UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 13, 2018
Emmaus Life Sciences, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 000-53072 | 41-2254389 | ||
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(State or Other Jurisdiction of Incorporation |
(Commission File Number) |
(IRS Employer Identification No.) |
21250 Hawthorne Boulevard, Suite 800, Torrance, CA 90503
(Address, including zip code, off principal executive offices)
Registrant’s telephone number, including area code 310-214-0065
(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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company ☒
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13a) of the Exchange Act. | ☒ |
Explanatory Note
On September 17, 2018, Emmaus Life Sciences, Inc. ( “ we ,” “ us ,” “ our ,” “ Emmaus ” or the “ company ”) filed with the Securities and Exchange Commission a report on Form 8-K, referred to herein as the original report, relating to our entry into a securities purchase agreement pursuant to which we agreed to sell and issue to the purchasers thereunder in a private placement pursuant to Rule 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D thereunder 10% senior secured debentures and common stock purchase warrants to purchase shares of our common stock. This amended report amends in certain respects the original report as described below. This amended report should be read in conjunction with the original report.
| Item 1.01 |
Entry into a Material Definitive Agreement |
On October 1, 2018, we entered into a second amendment to securities purchase agreement to increase the amount of our securities to be sold and issued to the purchasers to $12.2 million principal amount of debentures and warrants to purchase an aggregate of up to 1,220,000 shares of our common stock for an aggregate purchase price of $12.2 million. The closing of the transactions under the securities purchase agreement is expected to occur in or about the week of October 8, 2018, subject to the satisfaction of customary closing conditions. At the closing, we will enter into a security agreement by which we will grant to the purchasers a security interest in substantially all of our assets, except for certain pledged marketable securities.
The debentures will bear interest at the rate of 10% per annum, payable monthly commencing November 1, 2018, and will mature on the 18-month anniversary of the closing date. We will be obliged to redeem $1,000,000 principal amount of the debentures monthly, commencing in May 2019, and to redeem the debentures in full upon a “subsequent financing” by us of at least of $20 million, subject to certain exceptions. The debentures also will be redeemable at our option, and we may prepay the principal amount of the debentures, at any time without premium or penalty. Any outstanding principal balance of the debentures will be due on maturity date, subject to acceleration in specified events. At the closing, Emmaus Medical, Inc. and Newfield Nutrition Corporation, two of our subsidiaries, will enter into a subsidiary guarantee by which they will guarantee our obligations to the debenture holders.
The common stock purchase warrants will be exercisable for five years from the closing date beginning six months after the closing date at an initial exercise price of $11.30 per share, which will be subject to reduction upon the date we become a listed company or our common stock becomes quoted on a trading market based upon the public offering price or “VWAP” of our common stock. The exercise price also will be subject to adjustment in certain other customary circumstances.
T.R. Winston & Company, LLC acted as placement agent in connection with the transactions contemplated by the securities purchase agreement pursuant to an amended and restated fee agreement with us dated October 1, 2018. In the fee agreement, we have agreed to pay T.R. Winston at the closing a cash fee equal to 5% of the gross proceeds received from the purchasers, to grant to T.R. Winston common stock purchase warrants to purchase up to 120,000 shares of our common stock on the same terms as the common stock purchase warrants sold to the purchasers and to reimburse T.R. Winston for certain legal fees and expenses incurred in connection with the transactions contemplated by the securities purchase agreement.
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The securities purchase agreement contains representations and warranties that the parties made to, and solely for the benefit of, the other in the context of all of the terms and conditions of that agreement and of the specific relationship between the parties. The provisions of the securities purchase agreement, including such representations and warranties, are not for the benefit of any party other than the parties to the securities purchase agreement and are not intended as documents for investors and the public to obtain factual information about the current state of affairs of the parties to the securities purchase agreement. Rather, investors and the public should look to the disclosures contained in our filings with the Securities and Exchange Commission for such information.
The foregoing description of the terms of the securities purchase agreement, as amended, the debentures, the common stock purchase warrants, the security agreement, the subsidiary guarantee and the placement agent fee agreement are not complete, and are qualified in their entirety by reference to the full text of the agreements and documents, copies of which are filed as exhibits hereto and are incorporated herein by reference.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information in Item 1.01 regarding the debentures is incorporated herein by reference.
| Item 3.02 |
Unregistered Sales of Equity Shares |
Reference is made to Item 3.02 of the original report. The information in Item 1.01 of this report is incorporated herein by reference.
The total shares of our common stock covered by the transactions described in Item 3.02 of the original report and in Item 1.01 of this report amount to approximately 10.3% of the number of shares outstanding as of June 30, 2018.
The transactions described above were effected without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. These transactions qualified for the exemptions because they did not involve any public solicitation and all or substantially all of the investors were “accredited investors” as defined in Rule 501 under the Securities Act. Except as described in Item 1.01 of this amended report, no broker-dealers were used in connection with such sales of unregistered securities.
| Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits
There are filed as part of this report the exhibits listed on the accompanying Index to Exhibits, which information is incorporated herein by reference.
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INDEX TO EXHIBITS
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Previously filed. |
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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.
| Date: October 5, 2018 | EMMAUS LIFE SCIENCES, INC. | |||||
| By: | /s/ KURT KRUGER | |||||
| Name: | Kurt Kruger | |||||
| Title: | Chief Financial Officer | |||||
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Exhibit 10.5
THIS AMENDED AND RESTATED TRANSACTION FEE AGREEMENT (this “Agreement”) is made as of the 1st day of October 2018.
BETWEEN:
EMMAUS LIFE SCIENCES, INC.
21250 Hawthorne Blvd.
Suite 800
Torrance, CA 90503
(the “Company”)
OF THE FIRST PART
AND:
T.R. WINSTON & COMPANY, LLC
376 Main Street
Bedminster, New Jersey 07921
(the “Broker”)
OF THE SECOND PART
W H E R E A S:
A. This Agreement amends and restates in its entirety that certain Transaction Fee Agreement, dated as of August 24, 2018, between the Company and the Broker.
B. The Company will enter into a Securities Purchase Agreement (the “Purchase Agreement”) with the purchasers to be identified on the signature pages of the Purchase Agreement (collectively, the “Investors”) in connection with the placement of senior debentures in Emmaus Life Sciences, Inc., and warrants in the Company, in the aggregate amount up to $12,200,000;
C. The Broker is a licensed broker-dealer with the Financial Industry Regulatory Authority;
D. The Broker introduced the Company to the Investors and assisted the Company in the transactions contemplated by the Notes;
E. If the Company closes the transaction contemplated herein, the Company wishes to reward the Broker for its services in the manner hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, promises, conditions, warranties and representations hereinafter set forth, the parties hereto agree as follows:
1. The Company agrees to compensate the Broker as follows: (i) five percent (5%) of the gross proceeds raised in the offering, payable at the Closing (as defined in the Purchase Agreement),
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and (ii) one hundred twenty thousand (120,000) 5-year warrants, identical to the Investor Warrants (the “Broker Warrants”) to Broker or its designees at the Closing to purchase shares of common stock of Emmaus Life Sciences, Inc. with a strike price of $11.30 at the Closing of the transaction. The Broker Warrant shall vest immediately upon issuance. Fees and Broker Warrants shall be paid to Broker in the manner and in the name designated by Broker. The Company agrees to reimburse the Broker $35,000 for its legal fees and expenses ( provided , however , that such reimbursement amount in no way limits or impairs the indemnification and contribution provisions of this Agreement).
2. The parties hereto, and each of them, covenant and agree that each of them shall and will upon reasonable request by the other party, make, do, execute or cause to be made, done or executed all such further and other lawful acts, deeds, things, devices and assurances whatsoever for the better or more perfect and absolute performance of the terms and conditions of this Agreement.
3. By execution hereof, the Company acknowledges that the Broker does not provide investment advice or financial planning services. In that regard, the Broker is not registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and cannot therefore provide any advice regarding the desirability or value of purchasing, selling, transacting in, investing in, or holding any security. Rather, the Broker’s services will be limited to those properly provided by a licensed broker-dealer (T.R. Winston & Company, LLC is registered with the FINRA as an “Introducing Broker/Dealer” or “K” broker/ dealer in accordance with Section 15 of the Securities and Exchange Act of 1934, as amended.)
4. The Company hereby agrees to indemnify and hold harmless the Broker, its managers, members, agents and employees (collectively referred to as the Broker for purposes of this Section 4) from and against any and all claims, actions, suits, proceedings (including those of shareholders), damages, liabilities and expenses as incurred by any of them (including the fees and expenses of counsel) which are related to or arise out of any actions taken or omitted to be taken (including any untrue statements made or omitted to be made) by the Company or any actions taken or omitted to be taken by the Broker (except in the case of gross negligence or willful misconduct on the part of such Broker) in connection with the transactions contemplated by the Purchase Agreement or otherwise related to or arising out of the Broker’s activities on behalf of the Company. The Company shall reimburse Broker for all expenses (including the fees and expenses of counsel) incurred by such Broker in connection with investigating, preparing or defending any such claim, action, suit or proceeding, including in connection with pending or threatened litigation to which Broker is a party, except in the case of gross negligence or willful misconduct on the part of such Broker.
5. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, administrators, successors and assigns.
6. This Agreement shall be enforced, governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such State. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof. The parties hereto hereby submit to the exclusive jurisdiction of the state courts or the United States Federal Courts located in New York with respect to any dispute arising under this Agreement or the transactions contemplated hereby. The party which does not prevail in any dispute arising under this Agreement shall be responsible for all fees and expenses, including attorneys’ fees, incurred by the prevailing party in connection with such dispute.
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7. This Agreement consists of a total of three (3) pages. This Agreement may be signed in any number of counterparts and the combination of the same shall constitute a binding agreement. A signed copy of this Agreement received via facsimile shall be deemed an original signature of a party for purposes of making this Agreement a binding agreement.
Signature page to follow
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IN WITNESS WHEREOF the parties hereto have hereunto executed this Agreement as of and from the day first above written.
| EMMAUS LIFE SCIENCES, INC. | ||||
| By: | /s/ YUTAKA NIIHARA | |||
| Name: | Yutaka Niihara | |||
| Title: | Chief Executive Officer | |||
| T.R. WINSTON & COMPANY, LLC | ||||
| By: | /s/ G. TYLER RUNNELS | |||
| Name: | G. Tyler Runnels | |||
| Title: | Chairman & Chief Executive Officer | |||
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Exhibit 10.6
SECOND AMENDMENT TO SECURITIES PURCHASE AGREEMENT
This Second Amendment (“Amendment”) amends that certain Securities Purchase Agreement dated September 13, 2018 (“SPA”) by and between Emmaus Life Sciences, Inc., a Delaware corporation (“Emmaus”) and the Purchasers signatory thereto, as amended on September 24, 2018. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the SPA.
WHEREAS, Emmaus and the Purchasers desire to amend and restate the first sentence of Section 2.1 of the SPA in order to increase the principal amount of Debentures being sold to $12,200,000.
WHEREAS, Emmaus and the Purchasers desire to amend and restate the definition of Monthly Redemption Amount in the form of Debenture, attached as Exhibit A to the SPA to increase the aggregate dollar amount being redeemed per month to $1,000,000.
NOW, THEREFORE, in consideration of the mutual promises, conditions, representations and warranties hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto have mutually agreed as follows:
1. The foregoing recital is true and correct and incorporated herein.
2. The first sentence of Section 2.1 of the SPA is hereby amended to read, in its entirety, as follows:
“ On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $12,200,000 in principal amount of the Debentures. ”
3. The definition of “Monthly Redemption Amount” in the form of Debenture, attached as Exhibit A to the SPA, is hereby amended to read, in its entirety as follows:
“ ‘ Monthly Redemption Amount ’ means, as to a Monthly Redemption, $________ 1 , plus accrued but unpaid interest and any other amounts then owing to the Holder in respect of this Debenture. ”
With the following footnote:
“ 1 such Holder’s pro rata portion of $1,000,000 based on such Holder’s Subscription Amount divided by the aggregate Subscription Amount ”
4. Except as set forth herein, all other terms and conditions contained in the Agreement and the form of Debenture that are not changed, amended or modified through this Amendment shall remain unchanged and in full force and effect.
5. In the case of conflict between the provisions of the SPA and/or other Transaction Documents, on the one hand, and this Amendment on the other hand, the provisions of this Amendment will prevail.
6. This Amendment may be executed in counterparts, all of which, when so executed and delivered, shall be deemed an original, but all counterparts together shall constitute but one agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or in electronic (i.e., “pdf”) format shall be effective as delivery of a manually executed counterpart signature page.
[ Remainder of Page Intentionally Left Blank ]
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IN WITNESS WHEREOF , this Second Amendment has been duly executed by or on behalf of each of the parties as of the date first written above.
| EMMAUS LIFE SCIENCES, INC., | ||
| a Delaware corporation | ||
| By: | /s/ WILLIS LEE | |
| Name: Willis Lee | ||
| Title: Chief Operating Officer | ||
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AGREED AND ACCEPTED: |
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PURCHASERS: |
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