (the “ Shares ”) of Aytu BioScience, Inc., a Delaware corporation (the “ Corporation ”), for cash at a price of sixty-five cents ($0.65) per share, for a total purchase price of Ninety-Nine Thousand Nine Hundred Ninety-Nine Dollars and 90/100 Cents ($99,999.90) for such Shares. The subscription price hereunder shall be payable in full upon acceptance hereof by the Corporation.
The Purchaser hereby represents, warrants and agrees as follows:
(a) The Purchaser is a resident the State of Colorado.
(b) The transfer of securities contemplated hereby is made in reliance upon the Purchaser's representation to the Corporation, which by the Purchaser’s acceptance hereof the Purchaser hereby confirms, the Shares to be received by the Purchaser will be acquired for investment for Purchaser’s own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and the Purchaser has no present intention of selling, granting participation in, or otherwise distributing the same. By executing this Subscription Agreement, the Purchaser further represents that the Purchaser does not have any contract, undertaking, agreement, or arrangement with any person to sell, transfer or grant participations to such person, or to any third person, with respect to any of the Shares.
(c) The Purchaser understands that the Shares have not been registered under the 1933 Act on the grounds that the sale provided for in this Agreement and the issuance of securities hereunder is exempt from registration under the 1933 Act, and that the Corporation's reliance on such exemption is predicated in part on the Purchaser's representations set forth herein. The Purchaser realizes that the basis for the exemption may not be present if, notwithstanding such representations, the Purchaser has in mind merely acquiring the Shares for a fixed or determined period in the future, or for a market rise, or for sale if the market does not rise. The Purchaser does not have any such intention.
(d) The Purchaser represents that the Purchaser is experienced in evaluating early-stage companies such as the Corporation, is able to fend for the Purchaser’s own self in the transactions contemplated by this Agreement, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of Purchaser’s investment, and has the ability to bear the economic risks of the Purchaser’s investment. The Purchaser further represents that the Purchaser has had access, during the course of the transactions and prior to the Purchaser’s acquisition of Shares, to all such information as the Purchaser deemed necessary or appropriate (to the extent the Corporation possessed such information or could acquire it without unreasonable effort or expense), and that the Purchaser has had, during the course of the transactions and prior to the Purchaser’s acquisition of Shares, the opportunity to ask questions of, and receive answers from, the Corporation concerning the terms and conditions of the offering and to obtain additional information (to the extent the Corporation possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to the Purchaser or to which the Purchaser had access.
(e) The Purchaser understands that the Shares may not be sold, transferred or otherwise disposed of without registration under the 1933 Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Shares or an available exemption from registration under the 1933 Act, the Shares must be held indefinitely. In particular, the Purchaser is aware that the Shares may not be sold pursuant to Rule 144 promulgated under the 1933 Act unless all of the conditions of that Rule are met. Among the conditions for use of Rule 144 is the availability of current information to the public about the Corporation. Such information is not now available and the Corporation has no present plans to make such information available. The Purchaser represents that, in the absence of an effective registration statement covering the Shares the Purchaser will sell, transfer, or otherwise dispose of the Shares only in a manner consistent with the Purchaser’s representations set forth herein.
(f) The Purchaser agrees that in no event will the Purchaser make a transfer or disposition of any of the Shares (other than pursuant to an effective registration statement under the 1933 Act or, to the Corporation's reasonable satisfaction, pursuant to Rule 144), unless and until (i) the Purchaser shall have notified the Corporation of the proposed disposition and shall have furnished the Corporation with a statement of the circumstances surrounding the disposition, and (ii) if requested by the Corporation, at the expense of the Purchaser or transferee, the Purchaser shall have furnished to the Corporation an opinion of counsel, reasonably satisfactory to the Corporation, to the effect that such transfer may be made without registration under the 1933 Act.
(g) The Purchaser understands that each certificate representing the Shares will be endorsed with a legend substantially as follows.
| 2 |
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS.
(h) The Purchaser will indemnify the Corporation, its officers, directors, stockholders, employees and agents against any losses or damages suffered by any of them as a result of the failure of the above representations and warranties to be true or the failure of the Purchaser to comply with the agreements set forth herein.
(i) The Purchaser represents that he is an “Accredited Investor” as such term is defined in Rule 501 or Regulation D promulgated under the Securities Act of 1933, as amended.
(j) The Purchaser understands that no public market now exists for any of the securities issued by the Corporation and that there is no assurance that a public market will ever exist for the Shares.
(k) By execution below, Purchaser consents, without limiting the manner by which notice otherwise may be given effectively to stockholders, that any notice to stockholders given by the Corporation pursuant to the Delaware General Corporation Law or the Corporation’s Certificate of Incorporation or Bylaws, shall be effective if given by either electronic mail or fax if directed to either the electronic mail address or facsimile number set forth below Purchaser’s signature. The foregoing consent shall be revocable by Purchaser upon delivery of written notice to the Corporation. In addition, the foregoing consent shall be deemed to be revoked without any action by Purchaser if (1) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (2) such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
[ Signature page follows. ]
| 3 |
IN WITNESS WHEREOF, the parties have duly executed this Subscription Agreement as of the 20 th day of January, 2016.
| CORPORATION: | |||
| Aytu BioScience, Inc. | |||
| By: | |||
| Gregory Gould, Chief Financial Officer | |||
| PURCHASER: | |||
| [_____] | |||
| Address: | |||
[Signature Page to Subscription Agreement]