As filed with the Securities and Exchange Commission on August 12, 2020

 

Registration No. 333-238742

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Amendment No. 1

to

Form S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

 

AMERI Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   4899   95-4484725
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

 

4080 McGinnis Ferry Road, Suite 1306

Alpharetta, Georgia 30005

(770) 935-4152

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Brent Kelton

Chief Executive Officer

AMERI Holdings, Inc.

4080 McGinnis Ferry Road, Suite 1306

Alpharetta, Georgia 30005

(770) 935-4152

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

 

Rick A. Werner, Esq.

Jayun Koo, Esq.

Haynes and Boone, LLP 30 Rockefeller Plaza,

26th Floor New York, New York 10112
Tel. (212) 659-7300
Fax (212) 918-8989

 

Henoch Cohn

President and Director

Jay Pharma Inc.

4851 Tamiami Trail N.

Suite 200

Naples, FL 34103

Tel: (239) 302-1707

 

Richard A. Friedman, Esq.

Sheppard, Mullin, Richter &

Hampton LLP

30 Rockefeller Plaza, 39th Floor

New York, New York 10112

Tel. (212) 653-8700
Fax (212) 655-1729

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon completion of the amalgamation.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: [  ]

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [X] Smaller reporting company [X]
    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 7(a)(2)(B) of the Securities Act. [  ]

 

If applicable, place an [X] in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) [  ]

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) [  ]

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of
Securities to be Registered
 

Amount to be Registered (1)

    Proposed Maximum Offering Price per Share    

Proposed Maximum Aggregate Offering Price (2)

   

Amount of Registration
Fee (3)

 
Common Stock, $0.01 par value per share     37,238,068       N/A     $

1,926

(2)   $            0.00  
Series B Preferred Stock, $0.01 par value per share     7,418,754       N/A     $ N/A     $ N/A  

 

 

(1)

Represents the maximum number of shares of common stock, par value $0.01 per share, and Series B preferred stock, par value $0.01 per share (“Series B Preferred Stock”), of the registrant estimated to be issuable at the time of completion of the tender offer (the “Offer”) for all of the outstanding common shares of Jay Pharma Inc. (“Jay Pharma”) , whereby Jay Pharma will become a wholly-owned subsidiary of the registrant, to holders of common shares of Jay Pharma or upon the conversion or exchange of promissory notes, options, warrants and other securities convertible into or exercisable for common shares of Jay Pharma, including, without limitation (share numbers calculated after giving effect to the conversion of Jay Pharma common shares into the right to receive such number of shares of common stock of the registrant in the Offer at the specified exchange ratio), 19,275,533 shares of common stock to be issued to Jay Pharma equity holders upon the completion of the Offer, 1,498,039 shares of Series B Preferred Stock to be issued upon conversion of a bridge loan made by an investor to Jay Pharma prior to the completion of the Offer, 2,247,059 shares of Series B Preferred Stock to be issued to an investor in a private placement of Jay Pharma common shares for gross proceeds of $3,000,000 to be consummated prior to the completion of the Offer, 1,116,421 shares of common stock to be issued in respect of Jay Pharma common shares to be issued to a financial advisor of Jay Pharma and Ameri, 1,640,075 shares of common stock to be issued to an assignor (or such assignor’s assignee) of certain rights to Jay Pharma pursuant to a series of assignment and assumption agreements, 4,931,536 shares of Series B Preferred Stock to be issued to an investor pursuant to a nominal share purchase agreement, 3,745,098 shares of common stock deliverable upon the exercise of warrants to be issued to the investor in the foregoing bridge loan financing and the foregoing private placement, at an exercise price of $2.35 per share, 257,156 shares of common stock deliverable upon the exercise of warrants issued to the placement agent in the foregoing bridge loan financing and the private placement, 990,305 shares of common stock deliverable upon the exercise of warrants to be issued to Jay Pharma warrant holders other than the investor in the foregoing bridge loan financing and the foregoing private placement upon the completion of the Offer, and 2,551,815 shares of common stock deliverable upon the exercise of options to be issued to Jay Pharma option holders upon the completion of the Offer. Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), there are also being registered such additional shares of common stock that may be issued because of events such as recapitalizations, stock dividends, stock splits and reverse stock splits, and similar transactions.

   
(2)

Determined in accordance with Section 6(b) of the Securities Act, at a rate equal to $129.80 per $1 million of the proposed maximum aggregate offering price.

   
(3)

Estimated solely for purposes of calculation of the registration fee in accordance with Rule 457(f) of the Securities Act. Jay Pharma is a private company and no market exists for its equity securities and Jay Pharma has accumulated a capital deficit; therefore, pursuant to Rule 457(f)(2) under the Securities Act, the proposed maximum offering price is one-third of the aggregate par value of Jay Pharma’s capital stock being acquired in the proposed Offer. However, because Jay Pharma’s securities have no par value, this value is $0.00.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 
 

 

The information in this preliminary proxy statement/prospectus is not complete and may be changed. The securities being offered by the use of this preliminary proxy statement/prospectus may not be sold nor may offers to buy be accepted prior to the time the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary proxy statement/prospectus is not an offer to sell these securities nor a solicitation of any offer to buy these securities in any jurisdiction where the offer, solicitation or sale is not permitted.

 

PRELIMINARY — SUBJECT TO COMPLETION, DATED AUGUST 12, 2020
PROXY STATEMENT/PROSPECTUS

 

 

 

TENDER OFFER PROPOSED — YOUR VOTE IS VERY IMPORTANT

 

To the Stockholders of AMERI Holdings, Inc.:

 

On August 12, 2020, AMERI Holdings, Inc. (“Ameri”), Jay Pharma Inc. (“Jay Pharma”) and certain other signatories thereto entered into a tender agreement (as may be amended from time to time, the “Tender Agreement”), which provides that, among other things, Ameri will make a tender offer (such offer, as it may be amended or supplemented from time to time as permitted under the Tender Agreement, the “Offer”) to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Resulting Issuer common stock equal to the exchange ratio set forth in the Tender Agreement, and Jay Pharma will become a wholly-owned subsidiary of Ameri, on the terms and conditions set forth in the Tender Agreement. The Tender Agreement terminates and replaces in its entirety the Amalgamation Agreement, dated as of January 10, 2020, previously entered into by and among the parties thereto (the “Original Amalgamation Agreement”). We refer to Ameri after giving effect to the Offer and the completion of the transactions contemplated by the Tender Agreement as the “Resulting Issuer.” The boards of directors of each of Ameri and Jay Pharma have approved the Tender Agreement and the transactions contemplated by the Tender Agreement, including the Offer.

  

Upon completion of the Offer and the transactions contemplated in the Tender Agreement, (i) Jay Pharma equity holders, including parties acquiring common shares of Jay Pharma and parties receiving Series B Preferred Stock in the Offer, will own approximately 83% of the outstanding equity of the Resulting Issuer, (ii) the current Ameri stockholders will own approximately 14.5% of the outstanding equity of the Resulting Issuer, and (iii) the financial advisor to Jay Pharma and Ameri will own approximately 2.5% of the outstanding equity of the Resulting Issuer. Each of Ameri and Jay Pharma expects that the Offer will qualify as a tax-deferred transaction within the meaning of Section 368(a) and/or 351 of the Internal Revenue Code of 1986, as amended. Immediately following the Offer, subject to the approval of the current Ameri stockholders, it is anticipated that the Resulting Issuer will effect a reverse stock split at a ratio between 1-for-[●] and 1-for-[●] with respect to its issued and outstanding common stock. The reverse stock split is intended to increase the Resulting Issuer’s stock price to at least $6.00 per share, which such reverse stock split is one of the conditions to the closing of the Offer.

 

Ameri common stock is currently listed on The NASDAQ Stock Market under the symbol “AMRH.” On January 9, 2020, the last full trading day before the announcement of the execution of the previously signed Amalgamation Agreement, the last reported sale price of Ameri common stock was $1.20 per share. On August 10, 2020, the last full trading day before the announcement of the Offer, and the latest practicable date prior to the date of this proxy statement/prospectus, the last reported sale price of Ameri common stock was $1.91 per share. We urge you to obtain current market quotations for the price of Ameri common stock.

 

Ameri will hold a special meeting of its stockholders. This proxy statement/prospectus provides you with important information about the special meeting for Ameri, the proposed Offer and the transactions and documents related to the Offer. Please carefully read this entire proxy statement/prospectus, including “RISK FACTORS” beginning on page 57. Your vote is very important. Whether or not you plan to attend the Ameri Special Meeting, please take the time to vote by completing and returning the enclosed proxy card to Ameri or by granting your proxy electronically over the Internet or by telephone. If your shares are held in “street name,” you must instruct your broker in order to vote on all proposals.

 

Sincerely,

 

  Brent Kelton
Chief Executive Officer
AMERI Holdings, Inc.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Ameri securities to be issued in the Offer or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

This proxy statement/prospectus is dated August 12, 2020, and is first expected to be mailed or otherwise delivered to the stockholders of Ameri on or about [●], 2020.

 

ii
 

 

AMERI Holdings, Inc.

4080 McGinnis Ferry Road, Suite 1306

Alpharetta, Georgia, 30005

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [●], 2020

[●] Eastern Time

To Be Held Online at [●]

 

To the Stockholders of AMERI Holdings, Inc.:

 

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders (the “special meeting”) of AMERI Holdings, Inc., a Delaware corporation (“Ameri,” “we,” “our,” or “us”), will be held on [●], 2020, at [●] a.m., Eastern Time, and will be “virtual,” meaning that you can participate in the meeting online at [●], to consider and vote upon the following matters:

 

(1) The Ameri Share Issuance Proposal — to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the issuance of Ameri securities to Jay Pharma Inc., a Canada corporation (“Jay Pharma”), equity holders and to other parties in connection with the Offer , the Tender Agreement, dated as of August 12, 2020, as it may be amended, by and among Ameri, Jay Pharma, and the other signatories thereto, and the transactions contemplated thereby, including but not limited to the issuance of shares of common stock of Ameri in connection with the Offer (the “Resulting Issuer”) to Jay Pharma equity holders, warrants to purchase Resulting Issuer common stock to holders of certain outstanding warrants to purchase Jay Pharma common shares, Series B Warrants to purchase Resulting Issuer common stock to be issued to Alpha Capital Anstalt (“Alpha”), shares of Series B non-voting preferred stock, par value $0.01 per share, which are convertible into shares of Resulting Issuer common stock subject to a 9.99% beneficial ownership blocker (the “Series B Preferred Stock”) to be issued to Alpha and shares of Resulting Issuer common stock to a financial advisor of Jay Pharma and Ameri, as Offer consideration pursuant to the terms and conditions of the Tender Agreement (the “Ameri Share Issuance Proposal”);

 

(2) The Ameri Future Share Issuance Proposal – to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the potential future issuance of shares of Resulting Issuer common stock pursuant to the anti-dilution terms of the Securities Purchase Agreement, dated as of January 10, 2020, by and between Alpha and Jay Pharma, and certain warrants to be issued to Alpha immediately prior to the completion of the Offer (the “Ameri Future Share Issuance Proposal”);

 

(3) The Reverse Stock Split Proposal — to approve an amendment to our amended and restated certificate of incorporation to effect a reverse stock split with a ratio between 1-for-[●] and 1-for-[●] with respect to the issued and outstanding common stock of the Resulting Issuer immediately following the Offer (the “Reverse Stock Split Proposal”);

 

(4) The Spin-Off Proposal — to approve that certain Share Purchase Agreement, dated January 10, 2020 (the “Share Purchase Agreement”), by and between Ameri and Ameri100 Inc. (“Private Ameri”) pursuant to which Ameri will contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries (the “Spin-Off Proposal”);

 

(5) The A&R Charter Proposal — to approve an amendment and restatement to our amended and restated certificate of incorporation (the “A&R Charter Proposal”);

 

(6) The Incentive Plan Proposal — to approve the 2020 Employee, Director and Consultant Equity Incentive Plan (the “Incentive Plan Proposal”);

 

(7) The Put Right Proposal — with respect to the warrants issued to Alpha on August 4, 2020 (the “Alpha Warrants”), to approve, in accordance with Nasdaq Listing Standard Rule 5635(d), a put right which would require Ameri to repurchase the unexercised portion of the Alpha Warrants for the sum of $0.60 per warrant share, payable in cash or shares of common stock, at our discretion (the “Put Right Proposal”); and

 

(8) The Adjournment Proposal — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit the solicitation of additional proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote (the “Adjournment Proposal”).

 

iii
 

 

The Ameri special meeting will be a virtual meeting via live webcast on the Internet. Ameri stockholders will be able to attend the special meeting, vote and submit questions during the special meeting by visiting [●] and entering the control number included in the proxy card that you receive if you are a holder of record of Ameri common stock. If you are not a stockholder of record, you must obtain a legal proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote at the Ameri special meeting. Ameri stockholders are encouraged to access the special meeting before the start time of [●] a.m., Eastern Time on [●]. Please allow ample time for online check-in. Ameri stockholders will not be able to attend the special meeting in person.

 

Our board of directors has fixed the close of business on [●], 2020 as the record date for the special meeting. Only holders of record of shares of Ameri common stock at the close of business on such date are entitled to receive notice of, and vote at, the special meeting or at any postponement(s) or adjournment(s) of the special meeting. A complete list of our stockholders of record entitled to vote at the special meeting will be available for ten (10) days before the special meeting at our principal executive office for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

 

Assuming the presence of a quorum, (i) approval of each of the Ameri Share Issuance Proposal , the Ameri Future Share Issuance Proposal and the Put Right Proposal requires, for purposes of complying with Nasdaq Listing Rule 5635, the affirmative vote of a majority of votes cast; (ii) approval of each of the Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of a majority of the shares present at the special meeting or by proxy and entitled to vote on such matter; and (iii) approval of each of the Reverse Stock Split Proposal, the Spin-Off Proposal and the A&R Charter Proposal require the affirmative vote of holders of at least a majority of the shares of Ameri common stock outstanding and entitled to vote on such matter.

 

OUR BOARD OF DIRECTORS HAS DETERMINED THAT IT IS ADVISABLE AND IN THE BEST INTEREST OF AMERI AND ITS STOCKHOLDERS TO ENTER INTO THE TENDER AGREEMENT AND THE SHARE PURCHASE AGREEMENT AND THE BOARD HAS AUTHORIZED AND APPROVED THE TERMS OF EACH OF THE TENDER AGREEMENT AND THE SHARE PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE TENDER AGREEMENT AND THE SHARE PURCHASE AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT AMERI STOCKHOLDERS VOTE “FOR” THE AMERI SHARE ISSUANCE PROPOSAL, “FOR” THE AMERI FUTURE SHARE ISSUANCE PROPOSAL, “FOR” THE SPIN-OFF PROPOSAL, “FOR” THE REVERSE STOCK SPLIT PROPOSAL, “FOR” THE A&R CHARTER PROPOSAL, “FOR” THE INCENTIVE PLAN PROPOSAL , “FOR” THE PUT RIGHT PROPOSAL AND “FOR” THE ADJOURNMENT PROPOSAL.

 

Your vote is very important. If your shares are registered in your name as a stockholder of record of Ameri, whether or not you expect to attend the special meeting, please sign and return the enclosed proxy card promptly in the envelope provided or promptly submit your proxy by telephone or over the Internet following the instructions on the proxy card, to ensure that your shares will be represented at the special meeting.

 

If your shares are held in “street name” through a broker, trust, bank or other nominee, and you received the notice of the special meeting through your broker or through another intermediary, please complete and return the materials in accordance with the instructions provided to you by such broker or other intermediary to instruct them how to vote your shares or contact your broker or other intermediary directly in order to obtain a proxy issued to you by your nominee holder to attend the special meeting and vote at the special meeting. Failure to do so may result in your shares not being eligible to be voted by proxy at the special meeting. You may revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the enclosed proxy statement/prospectus.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON [●], 2020, at [●] a.m., Eastern Time, TO BE HELD ONLINE AT [●]: This notice is not a form for voting and presents only an overview of the more complete proxy statement/prospectus. We urge you to read the accompanying proxy statement/prospectus, including its annexes and the section titled “RISK FACTORS” beginning on page 57, carefully and in their entirety. Copies of the proxy statement/prospectus and the accompanying proxy card are available, without charge on the internet, on our website (www.ameri100.com), and can be obtained by calling [●] or sending an e-mail to [●]. To obtain timely delivery, our stockholders must request the materials no later than five (5) business days prior to the special meeting. If you have any questions concerning the Offer , the Tender Agreement, the Share Purchase Agreement, the proposals, the special meeting or the accompanying proxy statement/ prospectus or need help voting your shares of Ameri common stock, please contact Barry Kostiner, Chief Financial Officer at Barry.Kostiner@ameri100.com.

 

  By Order of the Board of Directors,
   
  /s/ Srinidhi “Dev” Devanur
  Srinidhi “Dev” Devanur, Chairman of the Board
   
  August 12, 2020

 

iv
 

 

REFERENCE TO ADDITIONAL INFORMATION

 

This proxy statement/prospectus includes important business and financial information about Ameri. Additional information about Ameri is available to you without charge upon your request. You can obtain any of the documents filed with or furnished to the Securities and Exchange Commission, or the “SEC,” by Ameri at no cost from the SEC’s website at http://www.sec.gov. You may also request copies of these documents at no cost by requesting them in writing or by telephone at the following address and telephone number:

 

AMERI Holdings, Inc.:
4080 McGinnis Ferry Road, Suite 1306

Alpharetta, Georgia, 30005

Attention: Corporate Secretary
Telephone: (770) 935-4152
E-mail: Barry.Kostiner@ameri100.com

 

Or

 

Ameri’s Proxy Solicitor:

 

Strategic Shareholder Advisor and Proxy Solicitation Agent

745 Fifth Avenue, 19th Floor, New York, NY 10151

 

North American Toll-Free Phone:

1-888-302-5741

 

Email: contactus@kingsdaleadvisors.com

Call Collect Outside North America: 416-867-2272

 

To obtain timely delivery of these documents, you must request them no later than five (5) business days before the date of the applicable special meeting. This means that Ameri stockholders requesting documents must do so by [●], 2020.

 

You should rely only on the information contained in this document. No one has been authorized to provide you with information that is different from that contained in this document. This document is dated [●], 2020, and you should assume that the information in this document is accurate only as of such date. Neither the mailing nor delivery of this document to Ameri stockholders nor the issuance by Ameri of shares of Ameri common stock in connection with the Offer will create any implication to the contrary.

 

ABOUT THIS PROXY STATEMENT/PROSPECTUS

 

Except where the context otherwise indicates, information contained in this document regarding Ameri has been provided by Ameri and information contained in this document regarding Jay Pharma has been provided by Jay Pharma. See “Where You Can Find More Information” beginning on page 293 for more details.

 

This document does not constitute an offer to sell, or a solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

 

v
 

 

TABLE OF CONTENTS

 

  Page
   
SUMMARY TERM SHEET 1
QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF 16
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS 17
The Companies 17
The Offer 18
Ancillary Transactions and Agreements 20
Ameri’s Spin-Off 29
Ameri’s Reasons for the Offer 30
Jay Pharma’s Reasons for the Offer 32
Risk Factors 33
Recommendation of Ameri’s Board of Directors 33
The Ameri Special Meeting 33
Interests of Ameri’s Directors and Executive Officers in the Offer 35
Treatment of Jay Pharma Options and Warrants 35
Board Composition and Management of the Resulting Issuer After the Offer 36
Conditions to Completion of the Offer 37
Listing of Ameri Common Stock 40
Termination of Tender Agreement 41
Expense Reimbursement upon Termination 42
Comparison of the Rights of Resulting Issuer Stockholders and Jay Pharma Shareholders 42
Regulatory Approvals Required for the Offer 42
Accounting Treatment 43
U.S. Federal Income Tax Considerations 43
Canadian Federal Income Tax Considerations 43
Opinion of Ameri’s Financial Advisor 44
SELECTED HISTORICAL FINANCIAL INFORMATION OF AMERI 45
AMERI HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS 46
AMERI HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 47
AMERI HOLDINGS, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY 49
AMERI HOLDINGS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 50
SELECTED HISTORICAL FINANCIAL INFORMATION OF JAY PHARMA 52
JAY PHARMA CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 53
JAY PHARMA CONDENSED BALANCE SHEETS 54
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA 55
COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA 56

 

 

 

 

RISK FACTORS 57
Risks Related to the Proposed Offer 57
Risks Related to the Reverse Stock Split 63
Risks Related to the Resulting Issuer Following the Offer 64
Risks Related to the Business of Jay Pharma 70
Risks Related to Regulatory Matters 77
Risks Related to Intellectual Property 85
Risks Related to the Ameri Spin-Off 86
Risks Related to the Business of Ameri Prior to the Completion of the Offer 87
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 99
MARKET AND INDUSTRY DATA 100
THE COMPANIES 101
THE SPECIAL MEETING OF AMERI STOCKHOLDERS 102
PROPOSALS SUBMITTED TO AMERI STOCKHOLDERS 107
AMERI PROPOSAL 1 — APPROVAL OF THE AMERI SHARE ISSUANCE PROPOSAL 107
AMERI PROPOSAL 2 — APPROVAL OF THE AMERI FUTURE SHARE ISSUANCE PROPOSAL 108
AMERI PROPOSAL 3 — APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL 109
AMERI PROPOSAL 4 — APPROVAL OF SPIN-OFF PROPOSAL 112
AMERI PROPOSAL 5 — APPROVAL OF A&R CHARTER PROPOSAL 113
AMERI PROPOSAL 6 — APPROVAL OF THE INCENTIVE PLAN PROPOSAL 114
AMERI PROPOSAL 7 — APPROVAL OF THE PUT RIGHT PROPOSAL 122
Background of the Offer 124
Ameri’s Reasons for the Offer 129
Jay Pharma’s Reasons for the Offer 130
Risk Factors 131
Opinion of Ameri’s Financial Advisor 131
Listing of Ameri Common Stock 138
Restrictions on Sales of Shares of Resulting Issuer Common Stock Received in the Offer 138
Opinions as to Material U.S. and Canadian Federal Income Tax Consequences of the Offer 139
Ownership of Ameri Following the Offer 139
Board Composition and Management of the Resulting Issuer after the Offer 139
The Employment Agreements and Lock-Up/Leak-Out Agreements 140
Interests of Ameri’s Directors and Executive Officers in the Offer 141
Regulatory Approvals Required for the Offer 142
Accounting Treatment 142
U.S. Federal Income Tax Considerations 142
Canadian Federal Income Tax Considerations 142
Letter of Transmittal 143
Treatment of Jay Pharma Stock Options 143
Treatment of Jay Pharma Warrants 143
Ameri Spin-Off 144
Ancillary Transactions and Agreements 144

 

 

 

 

THE TENDER AGREEMENT 150
Form, Effective Time and Closing of the Offer 150
Alpha Capital Anstalt Transactions 151
Treatment of Jay Pharma Options 151
Treatment of Jay Pharma Warrants 151
Treatment of Ameri Preferred Stock 152
Exchange Ratio 152
Directors and Executive Officers of the Resulting Issuer Following the Offer 153
Conditions to the Completion of the Offer 154
Representations and Warranties 158
No Solicitation 159
Meetings of the Ameri Stockholders 161
Conduct of Business Pending the Completion of the Offer 161
Covenants and Other Agreements 165
Termination of the Tender Agreement 168
Expense Reimbursement upon Termination 169
Amendment 170
ANCILLARY AGREEMENTS 171
Alpha Bridge Loan 171
Alpha Investment 172
Securities Exchange Agreements 175
Series B Preferred Stock 175
Tikkun IP Assignments and License Agreements 175
License Agreement 176
Nominal Share Purchase Agreement 176
Lock-Up/Leak-Out Agreements 177
Ameri Placement Agent and Merger Advisory Agreement 177
Jay Pharma Placement Agent and Merger Advisory Agreement 177
Letter of Transmittal 178
Ameri Share Purchase Agreement 178
AMERI SPIN-OFF 180
The Spin-Off 180
Background of the Spin-Off 180
Opinion of Ameri’s Financial Advisor 182
Ameri Board of Directors Reasons for the Approval of Spin-off 184
Certain Interests of Ameri’s Directors, Officers and Others in the Spin-off 185
Share Purchase Agreement 185
Ancillary Agreements 186
Required Vote 186
Recommendation 186
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION 187
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 188
Introduction 188

 

 

 

 

AMERI HOLDINGS, INC. UNAUDITED PROFORMA CONDENSED COMBINED BALANCE SHEET 190
AMERI HOLDINGS, INC. UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS 191
Business Combination 193
Basis of Pro Forma Presentation 195
Pro Forma Adjustments 196
MANAGEMENT OF THE RESULTING ISSUER 199
Executive Officers and Directors of the Resulting Issuer Following the Offer 199
Family Relationships 203
Board Composition 203
Independence of the Board of Directors 203
Executive Officer Compensation 203
Narrative Disclosure to Summary Compensation Table 204
Potential Payments Upon Termination of Employment or Change in Control 207
Outstanding Equity Awards at Fiscal Year-End 207
Director Compensation 210
Narrative to Director Compensation Table 211
Equity Compensation Plan Information 213
PRINCIPAL STOCKHOLDERS OF AMERI AND THE RESULTING ISSUER 214
PRINCIPAL SHAREHOLDERS OF JAY PHARMA AND THE RESULTING ISSUER 215
RELATED PARTY TRANSACTIONS 217
Jay Pharma Related Party Transactions 217
License Agreement 218
Purchase Agreement 218
Ameri Related Party Transactions 224
CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER 225
Consequences to U.S. Holders of Jay Pharma common stock, options or warrants that receive Resulting Issuer common stock, options or warrants in the Offer 227
Consequences to Non-U.S. Holders of Jay Pharma common stock, options or warrants that receive Resulting Issuer common stock, options or warrants in the Offer 227

Consequences of Ownership of Resulting Issuer Warrants

228
Consequences of Ownership of Resulting Issuer Common Stock 228
CERTAIN MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER 231
Holders Resident in Canada 231
Holders Not Resident in Canada 235
INFORMATION ABOUT AMERI 237
Our Company 237
Background 237
Our Industry 238
Our Approach 239
Our Portfolio of Service Offerings 239
Strategy 240
Sales and Marketing 240
Revenues and Customers 241
Strategic Alliances 241
Competition 241
Employees 242
Properties 242
Intellectual Property 242
Legal Proceedings 242

 

 

 

 

AMERI MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 243
Company History 243
Overview 243
Business Update Regarding COVID-19 244
Discussion of Business Activity 245
Results of Operations 246
Liquidity and Capital Resources 247
Critical Accounting Policies 251
Recent Accounting Pronouncements 253
INFORMATION ABOUT JAY PHARMA 254
Business Overview 254
Tender Agreement and Related Transactions 273
Tikkun Pharma Assignment and Assumption Agreement 275
Key Components of Jay Pharma’s Results of Operations 275
Results of Operations 275
Liquidity and Capital Resources 277
Cash Flows 280
Off-Balance Sheet Arrangements 281
Critical Accounting Policies and Significant Judgments and Estimates 281
Recent Accounting Standards 282
Concentration of Credit Risk 282
Foreign Currency Risk 282
DESCRIPTION OF AMERI CAPITAL STOCK 283
COMPARISON OF RIGHTS OF AMERI STOCKHOLDERS AND JAY PHARMA SHAREHOLDERS 284
CERTAIN DIFFERENCES BETWEEN THE RIGHTS OF STOCKHOLDERS OF AMERI AND SHAREHOLDERS OF JAY PHARMA 285
LEGAL MATTERS 293
EXPERTS 293
WHERE YOU CAN FIND MORE INFORMATION 293
FUTURE STOCKHOLDER PROPOSALS 294
Ameri 294
Jay Pharma 294
JAY PHARMA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS  
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2
JAY PHARMA BALANCE SHEETS F-3
JAY PHARMA STATEMENTS OF CASH FLOWS F-6
JAY PHARMA INC. NOTES TO THE FINANCIAL STATEMENTS F-7
NOTE 1 - BUSINESS F-7
NOTE 2 – LIQUIDITY AND GOING CONCERN F-7
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES F-7
NOTE 4 – SUBLICENSE AGREEMENT F-10
NOTE 5 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE F-11
NOTE 6 - SHARE CAPITAL AND OTHER EQUITY INSTRUMENTS F-13
NOTE 7 – INCOME TAXES F-16
NOTE 8 – COMMITMENTS F-17
NOTE 9 - SUBSEQUENT EVENTS F-17

 

 

 

 

AMERI INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-20
ANNEXES  
TENDER AGREEMENT A
SHARE PURCHASE AGREEMENT B
FORM OF EXCHANGE AGREEMENT C
AMENDED AND RESTATED CHARTER D
AMENDED AND RESTATED BYLAWS E
CHARTER AMENDMENT (REVERSE STOCK SPLIT) F
ALPHA SECURED PROMISSORY NOTE G-1
AMENDMENT NO. 1 TO ALPHA SECURED NOTE G-2
AMENDMENT NO. 2 TO ALPHA SECURED NOTE G-3
AMENDMENT NO. 3 TO ALPHA SECURED NOTE G-4
ALPHA SECURITIES PURCHASE AGREEMENT H-1
AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT H-2
SERIES B WARRANT I
SERIES B PREFERRED STOCK CERTIFICATE OF DESIGNATIONS J
ASSIGNMENT AND ASSUMPTION AGREEMENT (NON-U.S. GVHD SUBLICENSE) K-1
AMENDMENT NO. 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT (NON-U.S. GVHD SUBLICENSE) K-2
ASSIGNMENT AND ASSUMPTION AGREEMENT (U.S. GVHD SUBLICENSE + SKINCARE) K-3
AMENDMENT NO. 2 TO ASSIGNMENT AND ASSUMPTION AGREEMENT (U.S. GVHD SUBLICENSE + SKINCARE) K-4
LICENSE AGREEMENT L-1
AMENDMENT NO. 1 TO LICENSE AGREEMENT L-2
NOMINAL SHARE PURCHASE AGREEMENT M
FORM OF LOCK-UP/LEAK-OUT AGREEMENT N
AMERI PALLADIUM PLACEMENT AGENT AGREEMENT O-1
AMENDMENT TO AMERI PALLADIUM PLACEMENT AGENT AGREEMENT O-2
JAY PHARMA PALLADIUM PLACEMENT AGENT AGREEMENT P
RESULTING ISSUER LTIP Q
JOHNSON EMPLOYMENT AGREEMENT R
COHN EMPLOYMENT LETTER S
GEMINI OPINION (TENDER AGREEMENT) T
GEMINI OPINION (SHARE PURCHASE AGREEMENT) U
PART II INFORMATION NOT REQUIRED IN PROSPECTUS II-1
POWER OF ATTORNEY II-4
EXHIBIT INDEX II-5

  

 
 

 

SUMMARY TERM SHEET

 

This summary term sheet, together with the sections entitled “QUESTIONS AND ANSWERS ABOUT THE OFFER,” “QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF,” and “SUMMARY OF THE PROXY STATEMENT/PROSPECTUS,” summarizes certain information contained in this proxy statement/prospectus. Ameri urges you to read carefully this entire proxy statement/prospectus, including the annexes, because the information in this section does not provide all the information that might be important to you.

 

Unless the context otherwise requires, references in this proxy statement/prospectus to “Ameri” refers to AMERI Holdings, Inc., a Delaware corporation and “Jay Pharma” refers to Jay Pharma Inc., a Canada corporation.

 

  Ameri and Jay Pharma have entered into a Tender Agreement, dated as of August 12, 2020 (as may be amended from time to time, the “Tender Agreement”). Pursuant to the Tender Agreement, Ameri will make a tender offer (such offer, as it may be amended or supplemented from time to time as permitted under the Tender Agreement, the “Offer”) to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Resulting Issuer common stock equal to the exchange ratio set forth in the Tender Agreement, and Jay Pharma will become a wholly-owned subsidiary of Ameri. We refer to Ameri, after giving effect to the Offer and the completion of the transactions contemplated by the Tender Agreement, as the “Resulting Issuer.”
     
    Pursuant to the Tender Agreement, Ameri agreed to make a tender offer to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Resulting Issuer common stock equal to the Exchange Ratio. Upon the completion of the Offer, Jay Pharma will become a wholly-owned subsidiary of Ameri.
     
    For more information about the Tender Agreement and the Offer, see “THE OFFER” beginning on page 124 and “THE TENDER AGREEMENT” beginning on page 150. A copy of the Tender Agreement is attached to this proxy statement/prospectus as Annex A-1.
     
  The Tender Agreement terminates and replaces in its entirety the Amalgamation Agreement, dated as of January 10, 2020, previously entered by and among the parties thereto (the “Original Amalgamation Agreement”).
     
  As a condition to closing the Offer, the Tender Agreement also requires that Ameri contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries, and wherein Private Ameri will assume the liabilities of such subsidiaries (the “Spin-Off”), subject only to the substantially concurrent closing of the Offer.
     
  Subsequent to the Offer and the Spin-Off, the common stockholders of Ameri will no longer hold any ownership interest in the historical business and operations of Ameri. The business and operations of the Resulting Issuer will solely consist of the business and operations of Jay Pharma.
     
  Immediately following the Offer, subject to the approval of the current Ameri stockholders, it is anticipated that the Resulting Issuer will effect a reverse stock split at a ratio between 1-for-[●] and 1-for-[●] with respect to its issued and outstanding common stock. The reverse stock split is intended to increase the Resulting Issuer’s stock price to at least $6.00 per share, which such reverse stock split is one of the conditions to the closing of the Offer.
     
  Pursuant to the Tender Agreement and the relevant exchange agreement, each option and warrant to purchase common shares of Jay Pharma will be exchanged for an option or warrant to purchase a number of shares of Ameri common stock representing the number of Jay Pharma common shares of for which the exchanged option or warrant was exercisable multiplied by the Exchange Ratio. The exercise price for each option or warrant will be proportionately adjusted.

 

  1  

 

 

  Simultaneously with the execution of the Original Amalgamation Agreement, Jay Pharma entered into a Secured Promissory Note, dated January 10, 2020 (the “Original Note”), by and among Jay Pharma and a significant investor, Alpha Capital Anstalt (“Alpha”), pursuant to which, on January 10, 2020, Jay Pharma received a $1,500,000 loan. The Original Note was amended on August 12, 2020, to account for the termination of the Original Amalgamation Agreement and the change in the structure of the transaction from an amalgamation to a stock-for-stock exchange offer (as amended, the “Note”). Upon the satisfaction of the closing conditions to the Offer, the Note will be converted into the right to receive 2,361,627 common shares of Jay Pharma and warrants to purchase 2,361,627 common shares of Jay Pharma at an exercise price of $1.07 per share immediately prior to the Offer, assuming that the Offer is completed prior to January 1, 2021. In connection with the Offer, these common shares and warrants of Jay Pharma to be acquired by Alpha upon conversion of the Note shall be converted into the right to receive (i) 1,498,039 shares of Series B Preferred Stock that are convertible into up to 1,498,039 shares of common stock of the Resulting Issuer, prior to giving effect to the proposed reverse stock split discussed above, and (ii) warrants to purchase up to 1,498,039 shares of common stock of the Resulting Issuer at an exercise price of $2.36 per share, prior to giving effect to the proposed reverse stock split discussed above.
     
  Alpha will also acquire 3,542,441 common shares of Jay Pharma and warrants to purchase 3,542,441 common shares of Jay Pharma at an exercise price of $1.07 per share, immediately prior to the Offer, in connection with the $3.5 million private placement completed prior to the filing of this Registration Statement on Form S-4 (the “Alpha Investment”). While the Alpha Investment shares have not been issued yet, Alpha is bound to purchase from Jay Pharma, and Jay Pharma is bound to sell to Alpha, the Jay Pharma common shares and warrants subject to the satisfaction of the conditions in the securities purchase agreement for the Alpha Investment. Such common shares and warrants of Jay Pharma acquired by Alpha in the Alpha Investment will then immediately be converted into, as applicable, the right to receive (i) 2,247,059 shares of Series B Preferred Stock of the Resulting Issuer that are convertible into up to 2,247,059 shares of common stock of the Resulting Issuer, prior to giving effect to the proposed reverse stock split discussed above, and (ii) warrants to purchase up to 2,247,059 shares of common stock of the Resulting Issuer at an exercise price of $2.35 per share, prior to giving effect to the proposed reverse stock split discussed above, and warrants to purchase up to 2,247,059 shares of common stock of the Resulting Issuer at an exercise price of $2.36 per share, prior to giving effect to the proposed reverse stock split discussed above.
     
  Additionally, at the effective time of the Offer, the Resulting Issuer will issue five-year warrants (the “Series B Warrants”) to purchase 5,138,033 shares of common stock of the Resulting Issuer at an exercise price of $0.01 to Alpha, prior to giving effect to the proposed reverse stock split discussed above; provided, however, that Alpha is prohibited from exercising such Series B Warrants if Alpha, together with its affiliates, would own more than 9.99% of the total number of shares of Resulting Issuer common stock then issued and outstanding. The number of shares of common stock of the Resulting Issuer issuable upon the exercise of the Series B Warrants is equal to the product of (i) 8,100,000 and (ii) the Exchange Ratio.
     
  In connection with the Offer, Jay Pharma entered into a series of assignment and assumption agreements with a third party, Tikkun Pharma, Inc. (“Tikkun”), pursuant to which, on the satisfaction of all closing conditions to the Offer, Tikkun shall assign to Jay Pharma all of Tikkun’s (i) rights to certain skin care treatment assets and (ii) intellectual property rights to certain formulations for the development of therapeutic candidates for the prevention, management and treatment of graft versus host disease (GVHD) in exchange for an aggregate of 10,360,007 common shares of Jay Pharma.
     
  At the same time, because Alpha required additional shares of the Resulting Issuer, at no or a nominal cost, for Alpha to consummate the Alpha Bridge Loan and the Alpha Investment at the planned valuation, Alpha entered into an agreement with Tikkun pursuant to which, immediately following such assignment, but prior to the Offer, Tikkun will sell 7,774,463 of these common shares of Jay Pharma to Alpha for the nominal aggregate purchase price of $10.00 (the “Alpha Nominal Shares”), leaving Tikkun with 2,585,544 common shares of Jay Pharma (the “Tikkun Shares”). In connection with the Offer, the Tikkun Shares will be converted into the right to receive 1,640,075 shares of common stock of the Resulting Issuer, prior to giving effect to the proposed reverse stock split discussed above, and the Alpha Nominal Shares will be converted into the right to receive 4,931,536 shares of Series B Preferred Stock of the Resulting Issuer that are convertible into up to 4,931,536 shares of common stock of the Resulting Issuer, prior to giving effect to the proposed reverse stock split discussed above.

 

  2  

 

 

  As a result of the Offer, the Resulting Issuer will issue, or will be required to issue upon exchange, prior to giving effect to the proposed reverse stock split discussed below:

 

  19,275,533 shares of its common stock to Jay Pharma equity holders, in each case, in exchange for their Jay Pharma common shares;
     
     
  1,640,075 shares of its common stock to Tikkun in exchange for the Tikkun Shares, in exchange for their Jay Pharma common shares;
     
  1,116,421 shares of its common stock to be issued to a financial advisor of Jay Pharma and Ameri;
     
  4,931,536 shares of its Series B Preferred Stock that are convertible into approximately 4,931,536 shares of its common stock in exchange for the Alpha Nominal Shares;
     
  3,745,098 shares of Series B Preferred Stock convertible into the number of shares of Resulting Issuer common stock equal to the product of (i) the Exchange Ratio and (ii) (A) the sum of (1) the amount of the Alpha Investment and (2) the amount of the Note, divided by (B) the per share price derived from (1) $40,000,000 divided by (2) the number of shares of Jay Pharma common stock outstanding immediately prior to the effective time, but excluding any shares of Jay Pharma common stock issued or issuable (x) pursuant to the conversion of the Note and the Alpha Investment or (y) the warrants to purchase up to 7% of Jay Pharma common stock issued pursuant to the placement agent agreement by and between Jay Pharma and Palladium, in exchange for the shares of Jay Pharma common stock Alpha will receive immediately prior to the completion of the Offer upon the conversion of the Note and the completion of the Alpha Investment;
     
  (i) warrants to purchase up to 1,498,039 shares of its common stock with an exercise price of $2.35 per share to Alpha, in exchange for Jay Pharma Series A Warrants that Alpha will receive upon the conversion of the Note immediately prior to the completion of the Offer , (ii) warrants to purchase up to 2,247,059 shares of its common stock with an exercise price of $2.35 per share to Alpha, in exchange for the Jay Pharma Series A Warrants that Alpha will receive in connection with the Alpha Investment in Jay Pharma, and (iii) warrants to purchase up to 257,156 shares of its common stock in exchange for the warrants to purchase up to 7% of Jay Pharma common stock issued pursuant to the placement agent agreement by and between Jay Pharma and Palladium immediately prior to the completion of the Offer;
     
  options to purchase 2,551,815 shares of its common stock, with exercise prices pursuant to the terms of such options, in exchange for options to purchase 4,022,803 common shares of Jay Pharma;
     
  warrants to purchase 990,305 shares of its common stock, with exercise prices pursuant to the terms of such warrants, in exchange for warrants to purchase 1,561,195 common shares of Jay Pharma; and
     
  Series B Warrants to purchase the number of shares of its common stock equal to the product of (i) 8,100,000 and (ii) the Exchange Ratio at an exercise price of $0.01 to Alpha.

 

  3  

 

 

  Upon completion of the Offer and the transactions contemplated in the Tender Agreement, (i) Jay Pharma equity holders, including parties acquiring common shares of Jay Pharma pursuant to the transactions summarized above and who shall receive Series B Preferred Stock in the Offer, will own approximately 83% of the outstanding equity of the Resulting Issuer, assuming conversion of the Series B Preferred Stock into shares of common stock, (ii) the current Ameri stockholders will own approximately 14.5% of the outstanding equity of the Resulting Issuer, and (iii) the financial advisor to Jay Pharma and Ameri will own approximately 2.5% of the outstanding equity of the Resulting Issuer.
     
  Each company’s board of directors considered various factors in determining whether to approve the Tender Agreement, the Offer and the Spin-Off. For more information about our decision-making process, see the sections entitled “THE OFFER — Jay Pharma’s Reasons for the Offer” and “— Ameri’s Reasons for the Offer.”
     
  At the Ameri special meeting, Ameri stockholders will be asked to consider and vote upon the matters outlined in the accompanying Notice of Special Meeting of Stockholders of Ameri, including the following:

 

(1) The Ameri Share Issuance Proposal — to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the issuance of Ameri securities to Jay Pharma equity holders and to other parties in connection with the Offer, the Tender Agreement, and the transactions contemplated thereby, including but not limited to the issuance of shares of Resulting Issuer common stock to Jay Pharma equity holders, warrants to purchase Resulting Issuer common stock to holders of certain outstanding warrants to purchase Jay Pharma common shares, Series B Warrants to purchase Resulting Issuer common stock to be issued to Alpha, shares of Series B Preferred Stock and shares of Resulting Issuer common stock to a financial advisor of Jay Pharma and Ameri, as Offer consideration pursuant to the terms and conditions of the Tender Agreement (the “Ameri Share Issuance Proposal”);

 

(2) The Ameri Future Share Issuance Proposal – to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the potential future issuance of shares of Resulting Issuer common stock pursuant to the anti-dilution terms of the Alpha Securities Purchase Agreement, and the Series A Warrants to be issued to Alpha upon conversion of the Note and the completion of the Alpha Investment immediately prior to the completion of the Offer (the “Ameri Future Share Issuance Proposal”);

 

(3) The Reverse Stock Split Proposal — to approve an amendment to Ameri’s amended and restated certificate of incorporation to effect a reverse stock split with a ratio between 1-for-[●] and 1-for-[●] with respect to the issued and outstanding common stock of the Resulting Issuer immediately following the Offer (the “Reverse Stock Split Proposal”);

 

(4) The Spin-Off Proposal – to approve that certain Share Purchase Agreement, dated January 10, 2020 (the “Share Purchase Agreement”), by and between Ameri and Ameri100 Inc. (“Private Ameri”) pursuant to which Ameri will contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries (the “Spin-Off Proposal”);

 

(5) The A&R Charter Proposal — to approve an amendment and restatement to Ameri’s amended and restated certificate of incorporation (the “A&R Charter Proposal”);

 

(6) The Incentive Plan Proposal — to approve the 2020 Employee, Director and Consultant Equity Incentive Plan (the “Incentive Plan Proposal”);

 

(7) The Put Right Proposal — with respect to the warrants issued to Alpha on August 4, 2020 (the “Alpha Warrants”), to approve, in accordance with Nasdaq Listing Standard Rule 5635(d), a put right which would require Ameri to repurchase the unexercised portion of the Alpha Warrants for the sum of

$0.60 per warrant share, payable in cash or shares of common stock, at our discretion (the “Put Right Proposal”); and

 

  4  

 

 

(8) The Adjournment Proposal — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit the solicitation of additional proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote (the “Adjournment Proposal”).

 

  Assuming the presence of a quorum, (i) approval of each of the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal and the Put Right Proposal requires, for purposes of complying with Nasdaq Listing Rule 5635, the affirmative vote of a majority of votes cast; (ii) approval of each of the Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of a majority of votes cast; and (iii) approval of each of the Reverse Stock Split Proposal, the Spin-Off Proposal and the A&R Charter Proposal require the affirmative vote of holders of at least a majority of the shares of Ameri common stock outstanding and entitled to vote on such matter.
     
  The Ameri Share Issuance Proposal and the Spin-Off Proposal are conditioned on each other. Each of the Ameri Future Share Issuance Proposal, Reverse Stock Split Proposal, A&R Charter Proposal, and Incentive Plan Proposal are conditioned on the approval of the Ameri Share Issuance Proposal, but the approval of the Ameri Share Issuance Proposal is not conditioned on the approval of the Ameri Future Share Issuance Proposal, Reverse Stock Split Proposal, A&R Charter Proposal or Incentive Plan Proposal. The Put Right Proposal and the Adjournment Proposal do not require approval of any other proposal to be effective.
     
 

Each of Ameri and Jay Pharma expects that the Offer will qualify as a tax-deferred transaction within the meaning of Section 368(a) and/or 351 of the Internal Revenue Code of 1986, as amended. Immediately following the Offer, subject to the approval of the current Ameri stockholders, it is anticipated that the Resulting Issuer will effect a reverse stock split at a ratio between 1-for-[●] and 1-for-[●] with respect to its issued and outstanding common stock. The reverse stock split is intended to increase the Resulting Issuer’s stock price to at least $6.00 per share, which such reverse stock split is one of the conditions to the closing of the Offer.

     
  The proposed transactions involve numerous risks. For more information about these risks, please see the section entitled “RISK FACTORS.”
     
  In considering the recommendation of the Ameri board of directors that Ameri stockholders vote to approve all of the presented proposals, Ameri stockholders should be aware that some of Ameri’s directors and officers have interests in the Offer and have arrangements that are different from, or in addition to, those of Ameri stockholders generally. These interests and arrangements may create potential conflicts of interest. Ameri’s board of directors was aware of these interests and considered these interests, among other matters, in adopting and approving the Tender Agreement and the transactions contemplated thereby, including the Offer, and in recommending that Ameri stockholders approve the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal, the Reverse Stock Split Proposal, the Spin-Off Proposal, the A&R Charter Proposal, the Incentive Plan Proposal and the Adjournment Proposal. For more information about these interests and arrangements, please see the section entitled “THE OFFER – Interests of Ameri’s Directors and Executive Officers in the Offer” beginning on page 141 of this proxy statement/prospectus.

 

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QUESTIONS AND ANSWERS ABOUT THE OFFER

 

The following are answers to some questions that Ameri stockholders may have regarding the proposed Offer and the other proposals being considered by Ameri stockholders. Ameri urges you to read carefully this entire proxy statement/prospectus, including the annexes, because the information in this section does not provide all the information that might be important to you.

 

Questions and Answers for Ameri Stockholders

 

Q: Why am I receiving this proxy statement/prospectus?

 

A: You are receiving this proxy statement/prospectus because you are a stockholder of record of Ameri as of [●], the record date for the Ameri special meeting.

 

Ameri and Jay Pharma have entered into a Tender Agreement, dated as of August 12, 2020. Pursuant to the Tender Agreement, Ameri will make a tender offer to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Resulting Issuer common stock equal to the exchange ratio set forth in the Tender Agreement, and Jay Pharma will become a wholly-owned subsidiary of Ameri. We refer to Ameri, after giving effect to the Offer and the completion of the transactions contemplated by the Tender Agreement, as the “Resulting Issuer.” See “THE OFFER” beginning on page 141 and “THE TENDER AGREEMENT” beginning on page 150. The Tender Agreement terminates and replaces in its entirety the Amalgamation Agreement, dated as of January 10, 2020, previously entered by and among the parties thereto (the “Original Amalgamation Agreement”). A copy of the Tender Agreement is attached to this proxy statement/prospectus as Annex A-1.

 

The aggregate number of shares of common stock that Ameri will issue, or shall be issuable, pursuant to the terms of the Tender Agreement, or may become issuable in the future, pursuant to the Series A Warrants and Series B Warrants issued to Alpha, will be in excess of twenty percent (20%) of Ameri’s pre-Offer outstanding shares of common stock. Accordingly, Ameri is asking its stockholders to approve the Ameri Share Issuance Proposal and the Ameri Future Share Issuance Proposal in accordance with the NASDAQ Listing Rules.

 

The Tender Agreement requires, among other things, unless otherwise waived by Ameri and Jay Pharma, for the Offer to be completed, approval of each of the following proposals presented to Ameri stockholders to be voted on at the Ameri special meeting: the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal, the Spin-Off Proposal, the Reverse Stock Split Proposal, the A&R Charter Proposal, the Incentive Plan Proposal, and the Adjournment Proposal,

 

  which approval of the Ameri Share Issuance Proposal and the Ameri Future Share Issuance Proposal, for purposes of complying with Nasdaq Listing Rule 5635(a), requires the affirmative vote of a majority of votes cast;
     
  which approval of the Incentive Plan Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the votes cast; and
     
  which approval of each of the Reverse Stock Split Proposal, the Spin-Off Proposal and the A&R Charter Proposal requires the affirmative vote of holders of at least a majority of the shares of Ameri common stock outstanding and entitled to vote on such matter.

 

As a condition to closing the Offer, the Tender Agreement also requires the substantially concurrent closing of the Spin-Off, whereby Ameri will contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries, and wherein Private Ameri will assume the liabilities of such subsidiaries, subject only to the substantially concurrent closing of the Offer.

 

  6  

 

 

Subsequent to the Offer and the Spin-Off, the common stockholders of Ameri will no longer hold any ownership interest in the historical business and operations of Ameri. The business and operations of the Resulting Issuer will solely consist of the business and operations of Jay Pharma.

 

This proxy statement/prospectus contains important information about the Offer and the proposals being voted on by Ameri stockholders, and you should read it carefully. This document collectively serves as a proxy statement and a prospectus of Ameri. It is a proxy statement because Ameri is soliciting proxies from its stockholders. It is a prospectus because Ameri will issue shares of Ameri common stock to Jay Pharma equity holders in connection with the Offer. Your vote is important. You are encouraged to submit your proxy or written consent as soon as possible after carefully reviewing this proxy statement/prospectus and its annexes.

 

Q: What equity stake will current Ameri stockholders and former Jay Pharma shareholders hold in Ameri after the closing of the Offer?

 

A: It is anticipated that, after the closing of the Offer, (i) Jay Pharma equity holders, including parties acquiring common shares of Jay Pharma pursuant to the transactions summarized above and who shall receive Series B Preferred Stock in the Offer, will own approximately 83% of the outstanding equity of the Resulting Issuer, assuming conversion of the Series B Preferred Stock into shares of common stock, (ii) the current Ameri stockholders will own approximately 14.5% of the outstanding equity of the Resulting Issuer, and (iii) the financial advisor to Jay Pharma and Ameri will own approximately 2.5% of the outstanding equity of the Resulting Issuer. If the Reverse Stock Split Proposal is approved and the Resulting Issuer effects the reverse stock split immediately following the Offer, the percentage ownership interest of the Resulting Issuer’s stockholders will not change, except to the extent that the reverse stock split would result in the rounding up of a fractional share issued to a Resulting Issuer stockholder.

 

Q: When is the Offer expected to be completed?

 

A: Ameri and Jay Pharma anticipate that the Offer will be completed promptly following the Ameri Special Meeting, provided that all other conditions to the completion of the Offer in the Tender Agreement have been satisfied or waived. However, it is possible that the failure to timely meet the closing conditions specified in the Tender Agreement or other factors outside of Ameri’s or Jay Pharma’s control could require Ameri and Jay Pharma to complete the Offer at a later time or not at all. See “THE TENDER AGREEMENT — Conditions to the Completion of the Offer” on page 150 of this proxy statement/prospectus for a more complete summary of the conditions that must be satisfied prior to closing of the Offer.

 

Q: What happens if the Offer is not completed or is terminated?

 

A: There are certain circumstances under which the Tender Agreement may be terminated. If the Tender Agreement is terminated pursuant to its terms, the Offer will not be completed. If the Offer is not completed for any reason, Jay Pharma equity holders will not receive any Offer consideration or shares of Resulting Issuer common stock for their equity in Jay Pharma pursuant to the Tender Agreement or otherwise. Instead, Ameri and Jay Pharma will remain separate companies, and Ameri expects that its common stock will continue to be registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and traded on The NASDAQ Stock Market. See “THE TENDER AGREEMENT — Termination of the Tender Agreement” beginning on page 168 of this proxy statement/prospectus and “THE TENDER AGREEMENT — Expense Reimbursement upon Termination” beginning on page 169 of this proxy statement/prospectus for information regarding the parties’ specific termination rights.

 

If the Offer does not close, the board of directors of Ameri may elect to, among other things, attempt to complete another strategic transaction like the Offer, attempt to sell or otherwise dispose of the various assets of Ameri (including continuing with the Spin-Off, subject to shareholder approval of the Spin-Off on a stand-alone basis) or continue to operate the business of Ameri. If the board of directors of Ameri decides to dissolve and liquidate Ameri’s assets, Ameri would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims before any payments would be made to stockholders. This would be a lengthy and uncertain process, and there can be no assurances as to the amount of available cash, if any, that would be left to distribute, as well as the timing of any distributions thereof, to Ameri stockholders after paying the debts and other obligations of Ameri and setting aside funds for reserves.

 

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Q: What do I need to do now?

 

A: After you have carefully read this proxy statement/prospectus and have decided how you wish to vote your shares, please authorize a proxy to vote your shares promptly so that your shares are represented and voted at the Ameri special meeting.

 

Q: What will I receive in the Offer?

 

A: If the Offer is completed, Ameri stockholders will not receive any Offer consideration and will continue to hold shares of Ameri common stock.

 

Shares of Ameri common stock are currently traded on The NASDAQ Stock Market under the symbol “AMRH.” In connection with and immediately prior to the Offer, Ameri will change its name to “[●]” in accordance with Delaware law and seek to change its trading symbol on The NASDAQ Stock Market to “[●].” Ameri stockholders will experience dilution as a result of the issuance of Ameri common stock to the Jay Pharma equity holders in connection with the Offer.

 

Q: When and where is the Ameri special meeting?

 

A: The Ameri special meeting will be held on [●], 2020, at [●] a.m., Eastern Time, and will be “virtual,” meaning that you can participate in the meeting online at [●] at the appointed time and date. Ameri stockholders are encouraged to access the special meeting before the start time of [●]., Eastern Time on [●], 2020. Please allow ample time for online check-in. Ameri stockholders will not be able to attend the special meeting in person.

 

Q: Why are you holding a virtual special meeting?

 

A: Due to the public health impact of COVID-19 and to support the health and well-being of Ameri stockholders, this special meeting will be held in a virtual meeting format only. Ameri has designed its virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the virtual format allows Ameri stockholders to communicate with Ameri in advance of, and during, the special meeting so they can ask questions of the Ameri board of directors or management, as time permits. It is the present expectation of the Ameri board of directors that future special meetings will have an in-person format.

 

Q: What happens if there are technical difficulties during the special meeting?

 

A: Ameri will have technicians ready to assist its stockholders with any technical difficulties they may have accessing the virtual special meeting, voting at the special meeting or submitting questions at the special meeting. If Ameri stockholders encounter any difficulties accessing the virtual special meeting during the check-in or meeting time, they should call [●] (toll free) or [●] (international).

 

Q: What is being voted on?

 

A: At the Ameri special meeting, Ameri stockholders will be asked to consider and vote upon the matters outlined in the accompanying Notice of Special Meeting of Stockholders of Ameri, including the following:

 

(1) The Ameri Share Issuance Proposal — to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the issuance of Ameri securities to Jay Pharma equity holders and to other parties in connection with the Offer, the Tender Agreement, and the transactions contemplated thereby, including but not limited to the issuance of shares of Resulting Issuer common stock to Jay Pharma equity holders, warrants to purchase Resulting Issuer common stock to holders of certain outstanding warrants to purchase Jay Pharma common shares, Series B Warrants to purchase Resulting Issuer common stock to be issued to Alpha, shares of Series B Preferred Stock and shares of Resulting Issuer common stock to a financial advisor of Jay Pharma and Ameri, as Offer consideration pursuant to the terms and conditions of the Tender Agreement (the “Ameri Share Issuance Proposal”);

 

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(2) The Ameri Future Share Issuance Proposal – to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the potential future issuance of shares of Resulting Issuer common stock pursuant to the anti-dilution terms of the Alpha Securities Purchase Agreement, and certain warrants to be issued to Alpha immediately prior to the completion of the Offer (the “Ameri Future Share Issuance Proposal”);

 

(3) The Reverse Stock Split Proposal — to approve an amendment to Ameri’s amended and restated certificate of incorporation to effect a reverse stock split with a ratio between 1-for-[●] and 1-for-[●] with respect to the issued and outstanding common stock of the Resulting Issuer immediately following the Offer (the “Reverse Stock Split Proposal”);

 

(4) The Spin-Off Proposal – to approve that certain Share Purchase Agreement, dated January 10, 2020 (the “Share Purchase Agreement”), by and between Ameri and Ameri100 Inc. (“Private Ameri”) pursuant to which Ameri will contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries (the “Spin-Off Proposal”);

 

(5) The A&R Charter Proposal — to approve an amendment and restatement to Ameri’s amended and restated certificate of incorporation (the “A&R Charter Proposal”);

 

(6) The Incentive Plan Proposal — to approve the 2020 Employee, Director and Consultant Equity Incentive Plan (the “Incentive Plan Proposal”);

 

(7) The Put Right Proposal — with respect to the warrants issued to Alpha on August 4, 2020 (the “Alpha Warrants”), to approve, in accordance with Nasdaq Listing Standard Rule 5635(d), a put right which would require Ameri to repurchase the unexercised portion of the Alpha Warrants for the sum of $0.60 per warrant share, payable in cash or shares of common stock, at our discretion (the “Put Right Proposal”); and

 

(8) The Adjournment Proposal — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit the solicitation of additional proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote (the “Adjournment Proposal”).

 

Q: Are the proposals conditioned on one another?

 

A: The Ameri Share Issuance Proposal and the Spin-Off Proposal are conditioned on each other. Each of the Ameri Future Share Issuance Proposal, Reverse Stock Split Proposal, A&R Charter Proposal, and Incentive Plan Proposal are conditioned on the approval of the Ameri Share Issuance Proposal, but the approval of the Ameri Share Issuance Proposal is not conditioned on the approval of the Ameri Future Share Issuance Proposal, Reverse Stock Split Proposal, A&R Charter Proposal or Incentive Plan Proposal. The Put Right Proposal and the Adjournment Proposal do not require approval of any other proposal to be effective. It is important for you to note that in the event that any proposal does not receive the requisite vote for approval (other than the Put Right Proposal), then Ameri and Jay Pharma will not consummate the Offer unless a relevant closing condition is waived in accordance with the Tender Agreement.

 

Q: What will happen if the Reverse Stock Split Proposal is approved?

 

A: If the Reverse Stock Split Proposal is approved, Ameri will effect a reverse stock split with a ratio between 1-for-[●] and 1-for-[●] with respect to the issued and outstanding common stock of the Resulting Issuer immediately following the Offer, thereby reducing the total number of outstanding shares of Resulting Issuer common stock from approximately [●] shares to between approximately [●] shares and [●] shares. To the extent that the reverse stock split would result in any stockholders of the Resulting Issuer otherwise owning a fractional share of Resulting Issuer common stock, such share will be rounded up to the nearest whole share. The reverse stock split will affect all stockholders of the Resulting Issuer uniformly and will not change any stockholder’s percentage ownership interest in the Resulting Issuer, except to the extent that the reverse stock split would result in the rounding up of fractional shares. Unless otherwise set forth herein or unless the context indicates otherwise, all share amounts in this proxy statement/prospectus do not give effect to the reverse stock split. You are encouraged to review the proposed amendments to Ameri’s amended and restated certificate of incorporation, a marked copy of which is included in this proxy statement/prospectus as Annex D. The reverse stock split is intended to cause the price of the issued and outstanding common stock of the Resulting Issuer at the effective time to equal at least $6.00, which such reverse stock split is one of the conditions to the closing of the Offer.

 

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Q: What constitutes a quorum for the Ameri special meeting?

 

A: Pursuant to the bylaws of Ameri (the “Ameri Bylaws”), presence of holders of a majority of the stock entitled to vote at the special meeting is necessary to constitute a quorum to transact business. Stockholders of Ameri common stock present at the special meeting or represented by proxy (including stockholders who abstain or do not vote with respect to one or more of the matters presented for stockholder approval) will be counted for purposes of determining whether a quorum is present. “Broker non-votes,” which are shares that are held in “street name” by a bank or brokerage firm that indicates on its proxy that it does not have discretionary authority to vote on a particular matter, will not be counted for purposes of determining whether a quorum is present.

 

Pursuant to the Ameri Bylaws, if a quorum in not present, the holders of record present or represented by proxy at such meeting may vote to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is obtained. As of the record date for the special meeting, [●] shares of Ameri common stock would be required to achieve a quorum.

 

Q: What is the record date and what does it mean?

 

A: The record date to determine the stockholders entitled to notice of and to vote at the special meeting is the close of business on [●], 2020. The record date was established by the Ameri board of directors as required by Delaware law. On the record date, [●] shares of Ameri common stock were issued and outstanding.

 

Q: Who is entitled to vote at the special meeting?

 

A: Holders of Ameri common stock at the close of business on the Ameri record date may vote at the special meeting.

 

Q: How many votes do I have?

 

A: You are entitled to one vote on each proposal to be considered at the Ameri special meeting for each share of Ameri common stock that you owned as of the close of business on [●], 2020, which is the Ameri record date.

 

Q: Why is my vote important?

 

A:

The Ameri Share Issuance Proposal and the Spin-Off Proposal are conditioned on each other. Each of the Ameri Future Share Issuance Proposal, Reverse Stock Split Proposal, A&R Charter Proposal, and Incentive Plan Proposal are conditioned on the approval of the Ameri Share Issuance Proposal, but the approval of the Ameri Share Issuance Proposal is not conditioned on the approval of the Reverse Stock Split Proposal, A&R Charter Proposal or Incentive Plan Proposal. The Put Right Proposal and the Adjournment Proposal do not require approval of any other proposal to be effective. It is important for you to note that in the event that any proposal (other than the Put Right Proposal) does not receive the requisite vote for approval, then Ameri and Jay Pharma will not consummate the Offer unless a relevant closing condition is waived in accordance with the Tender Agreement.

 

Q: How do I vote?

 

A: If you are a stockholder of record, you may vote your shares of Ameri common stock on the matters to be presented at the Ameri special meeting in any of the following ways:

 

At the Special Meeting — To vote at the Ameri Special Meeting, you can participate in the meeting online at [●] at the appointed time and date and you will be able to vote by ballot. To ensure that your shares of Ameri common stock are voted at the Ameri special meeting, the Ameri board of directors recommends that you submit a proxy even if you plan to attend the Ameri special meeting. Ameri stockholders will not be able to attend the special meeting in person.

 

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By Mail — To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the enclosed return envelope. If you return your signed proxy card to Ameri before the Ameri special meeting, the persons named as proxies will vote your shares of Ameri common stock as you direct.

 

By Telephone — To vote by telephone, dial the toll-free telephone number located on the enclosed proxy card using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the enclosed proxy card.

 

By Internet — To vote over the Internet, go to the web address identified on the enclosed proxy card to complete an electronic proxy card. You will be asked to provide the company number and control number from the enclosed proxy card.

 

If your shares are held in “street name” by a broker, bank or other nominee, please refer to the voting instructions provided by your bank, brokerage firm or other nominee to see which of the above choices are available to you. Your bank, brokerage firm or other nominee cannot vote your shares without instructions from you. Please note that if your shares are held in “street name” and you wish to vote at the Ameri special meeting, you must obtain a legal proxy from your bank, brokerage firm or other nominee.

 

Q: What is the vote required to approve each proposal?

 

A:

Assuming the presence of a quorum, (i) approval of each of the Ameri Share Issuance Proposal , the Ameri Future Share Issuance Proposal and the Put Right Proposal requires, for purposes of complying with Nasdaq Listing Rule 5635, the affirmative vote of a majority of votes cast; (ii) approval of each of the Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of a majority of votes cast; and (iii) approval of each of the Reverse Stock Split Proposal, the Spin-Off Proposal and the A&R Charter Proposal require the affirmative vote of holders of at least a majority of the shares of Ameri common stock outstanding and entitled to vote on such matter.

 

Q: Do I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Ameri special meeting?

 

A: No. Ameri stockholders do not have any dissenters’ or appraisal rights under Delaware law in connection with the proposed Offer or with respect to any of the matters to be voted on at the Ameri special meeting.

 

Q: How does Ameri’s board of directors recommend that I vote at the Ameri special meeting?

 

A: Ameri’s board of directors unanimously recommends that you vote “for” the Ameri Share Issuance Proposal, “for” the Spin-Off Proposal, “for” the Reverse Stock Split Proposal, “for” the A&R Charter Proposal, “for” the Incentive Plan Proposal and “for” the Adjournment Proposal.

 

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Q: What happens if I abstain from voting or fail to instruct my bank or broker?
   
A:

Ameri will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, an abstention or failure to vote will have no effect on the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal or the Put Right Proposal, but it will have the effect of a vote against the Reverse Stock Split Proposal, the Spin-Off Proposal, the A&R Charter Proposal, the Incentive Plan Proposal, the Put Right Proposal or the Adjournment Proposal.

   
 

In addition, if you fail to submit a proxy or vote at the Ameri special meeting or fail to instruct your bank or broker how to vote with respect to any of the proposals, it will have no effect on the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal, the Incentive Plan Proposal or the Adjournment Proposal, but will have the effect of a vote against the Reverse Stock Split Proposal, the Spin-Off Proposal and the A&R Charter Proposal, and such failure to vote or submit a proxy or instruct your bank or broker how to vote will prevent your vote from counting towards quorum, and a failure to achieve quorum will require that the meeting be adjourned. Therefore, it is imperative that you either submit a proxy or vote at the Ameri special meeting or provide instructions to your bank or broker on how to vote with respect to any of the proposals.

 

Q: What will happen if I sign and return my proxy card without indicating how I wish to vote?
   
A:

All proxies will be voted in accordance with the instructions contained therein. Signed and dated proxies received by Ameri without an indication of how the stockholder intends to vote on a proposal will be voted in favor of each of the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal, the Reverse Stock Split Proposal, the Spin-Off Proposal, the A&R Charter Proposal, the Incentive Plan Proposal and the Adjournment Proposal.

   
Q: What happens if I sell my shares of Ameri common stock before the special meeting?
   
A: Only holders of record of Ameri common stock at the close of business on the record date are entitled to notice of the Ameri special meeting and to vote at the Ameri special meeting and any adjournments or postponements of the Ameri special meeting. A complete list of stockholders of record entitled to vote at the Ameri special meeting will be available from ten (10) days before the Ameri special meeting at Ameri’s principal executive office for inspection by stockholders during ordinary business hours for any purpose germane to the Ameri special meeting.
   
Q: If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
   
A: No. If you are an Ameri stockholder and your shares are held in “street name” by a broker, bank or other nominee, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of Ameri common stock voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. You may not vote shares held in “street name” by returning a proxy card directly to Ameri or by voting at the Ameri special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. Further, brokers, banks or other nominees who hold shares of Ameri common stock on behalf of their customers may not give a proxy to Ameri to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks and other nominees do not have discretionary voting power on these matters. Therefore, if you are a Ameri stockholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your shares will NOT be voted on any of the proposals to be voted upon at the Ameri special meeting, which will have the same effect as described above under “What happens if I abstain from voting or fail to instruct my bank or broker?”

 

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Q: Can I attend the Ameri special meeting and vote my shares?
   
A: Yes. All holders of Ameri common stock as of the record date, including stockholders of record and stockholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the Ameri special meeting. Holders of record of Ameri common stock can vote at the Ameri special meeting. If you are not a stockholder of record, you must obtain a legal proxy, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote at the Ameri special meeting. If you plan to attend the Ameri special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership.
   
Q: Can I change or revoke my vote?
   
A: Yes. If you are a holder of record of Ameri common stock, you may revoke any proxy at any time prior to the Ameri special meeting by:

 

  attending the Ameri special meeting and voting: your attendance at the Ameri special meeting will not by itself revoke a proxy. You must vote your shares by ballot at the Ameri special meeting to revoke your proxy;
     
  voting again by telephone or over the Internet (only your latest telephone or Internet vote submitted prior to the Ameri special meeting will be counted);
     
  completing and submitting a new valid proxy card bearing a later date; or
     
  sending notice of revocation to Ameri at [●] which notice must be received before [●], Eastern Time, on [●], 2020.

 

If your shares of Ameri common stock are held in “street name”, your bank, broker or other nominee should provide instructions explaining how you may change or revoke your voting instructions.

 

Q: What should I do if I receive more than one set of voting materials?
   
A: You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.
   
Q:

What will Jay Pharma equity holders receive in the Offer?

   
A:

If the Offer is completed, (i) the Jay Pharma equity holders other than Alpha will be entitled to receive the number of shares of Ameri common stock issuable in accordance with the Exchange Ratio, and (ii) Alpha will receive shares of Series B Preferred Stock, which are convertible into shares of Resulting Issuer common stock subject to a 9.99% beneficial ownership blocker. Immediately following the completion of the Offer and pursuant to the terms of the applicable Securities Exchange Agreement, each outstanding Jay Pharma option, whether vested or unvested, and warrant that has not previously been exercised will be exchanged for Resulting Issuer stock options and Resulting Issuer warrants, in each case, convertible into the number of shares of Resulting Issuer common stock equal to the Exchange Ratio.

 

  Additionally, Alpha will receive Series B Warrants to purchase the number of shares of Resulting Issuer common stock equal to the product of (i) 8,100,000 and (ii) the Exchange Ratio, prior to giving effect to the proposed reverse stock split pursuant to the Reverse Stock Split Proposal, provided, however, that Alpha is prohibited from exercising such Series B Warrants if Alpha, together with its affiliates, would own more than 9.99% of the total number of shares of Resulting Issuer common stock then issued and outstanding. For more information, see the section titled “THE TENDER AGREEMENT — Treatment of Certain Jay Pharma Securities” on page 151 of this proxy statement/prospectus.

 

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Q: Will the value of the Offer consideration change between the date of this proxy statement/prospectus and the time the Offer is completed?
   
A: Yes. The Tender Agreement has set the Exchange Ratio formula for the shares of Ameri common stock, and any changes in the market price of Ameri common stock before the completion of the Offer will not affect the number of shares Jay Pharma securityholders will be entitled to receive pursuant to the Tender Agreement. Because Ameri will issue a fixed number of shares of Ameri common stock in exchange for each Jay Pharma share, the value of the Offer consideration that Jay Pharma equity holders will receive in the Offer will depend on the market price of shares of Ameri common stock at the time the Offer is completed. The market price of shares of Ameri common stock when Jay Pharma equity holders receive such shares after the Offer is completed could be greater than, less than or the same as the market price of shares of Ameri common stock on the date of this proxy statement/prospectus. The following table sets forth the closing sale prices per share of Ameri common stock on January 9, 2020, the last full trading day immediately preceding the public announcement of the Original Amalgamation Agreement, on May 22, 2020, the latest practicable date prior to the date of the initial filing of this proxy statement/prospectus, on August 10, 2020, the last full trading day before the announcement of the Offer, and, the latest practicable date prior to the date of this amended proxy statement/prospectus.

 

    Ameri
Common Stock
 
January 9, 2020   $ 2.60  
May 22, 2020   $ 1.37  
August 10, 2020   $ 1.91  

 

Q: What will happen to the Jay Pharma options and warrants?
   
A: Subject to the completion of the Offer and pursuant to the terms of the applicable Securities Exchange Agreement, each outstanding Jay Pharma option, whether vested or unvested, and warrant that has not previously been exercised will be exchanged for Resulting Issuer stock options and Resulting Issuer warrants, in each case convertible into the number of shares of Resulting Issuer common stock equal to the Exchange Ratio. For more information, see the section titled “THE TENDER AGREEMENT — Effects of Offer; Offer Consideration” on page 150 of this proxy statement/prospectus.
   
Q: What are the U.S. federal income tax consequences of the Offer to Jay Pharma shareholders?
   
A:

The Offer should qualify as a tax-deferred transaction within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations promulgated thereunder, and each of Haynes and Boone, Sheppard, Mullin, Richter & Hampton, LLP and Fogler Rubinoff LLP will deliver an opinion, dated as of the date of closing of the Offer, to Jay Pharma and Ameri, respectively, to the effect that the Offer should qualify as a tax-deferred transaction as described in the tax discussion in “Certain Material U.S. Federal Income Tax Consequences of the Offer - Tax Consequences of the Offer Generally.” Jay Pharma shareholders and warrant holders generally should not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their Jay Pharma shares for shares of Resulting Issuer common stock, and on the exchange of their Jay Pharma warrants for Resulting Issuer warrants in connection with the Offer. If the Internal Revenue Service or a court determines that the Offer should not be treated as a reorganization pursuant to Section 368(a) of the Code, then the Offer should qualify as a tax-deferred transaction under Section 351 of the Code and a U.S. holder of Jay Pharma common shares and warrants would recognize taxable gain or loss upon the exchange of Jay Pharma common shares and warrants for Ameri common stock and warrants pursuant to the Offer.

 

For further information, see “THE OFFER — U.S. Federal Income Tax Considerations” on page 145 of this proxy statement/prospectus.

 

The U.S. federal income tax consequences described above may not apply to all equity holders of Jay Pharma. Jay Pharma equity holders’ tax consequences may depend on their individual situation. Accordingly, Jay Pharma equity holders should consult their independent tax advisors for a full understanding of the particular tax consequences of the Offer to them.

 

Q: What interests do Jay Pharma’s current executive officers and directors have in the Offer?
   
A: Jay Pharma’s directors and executive officers may have interests in the Offer that are different from, or in addition to or in conflict with, those of Jay Pharma shareholders generally. These interests include:

 

  continuing service of certain members of the board of directors of Jay Pharma as directors of the Resulting Issuer and executive officers of Jay Pharma as executive officers of the Resulting Issuer following the completion of the Offer;
     
  as current shareholders of Jay Pharma, certain of Jay Pharma’s directors and executive officers will obtain an ownership stake in the Resulting Issuer after the closing of the Offer;
     
  each outstanding option of Jay Pharma held by Jay Pharma’s directors and executive officers will be exchanged for a stock option of the Resulting Issuer, and Resulting Issuer common stock will be issued upon the exercise of such options; and
     
  continued indemnification of current directors and officers of Jay Pharma and expected continuation of coverage from directors’ and officers’ liability insurance after the Offer.

 

Q: Who can help answer my questions?
   
A: The information provided above in this “Question and Answer” format is for your convenience only and is merely a summary of the information contained in this proxy statement/prospectus. Ameri urges you to carefully read this entire proxy statement/prospectus, including the documents referred to herein or otherwise incorporated by reference. If you have any questions, or need additional material, please feel free to contact:

 

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AMERI Holdings, Inc.:

4080 McGinnis Ferry Road, Suite 1306

Alpharetta, Georgia, 30005

 

Attention: Corporate Secretary

Telephone: (770) 935-4152

E-mail: Barry.Kostiner@ameri100.com

 

Or

 

Ameri’s Proxy Solicitor:

 

 

Strategic Shareholder Advisor and Proxy Solicitation Agent

745 Fifth Avenue, 19th Floor, New York, NY 10151

 

North American Toll Free Phone:

1-888-302-5741

 

Email: contactus@kingsdaleadvisors.com

Call Collect Outside North America: 416-867-2272

 

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QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF

 

Q: What will happen under the Share Purchase Agreement?
   
A: At the closing of the transactions contemplated by the Share Purchase Agreement, which is expected to occur immediately following the closing of the Offer, subject to approval of the Spin-Off Proposal, Ameri will consummate the Spin-Off and all of the issued and outstanding shares of Series A preferred stock of Ameri shall be redeemed for an equal number of shares of Series A preferred stock of Private Ameri (“Private Ameri Preferred Stock”). Ameri will contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries. Private Ameri will assume the liabilities of such subsidiaries. Ameri will not receive any Following the Offer and the transactions contemplated by the Share Purchase Agreement, it is anticipated that the Resulting Issuer will focus its resources exclusively on executing Jay Pharma’s current business plan.
   
Q: What will Ameri securityholders receive in the Spin-Off?
   
A:

Holders of the issued and outstanding shares of Series A preferred stock of Ameri will receive an equal number of shares of Private Ameri Preferred Stock.

 

Holders of shares of Ameri common stock will not receive any consideration in the Spin-Off. Ameri will contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing operating subsidiaries of Ameri (including all assets and the assumption of all liabilities), constituting the entire business and operations of Ameri and its subsidiaries.

   
Q: When is the Spin-Off expected to be completed?
   
A:

Ameri anticipates that the Spin-Off will be consummated promptly following the Ameri Special Meeting, provided that all other conditions to the consummation of the Spin-Off in the Share Purchase Agreement have been satisfied or waived. However, it is possible that the failure to timely meet the closing conditions specified in the Share Purchase Agreement or other factors outside of Ameri’s or Jay Pharma’s control could require Ameri to complete the Spin-Off at a later time or not at all. See “SHARE PURCHASE AGREEMENT — Conditions to the Closing of the Spin-Off” on page 185 of this proxy statement/prospectus for a more complete summary of the conditions that must be satisfied prior to closing of the Offer.

   
Q: What happens if the Spin-Off is not consummated or is terminated?
   
A: There are certain circumstances under which the Share Purchase Agreement may be terminated. If the Share Purchase Agreement is terminated pursuant to its terms, the Spin-Off and the Offer will not be consummated. If this happens, Ameri and Jay Pharma will remain separate companies, and Ameri expects that its common stock will continue to be registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and traded on The NASDAQ Stock Market.
   
Q: Is there a break-up fee under the Share Purchase Agreement?
   
A: If the Share Purchase Agreement is terminated, neither party will have any continuing obligations other than confidentiality requirements, the miscellaneous provisions and liability for any fraud, willful misconduct or intentional breach of the Share Purchase Agreement, except that if the agreement is terminated in connection with the fiduciary out as described in the preceding sentence, Ameri will be required to pay to Private Ameri a termination fee equal to Private Ameri’s transaction expenses, up to a maximum of $300,000.
   
Q: What interests do Ameri’s current executive officers and directors have in the Spin-Off?
   
A:

Ameri’s directors and executive officers may have interests in the Spin-Off that are different from, or in addition to or in conflict with, yours.

 

Srinidhi “Dev” Devanur, our executive Chairman, is the owner of 90% of the common equity of Private Ameri. Brent Kelton, our Chief Executive Officer, is the owner of 10% of the common equity of Private Ameri. Additionally, Barry Kostiner will enter into a consulting agreement with the Resulting Issuer if both the Spin-Off and Offer are completed.

   
  These interests may influence Ameri’s directors in making their recommendation that you vote in favor of the approval of the Spin-Off and other proposals.
   
Q: Are the proposals conditioned on one another?
   
A: The Ameri Share Issuance Proposal and the Spin-Off Proposal are conditioned on each other. Each of the Ameri Future Share Issuance Proposal, Reverse Stock Split Proposal, A&R Charter Proposal, and Incentive Plan Proposal are conditioned on the approval of the Ameri Share Issuance Proposal, but the approval of the Ameri Share Issuance Proposal is not conditioned on the approval of the Ameri Future Share Issuance Proposal, Reverse Stock Split Proposal, A&R Charter Proposal or Incentive Plan Proposal. The Put Right Proposal and the Adjournment Proposal do not require approval of any other proposal to be effective. It is important for you to note that in the event that any proposal does not receive the requisite vote for approval, then the Offer will not be consummated unless a relevant closing condition is waived in accordance with the Tender Agreement.

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

This summary highlights selected information from this proxy statement/ prospectus and may not contain all of the information that is important to you. You are urged to carefully read this entire document, including the annexes, and the other documents to which Ameri and Jay Pharma refer for a more complete understanding of the Offer. In addition, Ameri and Jay Pharma encourage you to read the information about Ameri in the section titled “Information About Ameri” beginning on page 237 of this proxy statement/prospectus, which includes important business and financial information about Ameri, and to read the information in the section titled “Information About Jay Pharma” beginning on page 249 of this proxy statement/prospectus, which includes important business and financial information about Jay Pharma. Stockholders of Ameri may obtain additional information about Ameri without charge by following the instructions in the section titled “Where You Can Find More Information” beginning on page 293 of this proxy statement/prospectus. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.

 

This summary and the balance of this document contain forward-looking statements about events that are not certain to occur, and you should not place undue reliance on those statements. Please carefully read “Cautionary Statement Regarding Forward-Looking Statements” on page 99 of this document.

 

The Companies (see page 101)

 

AMERI Holdings, Inc.

4080 McGinnis Ferry Road, Suite 1306

Alpharetta, Georgia, 30005

(770) 935-4152

 

AMERI Holdings, Inc. was incorporated under the laws of the State of Delaware in February 1994 as Spatializer Audio Laboratories, Inc., which was a shell company immediately prior to the completion of a “reverse merger” transaction on May 26, 2015, whereby Ameri100 Acquisition, Inc., a Delaware corporation and newly created, wholly owned subsidiary, was merged with and into Ameri and Partners Inc. (“Ameri and Partners”), a Delaware corporation (the “Merger”). As a result of the Merger, Ameri and Partners became Ameri’s wholly owned subsidiary with Ameri and Partners’ former stockholders acquiring a majority of the outstanding shares of Ameri common stock. The Merger was consummated under Delaware law pursuant to an Agreement of Merger and Plan of Reorganization, dated as of May 26, 2015 (the “Merger Agreement”), and in connection with the Merger, Ameri changed its name to AMERI Holdings, Inc. Ameri does business under the brand name “Ameri100”. Ameri Holdings, Inc., along with its eleven operating subsidiaries, provides SAP cloud, digital and enterprise services to clients worldwide.

 

Ameri’s common stock trades on The NASDAQ Stock Market under the symbol “AMRH.”

 

Additional information about Ameri can be found in the sections titled “INFORMATION ABOUT AMERI — Overview” beginning on page 243, “INFORMATION ABOUT AMERI — Ameri Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 243 and Ameri’s financial statements included elsewhere in this proxy statement/prospectus.

 

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Jay Pharma Inc.

4851 Tamiami Trail N, Suite 200

Naples, FL 34103

(239) 302-1707

 

Jay Pharma Inc., a Canada corporation, was originally incorporated under the Canada Business Corporations Act on April 19, 2017 as Jay Resources Inc. Jay Pharma is an early-development-stage biopharmaceutical and wellness company that is seeking to develop innovative, evidence-based cannabinoid products and combination therapies to address unmet needs in cancer care.

 

Additional information about Jay Pharma can be found in the sections titled “INFORMATION ABOUT JAY PHARMA — Business Overview” beginning on page 268, “INFORMATION ABOUT JAY PHARMA — Jay Pharma Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 268 and Jay Pharma’s financial statements included elsewhere in this proxy statement/prospectus.

 

The Offer (see page 124)

 

The Tender Agreement (see page 150 and Annex A)

 

On August 12, 2020, Ameri, Jay Pharma and the other signatories thereto entered into the Tender Agreement. The Tender Agreement terminates and replaces in its entirety the Original Amalgamation Agreement, dated as of January 10, 2020, by and among the parties thereto. The Tender Agreement is the legal document governing the Offer and is included in this proxy statement/prospectus as Annex A. All descriptions in this Summary and elsewhere in this proxy statement/prospectus of the terms and conditions of the Offer are qualified in their entirety by reference to the full text of the Tender Agreement. Please read the Tender Agreement carefully for a more complete understanding of the Offer.

 

The Offer

 

Pursuant to the Tender Agreement, Ameri agreed to make a tender offer to purchase all of the outstanding common shares of Jay Pharma for the number of shares of Resulting Issuer common stock equal to the Exchange Ratio. Upon the completion of the Offer, Jay Pharma will become a wholly-owned subsidiary of Ameri. Subsequent to the transactions described in this proxy statement/prospectus, the common stockholders of Ameri will no longer hold any ownership interest in the historical business and operations of Ameri. The business and operations of the Resulting Issuer will solely consist of the business and operations of Jay Pharma.

 

Effects of Offer; Offer Consideration

 

Pursuant to the terms of the Tender Agreement, the Offer commences on the date the Registration Statement is declared effective by the SEC and expires on January 1, 2021, or such other date as mutually agreed to by the parties. On the earliest date as of which (a) sufficient shares have been tendered that Ameri will hold 100% of the issued and outstanding common stock of Jay Pharma and (b) Ameri shall have entered into the Exchange Agreements more fully described below (the “Minimum Tender Condition”), Ameri will have the obligation to accept and exchange the common stock of Jay Pharma tendered for exchange for the number of Ameri shares issuable in accordance with the Exchange Ratio (the “Offer Price”). Though Ameri may modify the terms of the Offer, Ameri may not do any of the following without the prior written consent of Jay Pharma and Alpha:

 

  change or waive the Minimum Tender Condition;
     
  decrease the number of shares of common stock of Jay Pharma sought to be purchased by Ameri in the Offer;
     
  reduce the Offer Price;
     
  extend or otherwise change the expiration date of the Offer (except as extended by the mutual agreement of the parties);
     
  change the form of consideration payable in the Offer; or
     
  otherwise amend, modify or supplement the conditions or terms of the Offer in a manner that adversely affects, or would be reasonably expected to adversely affect, the holders of the shares of common stock of Jay Pharma in any material respect.

 

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As a result of the issuance of the Offer consideration and the Offer, the Resulting Issuer will issue, or will be required to issue upon exchange, prior to giving effect to the proposed reverse stock split discussed below:

 

  19,275,533 shares of its common stock to Jay Pharma equity holders, in each case, in exchange for their Jay Pharma common shares;
     
  1,640,075 shares of its common stock to Tikkun in exchange for the Tikkun Shares, in exchange for their Jay Pharma common shares;
     
  1,116,421 shares of its common stock to be issued to a financial advisor of Jay Pharma and Ameri;
     
  4,931,536 shares of its Series B Preferred Stock that are convertible into approximately 4,931,536 shares of its common stock in exchange for the Alpha Nominal Shares;
     
  3,745,098 shares of Series B Preferred Stock convertible into the number of shares of Resulting Issuer common stock equal to the product of (i) the Exchange Ratio and (ii) (A) the sum of (1) the amount of the Alpha Investment and (2) the amount of the Note, divided by (B) the per share price derived from (1) $40,000,000 divided by (2) the number of shares of Jay Pharma common stock outstanding immediately prior to the effective time, but excluding any shares of Jay Pharma common stock issued or issuable (x) pursuant to the conversion of the Note and the Alpha Investment or (y) the warrants to purchase up to 7% of Jay Pharma common stock issued pursuant to the placement agent agreement by and between Jay Pharma and Palladium, in exchange for the shares of Jay Pharma common stock Alpha will receive immediately prior to the completion of the Offer upon the conversion of the Note and the completion of the Alpha Investment;
     
  (i) warrants to purchase up to 1,498,039 shares of its common stock with an exercise price of $2.35 per share to Alpha, in exchange for Jay Pharma Series A Warrants that Alpha will receive upon the conversion of the Note immediately prior to the completion of the Offer , (ii) warrants to purchase up to 2,247,059 shares of its common stock with an exercise price of $2.35 per share to Alpha, in exchange for the Jay Pharma Series A Warrants that Alpha will receive in connection with the Alpha Investment in Jay Pharma, and (iii) warrants to purchase up to 257,156 shares of its common stock in exchange for the warrants to purchase up to 7% of Jay Pharma common stock issued pursuant to the placement agent agreement by and between Jay Pharma and Palladium immediately prior to the completion of the Offer;
     
  options to purchase 2,551,815 shares of its common stock, with exercise prices pursuant to the terms of such options, in exchange for options to purchase 4,022,803 common shares of Jay Pharma;
     
  warrants to purchase 990,305 shares of its common stock, with exercise prices pursuant to the terms of such warrants, in exchange for warrants to purchase 1,561,195 common shares of Jay Pharma; and
     
  Series B Warrants to purchase the number of shares of its common stock equal to the product of (i) 8,100,000 and (ii) the Exchange Ratio at an exercise price of $0.01 to Alpha.

 

Upon completion of the Offer and the transactions contemplated in the Tender Agreement, (i) Jay Pharma equity holders, including parties acquiring common shares of Jay Pharma pursuant to the transactions summarized above and who shall receive Series B Preferred Stock in the Offer, will own approximately 83% of the outstanding equity of the Resulting Issuer, assuming conversion of the Series B Preferred Stock, (ii) the current Ameri stockholders will own approximately 14.5% of the outstanding equity of the Resulting Issuer, and (iii) the financial advisor to Jay Pharma and Ameri will own approximately 2.5% of the outstanding equity of the Resulting Issuer. As a significant investor in Jay Pharma, Alpha will receive Series B Preferred Stock in the Offer instead of common stock of the Resulting Issuer, which is subject to a beneficial ownership blocker of 9.99%.

 

Additionally, Alpha will receive Series B Warrants to purchase the number of pre-reverse stock split shares of Resulting Issuer common stock equal to the product of (i) 8,100,000 and (ii) the Exchange Ratio, provided, however, that Alpha is prohibited from exercising such Series B Warrants if Alpha, together with its affiliates, would own more than 9.99% of the total number of shares of Resulting Issuer common stock then issued and outstanding. Alpha’s total potential ownership interest in the Resulting Issuer is 28.3% without giving effect to the beneficial ownership limitations in its Resulting Issuer securities.

 

The Series A Warrants to purchase 5,791,445 common shares of Jay Pharma to be issued to Alpha upon conversion of the Note and the completion of the Alpha Investment and the outstanding warrants to purchase 1,561,195 common shares of Jay Pharma will be exchanged for warrants to purchase pre-reverse stock split shares of Resulting Issuer common stock equal to the number of common shares of Jay Pharma underlying such outstanding Jay Pharma warrants multiplied by the Exchange Ratio, with the exercise price of such converted warrants determined by dividing the exercise price of the Jay Pharma warrant by the Exchange Ratio.

 

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Pursuant to the Tender Agreement and the relevant exchange agreement, each option and warrant to purchase common shares of Jay Pharma will be exchanged for an option or warrant to purchase a number of shares of Ameri common stock representing the number of Jay Pharma common shares of for which the exchanged option or warrant was exercisable multiplied by the Exchange Ratio. The exercise price for each option or warrant will be proportionately adjusted.

 

Ameri will not issue any fractional shares of Ameri common stock in the Offer. Jay Pharma shareholders who would otherwise be entitled to a fraction of a share representing one-half (1/2) or more of a share of Ameri common stock upon the completion of the Offer (after aggregating all fractional shares of Ameri common stock to be received by such holder) will instead receive from Ameri one full share of Ameri common stock (i.e., rounded up to the nearest whole share). If that fraction of a share represents less than one-half (1/2) of a share of Ameri common stock, the number of shares of Ameri common stock to be received will be rounded down to the nearest whole share.

 

For a full description of the Offer consideration, see the sections titled “THE OFFER” beginning on page 124 and “THE TENDER AGREEMENT — The Offer” beginning on page 150 of this proxy statement/prospectus.

 

Ancillary Transactions and Agreements (see page 171)

 

Pursuant to the Tender Agreement, Jay Pharma and Ameri, as applicable, will complete certain transactions pursuant to the relevant transaction documents, including (i) the Alpha Bridge Loan, (ii) the Series B Warrants, (iii) the Alpha Investment, (iv) the Securities Exchange Agreements, (v) the Certificate of Designation for the Series B Preferred Stock; (vi) the Tikkun IP Assignments and License Agreements, (vii) the Nominal Share Purchase Agreement, (viii) the Lock-Up/Leak-Out Agreements, (ix) the Palladium Placement Agent and Merger Advisory Agreement for Jay Pharma, (x) the Palladium Placement Agent and Merger Advisory Agreement for Ameri, (xi) the Letter of Transmittal, (xii) the Share Purchase Agreement, and (xiii) the Exchange Agreements. For a full description of the Jay Pharma ancillary agreements, see the sections titled “THE OFFER — Ancillary Transactions and Agreements” beginning on page 144 and “THE ANCILLARY AGREEMENTS” beginning on page 171 of this proxy statement/prospectus.

 

Alpha Bridge Loan (see page 171 and Annex G-1)

 

At the signing of the Original Amalgamation Agreement, Jay Pharma issued the Secured Promissory Note to Alpha, dated as of January 10, 2020 (the “Original Note”), pursuant to which Alpha loaned $1,500,000 to Jay Pharma in connection with, and as a condition to, the Original Amalgamation Agreement (as amended, the “Alpha Bridge Loan”). The Original Note was amended on June 23, 2020 to account for an additional $500,000 investment by Alpha, increasing the principal amount to $2,000,000. The Original Note was further amended on August 12, 2020, to account for the termination of the Original Amalgamation Agreement and the change in the structure of the transaction from an amalgamation to a stock-for-stock exchange offer (the “Third Note Amendment”). The terms described in the following paragraphs reflect the terms of the Original Note as amended by the Third Note Amendment (the “Note”).

 

The Note is secured, pursuant to the Security Agreement by and between Jay Pharma and Alpha, dated as of January 10, 2020 (the “Security Agreement”), by all of the assets of Jay Pharma. The Note carries an annual interest rate of 7%, calculated daily.

 

Upon the satisfaction of the closing conditions to the Offer, the Note shall convert into 2,361,627 common shares of Jay Pharma and Series A Warrants to purchase 2,361,627 common shares of Jay Pharma at an exercise price of $1.07 per Jay Pharma common share, assuming that the closing of the Offer occurs on or before January 1, 2021. Pursuant to the Tender Agreement and the terms of the Alpha Exchange Agreement, such Jay Note Securities, together with the Alpha Investment Securities shall be exchanged for (i) with regard to the common shares of Jay Pharma held by Alpha, the number of shares of Series B Preferred Stock convertible into 3,745,098 shares of Resulting Issuer common stock, which is equal to the product of (A) the Exchange Ratio and (B) (1) the sum of (a) the amount of the Alpha Investment and (b) the amount of the Note, divided by (2) the per share price derived from (a) $40,000,000 divided by (b) the number of shares of Jay Pharma common stock outstanding immediately prior to the effective time, but excluding any shares of Jay Pharma common stock issued or issuable (x) pursuant to the conversion of the Note and the Alpha Investment or (y) the warrants to purchase up to 7% of Jay Pharma common stock issued pursuant to the placement agent agreement by and between Jay Pharma and Palladium, and (ii) with regard to the Series A Warrants of Jay Pharma held by Alpha, warrants to purchase up to 3,745,098 shares of common stock of the Resulting Issuer at an exercise price of $2.35 per share, in each case, prior to giving effect to the proposed reverse stock split.

 

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If the Tender Agreement is terminated without Alpha’s prior written consent and without meeting certain other conditions in the Tender Agreement, Jay Pharma is required to repay the entire outstanding principal balance of the Note plus all accrued and unpaid interest thereon and any other sums payable to Alpha directly in connection with the Note.

 

First Note Amendment

 

On May 6, 2020, Jay Pharma and Alpha entered into an amendment to the Note (the “First Note Amendment”). The First Note Amendment revised the maturity date of the Note. Prior to the First Note Amendment, the maturity date of the Note was the earlier of (a) July 6, 2020 and (b) an event of default that accelerates the maturity of the Note. Following the First Note Amendment, the maturity date of the Note was revised to be the earlier of (a) September 30, 2020 and (b) an event of default that accelerates the maturity of the Note. The First Note Amendment also revised the event of default regarding a failure of the amalgamation to be consummated by March 31, 2020 to extend such date to September 30, 2020.

 

Second Note Amendment

 

On June 23, 2020, Jay Pharma and Alpha entered into a second amendment to the Note (the “Second Note Amendment”). The Second Note Amendment revised the principal amount of the Note from $1,500,000 to $2,000,000, which was deemed advanced as the of date of the Second Note Amendment. The rights and securities granted to Alpha under the terms of the Note were extended to the additional $500,000 advance contemplated by the Second Note Amendment pursuant to the terms of the Second Note Amendment.

 

Third Note Amendment

 

On August 12, 2020, Jay Pharma and Alpha entered into the Third Note Amendment. The Third Note Amendment extended the maturity date to be the earlier of (a) January 1, 2021 and (b) an event of default that accelerates the maturity of the Note. The Third Note Amendment also revised the Note to account for the change in structure from an amalgamation to a stock-for-stock exchange offer. As a result, references to the Original Amalgamation Agreement and the amalgamation were revised to be references to the Tender Agreement and the Offer. The Third Note Amendment also revised the event of default regarding a failure of the amalgamation to be consummated by March 31, 2020 to be an event of default if the Offer was not consummated by January 1, 2021.

 

For a full description of the Note, the Note Amendment and the Alpha Bridge Loan, see the section titled “ANCILLARY AGREEMENTS – Alpha Bridge Loan” beginning on page 171 of this proxy statement/prospectus and Annexes G-1, G-2, G-3 and G-4, respectively. The foregoing summary of the terms of the Note and the Note Amendment is qualified in its entirety by reference to the provisions of the Note and the Note Amendment.

 

Series B Warrants (see page 167 and Annex I)

 

Upon the completion of the Offer, the Resulting Issuer will provide Alpha with the Series B Warrants to purchase the number of pre-reverse stock split shares of common stock of the Resulting Issuer equal to the product of (i) 8,100,000 and (ii) the Exchange Ratio at an exercise price of $0.01 to Alpha, as set forth in, and pursuant to the terms of, the Series B Common Stock Purchase Agreement, by and between Jay Pharma and Alpha dated May 6, 2020 (the “Series B Common Stock Purchase Agreement”). The Series B Warrants have a five-year term beginning on the 90th day after the later of the last day of the lock-up/leak-out period, which is described under “— Lock-Up/Leak-Out Agreements” beginning on page 177. If Alpha chooses to exercise the Series B Warrants, Alpha may elect, at its own option, to exercise the Series B Warrants on a cashless basis. Alpha may not exercise the Series B Warrants to the extent such exercise would result in Alpha and its affiliates owning more than 9.99% of the Resulting Issuer. The number of shares issuable under the terms of the Series B Common Stock Purchase Agreement are adjustable for stock dividends and splits. Additionally, Alpha shall have the right to participate in subsequent rights offerings or pro rata distributions with respect to the equity of the Resulting Issuer or any fundamental transaction involving the Resulting Issuer as more fully described in the Series B Common Stock Purchase Agreement.

 

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For a full description of the Series B Warrants, see the section titled “ANCILLARY AGREEMENTS – Series B Warrants” beginning on page 175 of this proxy statement/prospectus and Annex I. The foregoing summary of the terms of the Series B Warrants is qualified in its entirety by reference to the provisions of the Series B Warrants.

 

Alpha Investment (see page 172 and Annexes H-1 and H-2)

 

At the signing of the Original Amalgamation Agreement, Alpha entered into a Securities Purchase Agreement, dated as of January 10, 2020, with Jay Pharma (the “Original Alpha Securities Purchase Agreement”), pursuant to which Alpha agreed, subject to the terms and conditions thereof, to purchase common shares of Jay Pharma and warrants to purchase Jay Pharma’s common shares for an aggregate total purchase price of $3,500,000 (the “Alpha Investment”).

 

The Original Alpha Securities Purchase Agreement was amended on August 12, 2020 (as discussed further below), to account for the termination of the Original Amalgamation Agreement and the change in the structure of the transaction from an amalgamation to a stock-for-stock exchange offer (the “Third Alpha SPA Amendment”). The terms described in the following paragraphs reflect the terms of the Alpha Securities Purchase Agreement as amended by the Second Alpha SPA Amendment (the “Alpha Securities Purchase Agreement”). The closing of the Alpha Investment is conditioned upon the satisfaction or waiver of the conditions set forth in the Tender Agreement.

 

Upon the closing of the Alpha Investment under the Alpha Securities Purchase Agreement immediately prior to the Offer, Alpha will receive approximately 3,542,441 common shares of Jay Pharma and Series A Warrants to purchase 3,542,441 common shares of Jay Pharma at an exercise price of $2.35 per common share (the “Alpha Investment Securities”). Pursuant to the terms of the Tender Agreement and the Alpha Exchange Agreement, upon the satisfaction of the closing conditions to the Offer, the Alpha Investment Securities will be exchanged for (i) with regard to the common shares of Jay Pharma held by Alpha, the number of shares of Series B Preferred Stock convertible into 3,745,098 shares of Resulting Issuer common stock, which is equal to the product of (A) the Exchange Ratio and (B) (1) the sum of (a) the amount of the Alpha Investment and (b) the amount of the Note, divided by (2) the per share price derived from (a) $40,000,000 divided by (b) the number of shares of Jay Pharma common stock outstanding immediately prior to the effective time, but excluding any shares of Jay Pharma common stock issued or issuable (x) pursuant to the conversion of the Note and the Alpha Investment or (y) the warrants to purchase up to 7% of Jay Pharma common stock issued pursuant to the placement agent agreement by and between Jay Pharma and Palladium, and (ii) with regard to the Series A Warrants of Jay Pharma held by Alpha, warrants to purchase up to 3,745,098 shares of common stock of the Resulting Issuer at an exercise price of $2.35 per share, in each case, prior to giving effect to the proposed reverse stock split. The Resulting Issuer warrants will be immediately exercisable and will expire on the fifth anniversary of the original issuance date. The exercise price and number of shares of Resulting Issuer common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Resulting Issuer common stock and the exercise price. The Series B Preferred Stock of the Resulting Issuer and the warrants to purchase Resulting Issuer common stock to be issued to Alpha are convertible or exercisable, as applicable, subject to a 9.99% beneficial ownership blocker.

 

First Amendment to Alpha Securities Purchase Agreement

 

On June 23, 2020, Jay Pharma and Alpha entered into the Second Note Amendment. The Second Note Amendment also amended the Alpha Securities Purchase Agreement to reduce the amount of the investment in Jay Pharma’s shares and Series A Warrants from $3,500,000 to $3,000,000.

 

Second Amendment to Alpha Securities Purchase Agreement

 

On August 12, 2020, Jay Pharma and Alpha entered into a second amendment to the Alpha Securities Purchase Agreement (the “Second Alpha SPA Amendment”). The Second Alpha SPA Amendment revised the formula regarding the securities to be issued to Alpha in connection with the closing of the amalgamation to match the formula set forth in the Original Amalgamation Agreement. Additionally, the Second Alpha SPA amended the termination rights under the Alpha Securities Purchase Agreement to extend the termination date from July 7, 2020 to September 30, 2020.

 

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Third Amendment to Alpha Securities Purchase Agreement

 

On August 12, 2020, Jay Pharma and Alpha entered into the Third Alpha SPA Amendment. The Third Alpha SPA Amendment revised the references to the Original Amalgamation Agreement and amalgamation to be references to the Tender Agreement and the Offer, as applicable, in order to account for the change in transaction structure from an amalgamation to a stock-for-stock exchange offer. Additionally, the Third Alpha SPA Amendment amended the termination rights under the Alpha Securities Purchase Agreement to extend the termination date from September 30, 2020 to January 1, 2021.

 

For a full description of the Alpha Securities Purchase Agreement and the Alpha Investment, see the section titled “ANCILLARY AGREEMENTS – Alpha Investment” beginning on page 172 of this proxy statement/prospectus and Annexes H-1 and H-2. The foregoing summary of the terms of the Alpha Securities Purchase Agreement is qualified in its entirety by reference to the provisions of the Alpha Securities Purchase Agreement.

 

Securities Exchange Agreements

 

Option Exchange Agreements

 

Pursuant to the terms of the Tender Agreement, prior to the closing of the Offer, Ameri will enter into exchange agreements with each of the holders of Jay Pharma options (the “Option Exchange Agreements”). Pursuant to the terms of the Option Exchange Agreements, each outstanding Jay Pharma option shall be exchanged for Resulting Issuer options to purchase a number of shares of Resulting Issuer common stock equal to the Exchange Ratio on substantially the same terms as those contained in the stock option plan of the Resulting Issuer and each such Jay Pharma option shall be cancelled. The exercise price for each share of Resulting Issuer common stock underlying a Resulting Issuer option will be equal to the exercise price per share of Jay Pharma common stock under the Jay Pharma option in effect immediately prior to the completion of the Offer, as adjusted to reflect the proposed reverse stock split and Exchange Ratio and applicable currency exchange ratio. Jay Pharma and Ameri intend that the exchange of all Jay Pharma options for Resulting Issuer options will occur on a rollover basis pursuant to subsection 7(1.4) of the Tax Act and that any relevant adjustments to the exercise price of the Resulting Issuer options shall be made to reflect this intention, and that the foregoing treatment of Jay Pharma options is fair and reasonable in light of the circumstances of the transaction. The consummation of the transactions contemplated by the Option Exchange Agreements are conditioned upon the completion of the Offer.

 

Warrant Exchange Agreements

 

Pursuant to the terms of the Tender Agreement, prior to the closing of the Offer, Ameri will enter into exchange agreements with the holders of Jay Pharma warrants (the “Warrant Exchange Agreements). Pursuant to the terms of the Warrant Exchange Agreements, each outstanding Jay Pharma warrant shall be exchanged for Resulting Issuer warrants to purchase the number of shares of Resulting Issuer common stock equal to the Exchange Ratio on substantially economically equivalent terms and each such Jay Pharma warrant shall be cancelled. The exercise price for each share of Resulting Issuer common stock underlying a Resulting Issuer warrant will be equal to the exercise price per share of Jay Pharma common stock under the Jay Pharma warrant in effect immediately prior to the completion of the Offer, as adjusted to reflect the proposed reverse stock split and Exchange Ratio and the applicable currency exchange ratio. The consummation of the transactions contemplated by the Warrant Exchange Agreements are conditioned upon the completion of the Offer.

 

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Alpha Exchange Agreement

 

Pursuant to the terms of the Tender Agreement, prior to the closing of the Offer, Ameri will enter into an exchange agreement with Alpha (the “Alpha Exchange Agreement” and, together with the “Option Exchange Agreements” and the “Warrant Exchange Agreements,” the “Securities Exchange Agreements”). Pursuant to the terms of the Alpha Exchange Agreement, the Alpha Investment Securities and the Jay Note Securities will be exchanged for (i) with regard to the common shares of Jay Pharma held by Alpha, the number of shares of Series B Preferred Stock convertible into 3,745,098 shares of Resulting Issuer common stock, which is equal to the product of (A) the Exchange Ratio and (B) (1) the sum of (a) the amount of the Alpha Investment and (b) the amount of the Note, divided by (2) the per share price derived from (a) $40,000,000 divided by (b) the number of shares of Jay Pharma common stock outstanding immediately prior to the effective time, but excluding any shares of Jay Pharma common stock issued or issuable (x) pursuant to the conversion of the Note and the Alpha Investment or (y) the warrants to purchase up to 7% of Jay Pharma common stock issued pursuant to the placement agent agreement by and between Jay Pharma and Palladium, and (ii) with regard to the Series A Warrants of Jay Pharma held by Alpha, warrants to purchase up to 3,745,098 shares of common stock of the Resulting Issuer at an exercise price of $2.35 per share, in each case, prior to giving effect to the proposed reverse stock split. Additionally, the Alpha Nominal Shares (as described further below) will be exchanged for 4,931,536 shares of Series B Preferred Stock that are convertible into up to 4,931,536 shares of Resulting Issuer common stock, prior to giving effect to the reverse stock split proposed under the Reverse Stock Split Proposal. The Series B Preferred Stock of the Resulting Issuer and the warrants to purchase Resulting Issuer common stock to be issued to Alpha are convertible or exercisable, as applicable, subject to a 9.99% beneficial ownership blocker. The consummation of the transactions contemplated by the Alpha Exchange Agreement are conditioned upon the completion of the Offer.

 

Series B Preferred Stock (see page 175 and Annex J)

 

In connection with the Offer, the Resulting Issuer will create a class of non-voting Series B Preferred Stock. Each share of Series B Preferred Stock will be convertible into one share of Resulting Issuer common stock (subject to adjustment) at any time at the option of the holders, provided that each holder would be prohibited from converting Series B Preferred Stock into shares of Resulting Issuer common stock if, as a result of such conversion, any such holder, together with its affiliates, would own more than 9.99% of the total number of shares of Resulting Issuer common stock then issued and outstanding. This limitation may be waived with respect to a holder upon such holder’s provision of not less than 61 days’ prior written notice to the Resulting Issuer.

 

In the event of liquidation, dissolution, or winding up, each holder of Series B Preferred Stock could elect to receive either (i) in preference to any payments made to the holders of Resulting Issuer common stock and any other junior securities, a payment for each share of Series B Preferred Stock then held equal $0.01, plus an additional amount equal to any dividends declared but unpaid on such shares, and any other fees or liquidated damages then due and owing thereon or (ii) the amount of cash, securities or other property to which such holder would be entitled to receive with respect to each share of Series B Preferred Stock if such share of Series B Preferred Stock had been converted to common stock immediately prior to such liquidation, dissolution, or winding up (without giving effect to any conversion limitations). Shares of Series B Preferred Stock will not be entitled to receive any dividends, unless and until specifically declared by the board of directors. However, holders of Series B Preferred Stock are entitled to receive dividends on shares of Series B Preferred Stock equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends actually paid on shares of the Resulting Issuer common stock when such dividends are specifically declared by the board of directors. The Resulting Issuer will not be obligated to redeem or repurchase any shares of Series B Preferred Stock. Shares of Series B Preferred Stock will not otherwise be entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions.

 

For a full description of the Series B Preferred Stock, see the section titled “ANCILLARY AGREEMENTS – Series B Preferred Stock” beginning on page 175 of this proxy statement/prospectus. A full copy of the proposed Series B Preferred Stock Certificate of Designation is attached to this proxy statement/prospectus as Annex J. The foregoing summary of the terms of the Series B Preferred Stock is qualified in its entirety by reference to the provisions of the Series B Preferred Stock Certificate of Designation.

 

Tikkun IP Assignments and License Agreements

 

In connection with the Original Amalgamation Agreement, Jay Pharma entered into a series of assignment and assumption agreements (the “Tikkun Assignment and Assumption Agreements”) with a third party, Tikkun Pharma, Inc. (“Tikkun”). The assignment and assumption agreements with the Tikkun affiliates provided below were amended on August 12, 2020 (as discussed further below), to account for the termination of the Original Amalgamation Agreement and the change in the structure of the transaction from an amalgamation to a stock-for-stock exchange offer (the “First Amendment to the Tikkun Assignment and Assumption Agreements”). The terms described in the following paragraphs reflect the terms of the Tikkun Assignment and Assumption Agreements as amended by the First Amendment to the Tikkun Assignment and Assumption Agreements.

 

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Assignment and Assumption Agreements (see page 170 and Annexes K-1, K-2, K-3 and K-4)

 

On January 10, 2020, Jay Pharma entered into the Tikkun Assignment and Assumption Agreements, pursuant to which, upon the satisfaction of all closing conditions to the amalgamation, Tikkun shall assign to Jay Pharma all of Tikkun’s in-licensed and developed rights based on certain Amended and Restated Sublicense Agreements, effective January 12, 2018, pursuant to which Jay Pharma entered into two in-licensing U.S. and rest of world rights to the limited pharmaceutical business (including cancer) from TO Pharmaceuticals USA LLC, a Delaware limited liability company (“TOP”) and Tikun Olam IP Ltd., a Cayman Islands company (“TOCI”), respectively, each as amended by a First Amendment entered January 10, 2020, with:

 

  (i) TOP and Tikkun regarding all of Tikkun’s (i) in-licensed rights and obligations to commercialize pharmaceutical products related to graft versus host disease (“GVHD”) under the relevant sublicense in the U.S.; and (ii) certain skincare business and all of Tikkun’s rights related thereto as of the January 10, 2020 effective date. Jay Pharma agreed to issue 8,288,006 common shares of Jay Pharma to Tikkun in exchange for these rights; and
     
  (ii) TOCI and Tikkun regarding all of Tikkun’s in-licensed rights and obligations to commercialize pharmaceutical products related to GVHD under the relevant sublicense anywhere in the world outside the U.S. Jay Pharma agreed to issue 2,072,001 common shares of Jay Pharma to Tikkun in exchange for these rights.

 

On August 12, 2020, Jay Pharma and the applicable Tikkun affiliates entered into the First Amendment to the Tikkun Assignment and Assumption Agreements, pursuant to which all references to the Original Amalgamation Agreement and the amalgamation were revised to be references to the Tender Agreement and the Offer, as applicable.

 

For a full description of the assignment and assumption agreements, see the section titled “ANCILLARY AGREEMENTS – Tikkun IP Assignments and License Agreements – Assignment and Assumption Agreements” beginning on page 170 of this proxy statement/prospectus. Full copies of the assignment and assumption agreements are attached to this proxy statement/ prospectus as Annexes K-1, K-2, K-3 and K-4. The foregoing summary of the assignment and assumption agreements is qualified in its entirety by reference to the provisions of the assignment and assumption agreements.

 

License Agreement (see page 176 and Annexes L-1 and L-2)

 

Jay Pharma, Tikun Olam LLC (“TO LLC”) and Tikun Olam Hemp LLC (“TOH”) entered into a license agreement dated on January 10, 2020, pursuant to which Jay Pharma will acquire certain in-licensed and owned intellectual property rights related to the cannabis products in the United States (presently excluding the state of New York) from TO LLC and TOH, each of which is an affiliate of TO Holdings Group LLC (“TO Holdings”), in exchange for royalty payments of (i) four percent (4.0%) of net sales of OTC cancer products made via consumer channels; (ii) five percent (5.0%) of net sales of beauty products made via consumer channels; and (iii) three percent (3.0%) of net sales of over the counter (“OTC”) cancer products made via professional channels, along with a minimum net royalty payment starting in January 1, 2022 and progressively increasing up to a cap of $400,000 maximum each year for the first 10 years, then $600,000 maximum each year for the next 5 years, and an annual maximum cap of $750,000 each year thereafter during the term of the agreement. The licensed intellectual property rights relate to beauty products and OTC cancer products, and branding rights related thereto. The beauty products include any topical or transdermal cannabis-containing or cannabis-derived (including hemp-based) skin care or body care beauty products, and the OTC cancer products means any cancer-related products, in each case excluding those regulated as a drug, medicine, or controlled substance by the U.S. Food and Drug Administration (“FDA”) or any other relevant governmental authority, such as the U.S. Department of Agriculture (“USDA”).

 

On August 12, 2020, Jay Pharma, TO LLC and TOH entered into the First Amendment to the License Agreement, pursuant to which all references to the Original Amalgamation Agreement and the amalgamation were revised to be references to the Tender Agreement and the Offer, as applicable.

 

For a full description of the license agreement, see the section titled “ANCILLARY AGREEMENTS – Tikkun IP Assignments and License Agreements – License Agreement” beginning on page 176 of this proxy statement/prospectus. A full copy of the license agreement is attached to this proxy statement/ prospectus as Annex L-1 . The foregoing summary of the license agreement is qualified in its entirety by reference to the provisions of the license agreement.

 

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Nominal Share Purchase Agreement (see page 176 and Annex M )

 

Effective as of January 10, 2020, because Alpha required additional shares of the Resulting Issuer, at no or a nominal cost, for Alpha to consummate the Alpha Bridge Loan and the Alpha Investment at the planned valuation, Alpha entered into the Nominal Share Purchase Agreement with Tikkun, pursuant to which, immediately following the assignment of certain intellectual property rights and licenses to Jay Pharma as discussed above under “— Tikkun IP Assignments and License Agreements,” but prior to the completion of the Offer, Tikkun will assign 7,774,463 of these common shares of Jay Pharma to Alpha for the nominal aggregate purchase price of $10, leaving Tikkun with 2,585,544 common shares of Jay Pharma. In connection with the completion of the Offer and pursuant to the terms of the Alpha Exchange Agreement, the Tikkun Shares will be exchanged for 1,640,075 pre-reverse stock split shares of common stock of the Resulting Issuer and the Alpha Nominal Shares will be exchanged for 4,931,536 shares of Series B Preferred Stock that are convertible into up to 4,931,536 shares of Resulting Issuer common stock.

 

For a full description of the Nominal Share Purchase Agreement, see the section titled “ANCILLARY AGREEMENTS – Nominal Share Purchase Agreement” beginning on page 176 of this proxy statement/prospectus. A full copy of the Nominal Share Purchase Agreement is attached to this proxy statement/ prospectus as Annex M . The foregoing summary of the Nominal Share Purchase Agreement is qualified in its entirety by reference to the provisions of the Nominal Share Purchase Agreement.

 

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Lock-Up/Leak-Out Agreements (see page 177 and Annex N )

 

As a condition to the Tender Agreement, Jay Pharma agreed to obtain lock-up/leak-out agreements (the “Lock-Up/Leak-Out Agreements ”), in the form attached to the Tender Agreement, from certain of its shareholders governing the ability of such Jay Pharma shareholders to sell or otherwise dispose of or pledge Resulting Issuer common stock following the closing of the Offer, except as otherwise provided in the Lock-Up/Leak-Out Agreements.

 

The lock-up period begins at the effective time of the Offer and ends on the date that is 180 days after such time. During the lock-up period, the Jay Pharma shareholders may not offer, sell, pledge, discharge, swap or otherwise dispose of the Resulting Issuer common stock they receive in connection with the closing of the Offer, subject to the provisions of such Lock-Up/Leak-Out Agreements. Additionally, the Jay Pharma shareholders agreed to a leak-out period that begins on the date that is the end of the lock-up period and ends on a date that is 180 days after such date. During the leak-out period, the Jay Pharma shareholders may only sell up to 15% of the aggregate amount of Resulting Issuer securities owned by such shareholder as of the expiration of the lock-up period per month. The lock-up and leak-out restrictions are subject to value and trading thresholds set forth in the Lock-Up/Leak-Out Agreements which, if met, would cause the lock-up and leak-out restrictions to expire.

 

For a full description of the Lock-Up/Leak-Out Agreements, see the section titled “ANCILLARY AGREEMENTS – Lock-Up/Leak-Out Agreements” beginning on page 177 of this proxy statement/prospectus. The form of the Lock-Up/Leak-Out Agreement is attached to this proxy statement/ prospectus as Annex N . The foregoing summary of the Lock-Up/Leak-Out Agreements is qualified in its entirety by reference to the provisions of the Lock-Up/Leak-Out Agreements.

 

Ameri Placement Agent and Merger Advisory Agreement (see page 177 and Annexes O-1 and O-2)

 

On April 2, 2019, Ameri entered into placement agent and merger advisory agreement with Palladium (the “Ameri Palladium Advisory Agreement”), whereby Palladium agreed to (i) act as the non-exclusive placement agent in a private placement of, or similar unregistered transaction involving, equity or equity-linked securities of Ameri to a limited number of institutional, accredited individual or strategic investors, and (ii) serve as Ameri’s non-exclusive financial advisor and investment banker to provide general financial advisory and investment banking services in connection with a possible business combination transaction of Ameri.

 

Pursuant to the Ameri Palladium Advisory Agreement, among other things, Ameri is to pay Palladium a cash fee equal to 6% of the aggregate gross proceeds raised in each transaction. Palladium is also entitled to such cash fees for any sale of securities of Ameri that occurs during the term of Ameri’s engagement of Palladium or within 24 months thereafter with respect to any financing or capital-raising transaction with investors contacted by Palladium or introduced to the Company during the term of Ameri’s engagement of Palladium. The period for such tail fee is reduced to 6 months for certain existing investors of Ameri 100, Inc.

 

Ameri shall also pay Palladium a non-accountable expense allowance equal to 0.75% of the aggregate cash received by Ameri in a financing transaction.

 

Amendment to Ameri Palladium Advisory Agreement

 

On January 6, 2020, Ameri and Palladium entered into an amendment to the Ameri Palladium Advisory Agreement (the “Ameri Advisory Agreement Amendment”), pursuant to which Ameri and Palladium amended the cash fee related to the gross proceeds raised in each transaction such that Ameri will pay a cash fee equal to 8% of the aggregate gross proceeds raised in each transaction. Additionally, Ameri agreed to provide Palladium with a flat fee of $100,000 in the event of a merger, as well as to ensure that equity equaling 1.5% of the post-merger entity is issued to Palladium. Finally, Ameri amended to the non-accountable expense payment such that Ameri will pay Palladium non-accountable expenses equal to 1% of the aggregate cash received by Ameri in a financing transaction.

 

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For a full description of the Ameri Palladium Advisory Agreement, as amended by the Ameri Advisory Agreement Amendment, see the section titled “ANCILLARY AGREEMENTS – Ameri Placement and Merger Advisory Agreement” beginning on page 177 of this proxy statement/prospectus. The Ameri Palladium Advisory Agreement and the Ameri Advisory Agreement Amendment are attached to this proxy statement/ prospectus as Annexes O-1 and O-2, respectively. The foregoing summary of the Ameri Palladium Advisory Agreement and the Ameri Advisory Agreement Amendment is qualified in its entirety by reference to the provisions of the Ameri Palladium Advisory Agreement and the Ameri Advisory Agreement Amendment.

 

Jay Pharma Placement Agent and Merger Advisory Agreement (see page 177 and Annex P )

 

On January 10, 2020, Jay Pharma entered into a placement agent and merger advisory agreement with Palladium (the “Jay Pharma Palladium Advisory Agreement”), whereby Palladium agreed to (i) act as the exclusive placement agent in a private placement of, or similar unregistered transaction involving, equity or equity-linked securities of Jay Pharma; and (ii) serve as Jay Pharma’s exclusive financial advisor and investment banker in connection with any merger or other business transaction involving the acquisition of Jay Pharma.

 

Pursuant to the Jay Pharma Palladium Advisory Agreement, among other things, in connection with the Alpha Bridge Loan and the Alpha Investment, Jay Pharma is to (a) pay Palladium a cash fee equal to 8% of the aggregate gross proceeds raised in each transaction, payable in cash at the time of such closing, which has been deferred until the completion of the Offer, and (b) issue Palladium five-year warrants to purchase a number of common shares of Jay Pharma equal to 7% of the aggregate number of shares sold in each of the Alpha Bridge Loan and the Alpha Investment, at an exercise price equal to the offering price per share in the applicable closing.

 

Pursuant to the Jay Pharma Palladium Advisory Agreement and that certain side letter to be executed between Palladium, Jay and Ameri, for Palladium’s advisory services in connection with the Offer, prior to completion of the Offer, Palladium will receive common shares of Jay Pharma that will be exchanged for 1,116,421 pre-reverse stock split shares of Resulting Issuer common stock pursuant to the Offer, representing 2.5% equity ownership in the Resulting Issuer based on the total shares outstanding.

 

For a full description of the Jay Pharma Palladium Advisory Agreement, see the section titled “ANCILLARY AGREEMENTS – Jay Pharma Placement and Merger Advisory Agreement” beginning on page 177 of this proxy statement/prospectus. The Jay Pharma Palladium Advisory Agreement is attached to this proxy statement/ prospectus as Annex P . The foregoing summary of the Jay Pharma Palladium Advisory Agreement is qualified in its entirety by reference to the provisions of the Jay Pharma Palladium Advisory Agreement.

 

Letter of Transmittal (see page 178)

 

Together with this proxy statement/prospectus, Ameri has provided each of the Jay Pharma shareholders with a letter of transmittal (the “Letter of Transmittal”). Such Letter of Transmittal shall contain representations and warranties regarding ownership of the Jay Pharma common stock, authority to enter into the Letter of Transmittal, and other customary representations and warranties. Through the execution and delivery of the Letter of Transmittal by a Jay Pharma shareholder, such Jay Pharma shareholder will accept the Offer and surrender any certificates representing the shares of Jay Pharma common stock held by such stockholder. The Letter of Transmittal also contains instructions for Jay Pharma shareholders that may want their consideration shares issued in a different name.

 

For a full description of the Letter of Transmittal, see the section titled “ANCILLARY AGREEMENTS – Letter of Transmittal” beginning on page 178 of this proxy statement/prospectus.

 

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Ameri’s Spin-Off

 

Share Purchase Agreement (see page 178 and Annex B)

 

On January 10, 2020, Ameri and Ameri100 Inc. (“Private Ameri”) entered into a Share Purchase Agreement (the “Share Purchase Agreement”) pursuant to which Ameri will contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries, and wherein Private Ameri will assume the liabilities of such subsidiaries (the “Spin-Off”).  

 

For a full description of the Share Purchase Agreement, see the sections entitled “AMERI SPIN-OFF” beginning on page 180 and “THE SHARE PURCHASE AGREEMENT” beginning on page 178. of this proxy statement/prospectus. The Share Purchase Agreement is attached to this proxy statement/ prospectus as Annex B. The foregoing summary of the Share Purchase Agreement is qualified in its entirety by reference to the provisions of the Share Purchase Agreement.

 

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Organizational Structure

 

The following diagram illustrates the ownership structures of Ameri and Jay Pharma prior to the Offer and the Spin-Off.

 

 

The following diagram illustrates the ownership structure of the Resulting Issuer and Private Ameri after the Offer and the Spin-Off.

 

Timeline

 

The following diagram illustrates the timeline of the transactions and events related to the Offer.

 

 

Ameri’s Reasons for the Offer (see page 129)

 

In evaluating strategic alternatives, the Ameri board of directors consulted with Ameri’s management and legal and financial advisors, reviewed a significant amount of information, and considered a number of factors, including, among others, the following factors that the Ameri board of directors viewed as supportive of its decision, to approve the Offer with Jay Pharma, as being in the best interests of the Ameri’s stockholders:

 

  it will have a diversified business platform;
     
  it will be led by an experienced senior management team and an expanded board of directors; and
     
  it will be well-capitalized.

 

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The Ameri board of directors also carefully considered and discussed a number of risks, uncertainties, and other countervailing factors in its deliberations regarding entering into the Tender Agreement and consummating the Offer, including, among others, the following:

 

 

the strategic alternatives of Ameri to the Offer, including potential transactions that could have resulted from discussions that Ameri management conducted with other potential Offer parties;

     
  the consequences of current market conditions, Ameri’s current liquidity position, its depressed stock price and the likelihood that the resulting circumstances for Ameri would not change for the benefit of the Ameri stockholders in the foreseeable future on a stand-alone basis;
     
  the risks of continuing to operate Ameri on a stand-alone basis, including the fact that it has only one line of business which has not been profitable;
     
  Ameri management’s belief and experience that it would be difficult to obtain additional equity or debt financing on acceptable terms, if at all;
     
  the opportunity for Ameri stockholders to participate in the potential value that may result from Jay Pharma’s business and the potential increase in value of the Resulting Issuer following the Offer; and
     
 

the opinion of Gemini Valuation Services, LLC (“Gemini”), delivered to the Ameri board of directors (in its capacity as such) that, as of August 12, 2020, and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in the opinion, the Exchange Ratio was fair to the Ameri stockholders from a financial point of view.

 

The Ameri board of directors also reviewed the terms and conditions of the proposed Tender Agreement and associated transactions, as well as the safeguards and protective provisions included therein to mitigate risks, including:

 

  the determination that the Exchange Ratio is appropriate to reflect the expected relative percentage ownership of Ameri securityholders, Jay Pharma securityholders and the holders of the securities sold;
     
 

the expectation that the Offer should be treated as a tax-deferred transaction within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations promulgated thereunder, and as a result, Jay Pharma shareholders, and warrant holders generally should not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their Jay Pharma shares for shares of Resulting Issuer common stock, and on the exchange of their Jay Pharma warrants for Resulting Issuer warrants in connection with the Offer; provided, however, that if the Internal Revenue Service or a court determines that the Offer should not be treated as a reorganization pursuant to Section 368(a) of the Code, then the Offer should qualify as a tax-deferred transaction under Section 351 of the Code and a U.S. holder of Jay Pharma common shares and warrants would recognize taxable gain or loss upon the exchange of Jay Pharma common shares and warrants for Ameri common stock and warrants pursuant to the Offer; and

     
  that the potential expense reimbursement of up to $500,000 payable by Ameri to Jay Pharma and the circumstances when such reimbursement may be payable, were reasonable.

 

The Ameri board of directors believes that, overall, the potential benefits to Ameri stockholders of the Tender Agreement and the transactions contemplated thereby outweigh the risks and uncertainties.

 

Although this discussion of the information and factors considered by the Ameri board of directors is believed to include the material factors it considered, it is not intended to be exhaustive and may not include all of the factors considered by the Ameri board of directors. The Ameri board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination that the Tender Agreement and the transactions contemplated thereby are fair to, advisable, and in the best interests of Ameri and its stockholders. The Ameri board of directors based its determination on the totality of the information presented to and factors considered by it. In addition, individual members of the Ameri board of directors may have given differing weights to different factors.

 

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For a more complete discussion of Ameri’s reasons for the Offer, see the section titled “THE OFFER — Ameri’s Reasons for the Offer.” beginning on page 129 of this proxy statement/prospectus.

 

Jay Pharma’s Reasons for the Offer (see page 130)

 

Jay Pharma’s board of directors considered many factors in making its decision to approve and adopt the Tender Agreement and the other transactions contemplated by the Tender Agreement. In arriving at its decision, Jay Pharma’s board of directors consulted with Jay Pharma’s senior management and legal advisors, reviewed a significant amount of information, conducted an overall analysis of a number of factors, including the following material facts (not in any relative order of importance):

 

  the expectation that the Offer would be a more time- and cost-effective means to access sufficient capital than other options considered, including an initial public offering or additional rounds of private financing;
     
  the view that the range of options available to the Resulting Issuer to access private and public equity markets will likely be greater as a public company than continuing as a privately held company;
     
  the view that the proposed Offer would provide Jay Pharma shareholders with a greater potential opportunity to realize a return on their investment than any other alternative reasonably available to Jay Pharma and its shareholders, including the strategic alternatives to the proposed Offer, such as remaining an independent private company, attempting an initial public offering, entering into a business combination transaction with other companies and additional strategic partnerships;
     
  the view that the Resulting Issuer’s potential revenue sources, access to opportunities for non-dilutive funding and other synergies creates a superior company when compared to remaining as an independent private company;
     
  each of Jay Pharma’s and Ameri’s historical and current information concerning their respective businesses, financial performances, financial conditions, operations and managements, including its short- and long-term strategic objectives and the significant risks associated therewith;
     
 

the expectation that the Offer should be treated as a tax-deferred transaction within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations promulgated thereunder, and as a result, Jay Pharma shareholders, and warrant holders generally should not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their Jay Pharma shares for shares of Resulting Issuer common stock, and on the exchange of their Jay Pharma warrants for Resulting Issuer warrants in connection with the Offer; provided, however, that if the Internal Revenue Service or a court determines that the Offer should not be treated as a reorganization pursuant to Section 368(a) of the Code, then the Offer should qualify as a tax-deferred transaction under Section 351 of the Code and a U.S. holder of Jay Pharma common shares and warrants would recognize taxable gain or loss upon the exchange of Jay Pharma common shares and warrants for Ameri common stock and warrants pursuant to the Offer;

     
  the likelihood that the Offer would be consummated on a timely basis, including the likelihood that the Offer would receive all necessary approvals;
     
  the opportunity for Jay Pharma shareholders to hold shares of a publicly traded company;
     
  the possibility that the Resulting Issuer would be able to take advantage of the potential benefits resulting from the combination of Ameri’s public company infrastructure and Jay Pharma’s management team; and
     
  the terms and conditions of the Tender Agreement, including without limitation the following:

 

  the determination that the relative percentage ownerships of Jay Pharma shareholders and Ameri stockholders is fair and based on the valuations of each company at the time of Jay Pharma’s board of directors’ approval of the Tender Agreement;

 

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  the structure of the Offer and the level of certainty as to the percentage of the total shares of common stock of the Resulting Issuer that current Jay Pharma shareholders and Ameri stockholders would own after the Offer; and
     
  the view that the parties’ representations, warranties and covenants, and the conditions to their respective obligations, are reasonable under the circumstances.

 

For a more complete discussion of Jay Pharma’s reasons for the Offer, see the section titled “THE OFFER — Jay Pharma’s Reasons for the Offer” beginning on page 130 of this proxy statement/prospectus.

 

Risk Factors (see page 57)

 

In evaluating the Tender Agreement and the Offer and related transactions contemplated by the Tender Agreement, you should carefully consider all of the information into this proxy statement/prospectus. In particular, you are urged to read and consider all of the factors discussed in the section titled “RISK FACTORS” beginning on page 57.

 

Recommendation of Ameri’s Board of Directors (see page 103)

 

Ameri’s board of directors has determined that the Tender Agreement and the transactions contemplated thereby, including the Offer and the issuance of shares of Ameri common stock pursuant to the terms of the Tender Agreement, are advisable and in the best interests of Ameri and its stockholders and has unanimously approved and adopted the Tender Agreement, the Offer and the other transactions contemplated therein. Ameri’s board of directors believes that each of the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal, the Reverse Stock Split Proposal, the Spin-Off Proposal, the A&R Charter Proposal, the Incentive Plan Proposal and the Adjournment Proposal to be presented at the Ameri special meeting is in the best interests of Ameri and its stockholders, and unanimously recommends that its stockholders vote “FOR” each of the proposals. For the factors considered by Ameri’s board of directors in reaching its decision to approve the Offer and Tender Agreement, see the section titled “THE OFFER — Ameri’s Reasons for the Offer” beginning on page 129 of this proxy statement/prospectus.

 

The Ameri Special Meeting (see page 107)

 

At the Ameri special meeting, Ameri stockholders will be asked to consider and vote on the following:

 

(1) The Ameri Share Issuance Proposal — to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the issuance of Ameri securities to Jay Pharma equity holders and to other parties in connection with the Offer, the Tender Agreement, and the transactions contemplated thereby, including but not limited to the issuance of shares of Resulting Issuer common stock to Jay Pharma equity holders, warrants to purchase Resulting Issuer common stock to holders of certain outstanding warrants to purchase Jay Pharma common shares, Series B Warrants to purchase Resulting Issuer common stock to be issued to Alpha, shares of Series B Preferred Stock and shares of Resulting Issuer common stock to a financial advisor of Jay Pharma and Ameri as Offer consideration pursuant to the terms and conditions of the Tender Agreement (the “Ameri Share Issuance Proposal”);

 

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(2) The Ameri Future Share Issuance Proposal – to approve, for purposes of complying with Nasdaq Listing Rule 5635(a), the potential future issuance of shares of Resulting Issuer common stock pursuant to the anti-dilution terms of the Alpha Securities Purchase Agreement, and certain warrants to be issued to Alpha immediately prior to the completion of the Offer (the “Ameri Future Share Issuance Proposal”);

 

(3) The Reverse Stock Split Proposal — to approve an amendment to Ameri’s amended and restated certificate of incorporation to effect a reverse stock split with a ratio between 1-for-[●] and 1-for-[●] with respect to the issued and outstanding common stock of the Resulting Issuer immediately following the closing of the Offer (the “Reverse Stock Split Proposal”);

 

(4) The Spin-Off Proposal — to approve that certain Share Purchase Agreement, dated January 10, 2020 (the “Share Purchase Agreement”), by and between Ameri and Ameri100 Inc. (“Private Ameri”) pursuant to which Ameri will contribute, transfer and convey to Private Ameri all of the issued and outstanding equity interests of the existing subsidiaries of Ameri, constituting the entire business and operations of Ameri and its subsidiaries (the “Spin-Off Proposal”);

 

(5) The A&R Charter Proposal — to approve an amendment and restatement to Ameri’s amended and restated certificate of incorporation (the “A&R Charter Proposal”);

 

(6) The Incentive Plan Proposal — to approve the 2020 Employee, Director and Consultant Equity Incentive Plan (the “Incentive Plan Proposal”);

 

(7) The Put Right Proposal — with respect to the warrants issued to Alpha on August 4, 2020 (the “Alpha Warrants”), to approve, in accordance with Nasdaq Listing Standard Rule 5635(d), a put right which would require Ameri to repurchase the unexercised portion of the Alpha Warrants for the sum of $0.60 per warrant share, payable in cash or shares of common stock, at our discretion (the “ Put Right Proposal”); and

 

(8) The Adjournment Proposal — to consider and vote upon a proposal to adjourn the Ameri special meeting to a later date or dates, if necessary, to permit the solicitation of additional proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote (the “Adjournment Proposal”).

 

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Interests of Ameri’s Directors and Executive Officers in the Offer (see page 141)

 

In considering the recommendation of the Ameri board of directors that Ameri stockholders vote to approve all of the presented proposals, Ameri stockholders should be aware that some of Ameri’s directors and officers have interests in the Offer and have arrangements that are different from, or in addition to, those of Ameri stockholders generally. These interests and arrangements may create potential conflicts of interest. Ameri’s board of directors was aware of these interests and considered these interests, among other matters, in adopting and approving the Tender Agreement and the transactions contemplated thereby, including the Offer , and in recommending that Ameri stockholders approve the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal, the Reverse Stock Split Proposal, the Spin-Off Proposal, the A&R Charter Proposal, the Incentive Plan Proposal, the Put Right Proposal and the Adjournment Proposal.

 

When you consider the recommendation of Ameri’s board of directors in favor of approval of the Ameri Share Issuance Proposal, the Ameri Future Share Issuance Proposal, the Reverse Stock Split Proposal, the Spin-Off Proposal, the A&R Charter Proposal, the Incentive Plan Proposal, the Put Right Proposal and the Adjournment Proposal, you should keep in mind that Ameri’s directors and officers have interests in the Offer that are different from, or in addition to, your interests as a stockholder. These interests include, among other things:

 

 

Srinidhi “Dev” Devanur, our executive Chairman, is the owner of 90% of the common equity of Private Ameri;

     
  Brent Kelton, our Chief Executive Officer, is the owner of 10% of the common equity of Private Ameri;
     
  Barry Kostiner, the CFO of Ameri, will enter into a consulting agreement with the Resulting Issuer, which will pay him $10,000 per month for a term of twelve months;
     
 

as current stockholders of Ameri, certain of Ameri’s directors and officers will retain an ownership stake in Ameri after the closing of the Offer, at which time the Jay Pharma business will be Ameri’s substantial business; and

     
  the continued indemnification of current directors and officers of Ameri and the continuation of directors’ and officers’ liability insurance after the Offer.

 

For a more complete description of these interests, see “THE OFFER — Interests of Ameri’s Directors and Executive Officers in the Offer” beginning on page 141 of this proxy statement/prospectus.

 

Treatment of Jay Pharma Options and Warrants (see page 143)

 

Subject to the completion of the Offer, each outstanding stock option or warrant to purchase shares of Jay Pharma common stock will be exchanged for an option or warrant to purchase a number of shares of Resulting Issuer common stock representing the number of shares of Jay Pharma common stock for which the exchanged option or warrant was exercisable multiplied by the Exchange Ratio with an exercise price equal to the exercise price of such options divided by the Exchange Ratio. As a general matter, except as set forth in the Tender Agreement, all other material terms and conditions governing stock options or warrants in effect immediately prior to the Offer will remain in effect following the Offer.

 

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For more information on the assumption of outstanding stock options and warrants of Jay Pharma, see the section titled “THE TENDER AGREEMENT — Treatment of Jay Pharma Options” beginning on page 151 and “— Treatment of Jay Pharma Warrants” beginning on page 151 of this proxy statement/prospectus.

 

Board Composition and Management of the Resulting Issuer After the Offer (see page 199)

 

Effective immediately after the closing of the Offer, each current member of the Ameri board of directors will resign. The Tender Agreement provides that the Resulting Issuer’s board of directors at the effective time of the Offer will consist a minimum of six (6) directors, one (1) of which will be appointed by Ameri and the remaining five (5) of which shall be appointed by Jay Pharma. Effective immediately after the closing of the Offer, the following persons will consist of the board of directors of Ameri:

 

Name   Position
David Johnson   Director, Chief Executive Officer and Chairman
Sol Mayer   Director
Dr. Marcus Schabacker   Director
George Kegler   Director
R. James Woolsey   Director
[•]  

Director

 

Following the Offer , certain of the executive officers of Jay Pharma immediately prior to the effective time of the Offer will be appointed as the executive officers of the Resulting Issuer as follows:

 

Name   Position
David Johnson   Director, Chief Executive Officer and Chairman
John Van Buiten   Chief Financial Officer
Avani Kanubaddi   Chief Operating Officer

 

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Conditions to Completion of the Offer (see page 154)

 

As more fully described in this proxy statement/prospectus and in the Tender Agreement, each party’s obligation to complete the Offer depends on a number of conditions being satisfied or, where legally permissible, waived, which include, in addition to other customary closing conditions, the following:

 

  the affirmative vote of a majority of the votes cast at the Ameri special meeting for the approval of the Ameri Share Issuance Proposal and the Ameri Future Share Issuance Proposal ; the affirmative vote of a majority of the shares present at the Ameri special meeting or by proxy and entitled to vote for the approval of the Incentive Plan Proposal and the Adjournment Proposal; and the affirmative vote of holders of at least a majority of the shares of Ameri common stock outstanding and entitled to vote for the approval of the Reverse Stock Split Proposal, the Spin-Off Proposal and the A&R Charter Proposal;
     
  no temporary restraining order, preliminary or permanent injunction or other order (whether temporary, preliminary or permanent) issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the completion of the Offer will be in effect, nor will any proceeding brought by any administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, seeking any of the foregoing be pending;
     
  no action will be taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Offer , which makes the completion of the Offer illegal;
     
  each required consent, waiver, permit, exemption, review, order, decision or approval of, or any registration and filing with, any governmental authority having authority over a party to the Tender Agreement, or the expiry, waiver or termination of any waiting period imposed by applicable law or a governmental authority having authority over a party to the Offer , in each case that is required in connection with the Offer has been made, given or obtained and is in force and has not been modified;
     
  the shares of Resulting Issuer common stock shall have been approved for listing on NASDAQ;
     
  Ameri shall have satisfied accepted shares of Jay Pharma common stock for exchange pursuant to the Offer; provided, that the obligation of Ameri to complete the Offer shall not be subject to this condition if the failure of Ameri to accept shares of Jay Pharma common stock for exchange pursuant to the Offer shall have constituted or resulted from a material breach of the Offer or the Tender Agreement by Ameri; and
     
  a registration statement on Form S-4 (including a prospectus) in connection with the issuance of shares of Resulting Issuer common stock as consideration in the Offer, which will include a proxy statement to be sent to the stockholders of Ameri and shareholders of Jay Pharma shall have become effective under the Securities Act, and shall not be the subject of any stop order.

 

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The obligation of Ameri to complete the Offer is subject to the satisfaction or waiver of the following additional conditions:

 

  certain fundamental representations and warranties of Jay Pharma shall have been true and correct in all respects on the date of the Tender Agreement and shall be true and correct on the closing date of the Offer with the same force and effect as if made on and as of the date on which the Offer is to be completed or, if such representations and warranties address matters as of a particular date, then such fundamental representations and warranties shall be true and correct as of that particular date;
     
  all other representations and warranties of Jay Pharma in the Tender Agreement shall have been true and correct as of the date of the Tender Agreement and shall be true and correct on the closing date of the Offer with the same force and effect as if made on the date on which the Offer is to be completed or, if such representations and warranties address matters as of a particular date, then such representations and warranties shall be true and correct as of that particular date, except where the failure of these representations and warranties to be true and correct, individually or in the aggregate, would not reasonably be expected to have a material adverse effect;
     
  Jay Pharma shall have performed or complied with in all material respects all of its covenants and agreements in the Tender Agreement required to be performed or complied with by it on or before the closing of the Offer ;
     
  Jay Pharma shall have delivered certain certificates and other documents required under the Tender Agreement for the closing of the Offer ;
     
  no legal action or proceeding can be pending or threatened that (a) imposes any limitations, damages or conditions on Ameri’s ability to acquire, hold or exercise full rights of ownership over any Jay Pharma common shares, (b) prohibits, restricts or imposes terms or conditions on the Offer or the ownership or operation by Ameri of the business or assets of Jay Pharma, or that compels Ameri to dispose of or hold separate any of the business or assets of Jay Pharma as a result of the Offer , or (c) prevents or materially delays the completion of the Offer , or if the Offer were to be consummated, have a material adverse effect with respect to Jay Pharma;
     
  there shall not have been any change, event, occurrence, effect, state of facts or circumstance that, either individually or in the aggregate, is or would reasonably be expected to be material and adverse to the business, operations, results of operations, assets, properties, condition (financial or otherwise) or liabilities (contingent or otherwise) or prospects of that Jay Pharma and its subsidiaries, taken as a whole, and would, or would be reasonably expected to, prevent or materially delay Jay Pharma from consummating the transactions contemplated by the Tender Agreement within 180 days of the date of the Tender Agreement. The Tender Agreement provides that certain effects, changes, events, circumstances, or developments arising or resulting from the following shall not be considered a material adverse effect on Jay Pharma (except to the extent that the first three circumstances in the list below have a materially disproportionate effect on Jay Pharma and its subsidiaries, taken as a whole, relative to companies of similar size operating in the industries or markets in which Jay Pharma operates (in which case the incremental disproportionate effect may be taken into account in determining whether there has been, or is reasonably expected to be, a material adverse effect)):

 

  any change in general political, economic, financial, currency exchange, securities, capital or credit market conditions in Canada or the United States;
     
  any change or proposed change in applicable laws or generally accepted accounting principles in the United States of America (“GAAP”);
     
  any change affecting the industries or markets in which Jay Pharma operates;
     
  any natural disaster or the commencement or continuity of any act of war, armed hostilities or acts of terrorism;

 

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  the announcement of the Tender Agreement or the transactions contemplated thereby;
     
  any action taken (or omitted to be taken) by Jay Pharma or its subsidiaries which is required to be taken (or omitted to be taken) pursuant to the Tender Agreement; or
     
  change in the market price or trading volume of any securities of Jay Pharma (it being understood that the causes underlying such change in market price or trading volume may be taken into account in determining whether a material adverse effect has occurred);

 

  Jay Pharma shall have provided executed lock-up agreement from its shareholders to Ameri;
     
 

Jay Pharma and Barry Kostiner shall have entered into a consulting agreement, to be effective as of the closing, pursuant to which Barry Kostiner will serve as a consultant to Jay Pharma for a period of twelve months following the closing date of the Offer; and

 

  Ameri shall have received an updated fairness opinion from Gemini which incorporates the terms of the Tender Agreement.

 

Additionally, Ameri’s obligation to consummate the Offer is subject to the satisfaction of the Minimum Tender Condition, which may not be modified or waived without the prior written consent of Jay Pharma.

 

The board of Jay Pharma can change its recommendation with regard to the Offer if any of the following are not satisfied or waived:

 

  certain fundamental representations and warranties of Ameri shall have been true and correct in all respects on the date of the Tender Agreement and shall be true and correct on the closing date of the Offer with the same force and effect as if made on and as of the date on which the Offer is to be completed or, if such representations and warranties address matters as of a particular date, then such fundamental representations and warranties shall be true and correct as of that particular date;
     
  all other representations and warranties of Ameri in the Tender Agreement shall have been true and correct as of the date of the Tender Agreement and shall be true and correct on the closing date of the Offer with the same force and effect as if made on the date on which the Offer is to be completed or, if such representations and warranties address matters as of a particular date, then such representations and warranties shall be true and correct as of that particular date, except where the failure of these representations and warranties to be true and correct, individually or in the aggregate, would not reasonably be expected to have a material adverse effect;
     
  Ameri shall have performed or complied with in all material respects all of its covenants and agreements in the Tender Agreement required to be performed or complied with by it on or before the closing of the Offer ;
     
  Ameri and shall have delivered certain certificates and other documents required under the Tender Agreement for the closing of the Offer ;
     
  Ameri shall have no outstanding material debts or liabilities of any kind (including, without limitation, unpaid transaction expenses, leases, accounts payable or promissory notes) at the effective time;

 

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  there shall not have been any change, event, occurrence, effect, state of facts or circumstance that, either individually or in the aggregate, is or would reasonably be expected to be material and adverse to the business, operations, results of operations, assets, properties, condition (financial or otherwise) or liabilities (contingent or otherwise) or prospects of that Ameri and its subsidiaries, taken as a whole, and would, or would be reasonably expected to, prevent or materially delay Ameri from consummating the transactions contemplated by the Tender Agreement within 180 days of the date of the Tender Agreement. The Tender Agreement provides that certain effects, changes, events, circumstances, or developments arising or resulting from the following shall not be considered a material adverse effect on Ameri (except to the extent that the first three circumstances in the list below have a materially disproportionate effect on Ameri and its subsidiaries, taken as a whole, relative to companies of similar size operating in the industries or markets in which Ameri operates (in which case the incremental disproportionate effect may be taken into account in determining whether there has been, or is reasonably expected to be, a material adverse effect)):

 

  any change in general political, economic, financial, currency exchange, securities, capital or credit market conditions in Canada or the United States;
     
  any change or proposed change in applicable laws or U.S. GAAP;
     
  any change affecting the industries or markets in which Ameri operates;
     
  any natural disaster or the commencement or continuity of any act of war, armed hostilities or acts of terrorism;
     
  the announcement of the Tender Agreement or the transactions contemplated thereby;
     
  any action taken (or omitted to be taken) by Ameri or its subsidiaries which is required to be taken (or omitted to be taken) pursuant to the Tender Agreement; or
     
  change in the market price or trading volume of any securities of Ameri (it being understood that the causes underlying such change in market price or trading volume may be taken into account in determining whether a material adverse effect has occurred);

 

  Ameri will have provided a duly executed copy of a resignation letter from each of the resigning members of the board of directors of Ameri and each officer of Ameri and each of Ameri’s subsidiaries, as applicable, pursuant to which each such person will resign as a member of the board of directors or officer of Ameri immediately following the effective time of the Offer;
     
  if deemed necessary, Ameri will have completed a stock split of the issued and outstanding shares of Ameri common stock at a ratio sufficient to increase the then-current trading price per share of Ameri common stock to at least $6.00 per share;
     
  Ameri shall have caused all Ameri preferred stock to be redeemed into shares of Private Ameri Preferred Stock; and
     
 

Ameri shall have adopted a stock incentive plan pursuant to which shares of Resulting Issuer common stock comprising 15% of the issued and outstanding shares of Resulting Issuer common stock post-closing, on a fully diluted basis, shall be reserved for issuance to employees, directors, consultants, and other service providers shall have been obtained. See “AMERI PROPOSAL 6 — APPROVAL OF THE INCENTIVE PLAN PROPOSAL” on page 114 of this proxy statement/prospectus.

 

Neither Ameri nor Jay Pharma can be certain when, or if, the conditions to the Offer will be satisfied or waived, or that the Offer will be completed. See “THE TENDER AGREEMENT — Conditions to the Completion of the Offer ” on page 154 of this proxy statement/prospectus for a more complete summary of the conditions that must be satisfied prior to closing of the Offer .

 

Listing of Ameri Common Stock (see page 138)

 

Ameri common stock is currently listed on NASDAQ under the symbol “AMRH.” Pursuant to the Tender Agreement, Ameri has agreed to obtain approval for listing on NASDAQ of the shares of Resulting Issuer common stock to be issued to Jay Pharma equity holders in the Offer. In addition, under the Tender Agreement, each party’s obligation to complete the Offer is subject to the satisfaction or waiver by each of the parties, at or prior to the Offer, of various conditions, including that Ameri must have caused such shares of Resulting Issuer common stock to be approved for listing on NASDAQ, subject only to official notice of issuance as of the closing of the Offer.

 

In connection with and immediately prior to the Offer, Jay Pharma will change its name to “[●]” and Ameri will change its name to “[●]” in accordance with Delaware law and seek to change its trading symbol on The NASDAQ Stock Market to “[●].”

 

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Termination of Tender Agreement (see page 168)

 

The Tender Agreement may be terminated at any time prior to the closing of the Offer by mutual written consent of the parties, subject to the prior written consent of Alpha. The Tender Agreement may also be terminated by either party, whether before or after the required stockholder approvals to complete the Offer and related matters have been obtained but subject to the prior written consent of Alpha, in the following circumstances:

 

  by either Jay Pharma or Ameri if the Ameri stockholder approval is not obtained at the Ameri special meeting; provided, however, that neither Ameri nor Jay Pharma may terminate the Tender Agreement if the failure to obtain such approval was caused by, or is a result of, a breach by such terminating party of its representations or warranties or failure to perform its covenants or agreements under the Tender Agreement;
     
  by either Jay Pharma or Ameri if, after the date of the Tender Agreement, any applicable law is enacted, made, enforced or amended that makes the completion of the Offer illegal or otherwise permanently prohibits or enjoins Jay Pharma or Ameri from consummating the Offer , and such applicable law has, if applicable, become final and non-appealable;
     
  by either Jay Pharma or Ameri if the effective time of the Offer does not occur by January 1, 2021; provided that a party may not terminate if the failure of the effective time of the Offer to occur is a result of a breach by such party of its representations or warranties or the failure of such party to perform its covenants or agreements;
     
 

by either Jay Pharma or Ameri if the Minimum Tender Condition is not satisfied on or prior to January 1, 2021; provided that a party may not terminate if the failure of the Minimum Tender Condition to be satisfied is a result of a breach by such party of its representations or warranties or the failure of such party to perform its covenants or agreements;

     
 

by either Jay Pharma or Ameri if the this proxy statement/prospectus (1) has not been filed by Ameri with the SEC on or prior to the 15th calendar day following the date of the Tender Agreement (the “Filing Deadline”) or (2) declared effective by the SEC on or prior to the 60th calendar day after the earlier of the filing date of this proxy statement/prospectus or the Filing Deadline (the “Effectiveness Deadline); provided that a party may not terminate if the failure to meet the Filing Deadline or Effectiveness Deadline is a result of a breach by such party of its representations or warranties or the failure of such party to perform its covenants or agreements;

     
  by Jay Pharma if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Ameri under the Tender Agreement occurs that would cause any condition precedent to the closing of the Offer not to be satisfied, and such breach or failure is incapable of being cured on or prior to January 1, 2021 is not cured in the manner described above; provided that (a) any willful breach is deemed incurable, and (b) Jay Pharma is not in breach so as to cause any condition to the closing of the Offer to not be satisfied;

 

  by Jay Pharma if the Ameri board of directors or any committee thereof fails to recommend or withdraws, amends, modifies or qualifies the approval of the Offer, or publicly proposes or states its intention to do so;
     
  by Jay Pharma if Ameri breaches its non-solicitation obligations in any material respect;
     
  by Jay Pharma if there is a material adverse effect with respect to Ameri that has not been disclosed by Ameri prior to the date of the Tender Agreement;
     
  by Ameri in order to enter into a definitive agreement with regard to a superior proposal;
     
  by Ameri if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Jay Pharma under the Tender Agreement occurs that would cause any condition precedent to the closing of the Offer not to be satisfied, and such breach or failure is incapable of being cured on or prior to January 1, 2021 or is not cured in the manner described above; provided that (a) any willful breach is deemed incurable, and (b) Ameri is not in breach so as to cause any condition to the closing of the Offer to not be satisfied;
     
  by Ameri if the Jay Pharma board of directors or any committee thereof fails to recommend or withdraws, amends, modifies or qualifies the approval of the Offer , or publicly proposes or states its intention to do so;
     
  by Ameri if Jay Pharma breaches its non-solicitation obligations in any material respect; or
     
  by Ameri if there is a material adverse effect with respect to Jay Pharma that has not been disclosed by Jay Pharma prior to the date of the Tender Agreement.

 

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Expense Reimbursement upon Termination (see page 169)

 

Jay Pharma must reimburse Ameri for certain expenses up to $500,000 if Ameri’s termination is because (a) the board of directors of Jay Pharma changes its recommendation regarding the Offer or Jay Pharma materially breaches the covenants regarding non-solicitation set forth in the Tender Agreement, or (b) the required Jay Pharma shareholder approval is not obtained and, in each case of (a) or (b), prior to such termination, an acquisition proposal for Jay Pharma is made or publicly announced and, within 365 days following the date of such termination:

 

  an acquisition proposal for Jay Pharma is consummated or effected;
     
  Jay Pharma enters into a contract or letter of intent with regard to such acquisition proposal and such acquisition proposal is later consummated or effected; or
     
  an acquisition proposal is made or publicly announced or otherwise publicly disclosed.

 

Ameri must reimburse Jay Pharma for certain expenses up to $500,000 if Jay Pharma’s termination is because (a) the board of directors of Ameri changes its recommendation regarding the Offer or Ameri materially breaches the covenants regarding non-solicitation set forth in the Tender Agreement, or (b) the required Ameri stockholder approval is not obtained and, in each case of (a) or (b), prior to such termination, an acquisition proposal for Ameri is made or publicly announced and, within 365 days following the date of such termination:

 

  an acquisition proposal for Ameri is consummated or effected; or
     
  Ameri enters into a contract or letter of intent with regard to such acquisition proposal and such acquisition proposal is later consummated or effected.

 

Ameri must also reimburse Jay Pharma for certain expenses up to $500,000 if Ameri terminates the Tender Agreement to enter into a definitive agreement providing for a superior proposal.

 

In addition, if the Tender Agreement is terminated without Alpha’s prior written consent and without meeting certain other conditions in the Tender Agreement, Jay Pharma is required to repay the entire outstanding principal balance of the Note plus all accrued and unpaid interest thereon and any other sums payable to Alpha directly in connection with the Note.

 

Comparison of the Rights of Resulting Issuer Stockholders and Jay Pharma Shareholders (see page 284)

 

Ameri is incorporated under the laws of the State of Delaware, and accordingly, the rights of the stockholders of Ameri are currently, and will continue to be, governed by the DGCL. If the Offer is completed, Jay Pharma shareholders will become stockholders of the Resulting Issuer, and their rights will be governed by the DGCL, as well as the amended and restated certificate of incorporation of the Resulting Issuer (the “ A&R Charter”) and the bylaws of the Resulting Issuer (the “ A&R Bylaws”). The rights of the Resulting Issuer stockholders contained in the A&R Charter and the A&R Bylaws, as amended and restated, differ from the rights of Jay Pharma shareholders under Jay Pharma’s certificate of incorporation (the “Jay Pharma Charter”) and Jay Pharma’s by-laws (the “Jay Pharma By-laws”), as more fully described under the section titled “COMPARISON OF RIGHTS OF AMERI STOCKHOLDERS AND JAY PHARMA SHAREHOLDERS” on page 284 of this proxy statement/prospectus.

 

Regulatory Approvals Required for the Offer (see page 142)

 

Completion of the Offer is subject to prior receipt of all approvals required to be obtained from applicable governmental and regulatory authorities. Subject to the terms and conditions of the Tender Agreement, Ameri and Jay Pharma have agreed to use their commercially reasonable efforts to take all actions and do all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by the Tender Agreement, and to cooperate with the other party to prepare and file, as soon as practicable, all necessary documentation to consummate the transactions contemplated by the Tender Agreement.

 

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Ameri must also comply with the applicable federal and state securities laws and the rules and regulations of NASDAQ for the approval of the listing application to be submitted in connection with the issuance of shares of Ameri common stock in the Offer and the filing with the SEC of the registration statement of which this proxy statement/prospectus forms a part.

 

The foregoing is a summary of the material regulatory requirements for the Offer , satisfaction or waiver of certain of which requirements is a condition to the completion of the Offer . There can be no guarantee as to if and when any of the consents or approvals required for the Offer will be obtained or as to the conditions that such consents and approvals may contain.

 

Estimated Costs and Expenses of the Offer and the Spin-Off

 

The following is an estimate of the fees and expenses incurred or to be incurred in the Offer and the Spin-Off:

 

Filing Fees   $ [•]  
Legal Fees   $ [•]  
Accounting Fees   $ [•]  
Soliciting Expenses   $ [•]  
Financial Advisor Expenses   $ [•]  
Printing Costs   $ [•]  
Estimated Fees Total   $ [•]  

 

Accounting Treatment (see page 142)

 

The Offer will be accounted for as a reverse acquisition in accordance with U.S. generally accepted accounting principles (“GAAP”). Under this method of accounting, Ameri will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Jay Pharma comprising the ongoing operations of the Resulting Issuer, Jay Pharma senior management comprising the senior management of the Resulting Issuer, and that the former owners and management of Jay Pharma will have control of the board of directors after the Offer . In accordance with guidance applicable to these circumstances, the Offer will be considered to be a capital transaction in substance. Accordingly, for accounting purposes, the Offer will be treated as the equivalent of Jay Pharma issuing shares for the net assets of Ameri, accompanied by a recapitalization. The net assets of Ameri will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Offer will be those of Jay Pharma.]7

 

U.S. Federal Income Tax Considerations (see page 142)

 

Each of Haynes and Boone, Sheppard, Mullin, Richter & Hampton, LLP and Fogler Rubinoff LLP will deliver an opinion, to Jay Pharma and Ameri, respectively, to the effect that the Offer should be treated as a tax-deferred transaction within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations promulgated thereunder, and as a result, Jay Pharma shareholders, and warrant holders generally should not recognize gain or loss for U.S. federal income tax purposes upon the exchange of their Jay Pharma shares for shares of Resulting Issuer common stock, and on the exchange of their Jay Pharma warrants for Resulting Issuer warrants in connection with the Offer. If the Internal Revenue Service or a court determines that the Offer should not be treated as a reorganization pursuant to Section 368(a) of the Code, then the Offer should qualify as a tax-deferred transaction under Section 351 of the Code and a U.S. holder of Jay Pharma common shares and warrants would recognize taxable gain or loss upon the exchange of Jay Pharma common shares and warrants for Ameri common stock and warrants pursuant to the Offer.

 

For a more complete discussion of the material U.S. federal income tax consequences of the Offer , see the section titled “CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER” beginning on page 225 of this proxy and consent solicitation statement/prospectus.

 

The U.S. federal income tax consequences described above may not apply to all equity holders of Jay Pharma. Jay Pharma equity holders’ tax consequences may depend on their individual situation. Accordingly, Jay Pharma equity holders should consult their independent tax advisors for a full understanding of the particular tax consequences of the Offer to them.

 

Canadian Federal Income Tax Considerations (see page 142)

 

Canadian resident shareholders will be considered to have disposed of their Jay Pharma common shares in the Offer for proceeds of disposition equal to the fair market value of Ameri common stock received as of the date of exchange pursuant to the Offer and to have acquired their Ameri common stock at a cost equal to that same amount. As a result, Canadian resident shareholders would have a capital gain on the disposition of their Jay Pharma common shares pursuant to the Offer to the extent that the fair market value of Ameri common stock received (less reasonable costs of disposition) exceeds the adjusted cost base of Jay Pharma common shares held by such a shareholder. The exchange of Jay Pharma common shares in the Offer by a shareholder who is not resident in Canada for Ameri common stock should not give rise to a gain or loss to such shareholder for purposes of the Tax Act.

 

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For a more complete discussion of the material Canadian federal income tax consequences of the Offer , see the section titled “CERTAIN MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER” beginning on page 231 of this proxy and consent solicitation statement/prospectus.

 

Opinion of Ameri’s Financial Advisor (see page 131 and Annex T)

 

On May 26, 2020, Gemini rendered its oral opinion to the Ameri board of directors (which was confirmed in writing by delivery of Gemini’s written opinion, dated as of the same date) as to, as of May 26, 2020, the fairness, from a financial point of view, to Ameri of the Exchange Ratio in the amalgamation, after giving effect to the ancillary transactions, pursuant to the Original Amalgamation Agreement. On August 7, 2020, at the request of the Ameri board of directors and in light of the changes proposed to terminate and replace the Amalgamation Agreement with the Tender Agreement, GVS rendered the revised written opinion dated August 7, 2020, to the Ameri board of directors, that as of that date and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth in the GVS Opinion and described below, the contribution made and consideration received by the holders of Ameri common stock as part of the Offer, pursuant to the Tender Agreement, was fair to the holders of Ameri common stock from a financial point of view.

 

The opinion was addressed to the Ameri board of directors for the use and benefit of the members of the Ameri board of directors (in their capacities as such) in connection with the Ameri board of directors’ evaluation of the Offer. Gemini’s opinion only addressed whether, as of the date of the opinion, the Exchange Ratio in the Offer, after giving effect to the ancillary transactions, pursuant to the Tender Agreement was fair, from a financial point of view, to Ameri. It did not address any other terms, aspects, or implications of the transaction or the Tender Agreement. The summary of the opinion in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the written opinion, which is included as Annex T to this proxy statement/prospectus and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Gemini in preparing its opinion. Neither the opinion nor the summary of the opinion and related analyses set forth in this proxy statement/prospectus is intended to and they do not constitute advice or a recommendation to any of the stockholders of Ameri or any other security holders as to how such holder should vote or act with respect to any matter relating to the transaction or otherwise.

 

For further information, see the section titled “THE OFFER — Opinion of Ameri’s Financial Advisor” beginning on page 131 and the full text of the opinion attached as Annex T to this proxy statement/prospectus.

  

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SELECTED HISTORICAL FINANCIAL INFORMATION OF AMERI

 

The following table sets forth selected historical financial information of Ameri for each of the periods presented (in thousands, except share and per share data). Such information has been derived from Ameri’s unaudited financial statements for the three months ended March 31, 2020 and three months ended March 31, 2019 and audited financial statements as of and for the years ended December 31, 2019 and 2018, each of which is included elsewhere in this proxy statement/prospectus.

 

The following table should be read together with “INFORMATION ABOUT AMERI — Ameri Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 255 of this proxy statement/prospectus and Ameri’s audited financial statements for the years ended December 31, 2019 and 2018 and related notes and unaudited financial statements as of and for the three months ended March 31, 2020, and related notes beginning on page F-1 of this proxy statement/prospectus.

 

Ameri’s historical results are not necessarily indicative of results to be expected in any future period.

 

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AMERI HOLDINGS, INC.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

March 31,

2020

    December 31, 2019     December 31, 2018  
    (as revised)    

(as revised)

       
Assets                        
Current assets:                        
Cash and cash equivalents   $ 1,267,352     $ 431,400       1,371,331  
Accounts receivable     8,101,751       6,384,148       7,871,422  
Other current assets     874,856       783,606       818,600  
Total current assets     10.243,959       7,599,154       10,061,353  
Other assets:                        
Property and equipment, net     115,521       83,128       58,892  
Intangible assets, net     3,035,580       3,584,221       5,778,036  
Goodwill     13,729,770       13,729,770       13,729,770  
Operating lease right of use asset, net     918,903       286,161          
Deferred income tax assets, net     11,349       8,879       9,399  
Total other assets     17,811,123       17,692,161       19,576,097  
Total assets   $ 28,055,082     $ 25,291,131       29,637,450  
                         
Liabilities                        
Current liabilities:                        
Line of credit   $ 4,553,492     $ 2,881,061       3,950,681  
Accounts payable     5,254,231       4,696,352       4,377,794  
Other accrued expenses     2,177,213       1,989,894       1,697,636  

Current portion – operating lease liability

   

186,389

     

120,052

         
Current portion – long-term notes     -       -       6,450  
Convertible notes     1,000,000       1,000,000       1,250,000  
Debentures     1,500,000       1,000,000       1,250,000  
Consideration payable – cash     1,000,000       2,496,000       2,696,000  
Short term Loans     1,000,000       -       -  
Dividend payable – Preferred stock     428,133       320,298       105,181  
Total current liabilities     17,099,457       14,503,657       14,688,965  

Operating lease liability - net

   

739,977

     

169,897

     

-

 

Warrant liability

   

-

     

-

     

4,189,388

 
Long-term liabilities     739,977       169,897       4,189,388  
Total liabilities     17,839,434       14,673,554       18,878,353  
                         
Stockholders’ equity:                        
Preferred stock, $0.01 par value; 1,000,000 authorized, 424,938 issued and outstanding as of March 31, 2020, and December 31, 2019 and December 31, 2018.     4,249       4,249       4,207  
Common stock, $0.01 par value; 100,000,000 shares authorized, 3,246,705 and 2,522,095 issued and outstanding as of March 31, 2020 and December 31, 2019 and December 31, 2018, respectively     32,467       25,221       16,932  
Additional paid-in capital     52,562,485       51,040,296       45,129,214  
Accumulated deficit     (42,408,062 )     (40,512,019 )     (34,478,253 )
Accumulated other comprehensive income (loss)     24,509       60,012       86,997  
Total stockholders’ equity     10,215,648       10,617,759       10,759,097  
Total liabilities and stockholders’ equity   $ 28,055,082     $ 25,291,315         29,637,450  

 

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AMERI HOLDINGS, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 

   

Three Months Ended

March 31, 2020

   

Three Months Ended

March 31, 2019

 
    (as revised)        
Revenue     9,602,528       10,686,196  
Cost of revenue     7,720,962       8,546,232  
Gross profit     1,881,566       2,139,964  
Operating expenses                
Selling, General and administration     2,924,518       2,877,309  
Depreciation and amortization     559,623       561,017  
Operating expenses     3,484,141       3,438,326  
Operating Income (loss)     (1,602,575 )     (1,298,362 )
Other income /(expenses)                
Interest expenses     (163,741 )     (142,554 )
Changes in fair value of warrant liability     -       (450,267 )
Income (loss) before income taxes     (1,766,316 )     (1,891,183 )
Income tax benefit     (21,892 )     31,211  
Income (loss) after income taxes     (1,788,208 )     (1,859,972 )
Net income attributable to non-controlling interest                
Net Income (loss) attributable to the Company     (1,788,208 )     (1,859,972 )
Dividend on preferred stock     (107,835 )     (105,705 )
Net Income (loss) attributable to common stockholders     (1,896,043 )     (1,965,677 )
Other comprehensive income (loss), net of tax                
Foreign exchange translation     (35,503 )     18,714  
Total Comprehensive Income (loss)     (1,931,546 )     (1,946,963 )
                 
Basic income (loss) per share     (0.60 )     (1.09 )
Diluted income (loss) per share     (0.60 )     (1.09 )
                 
Basic weighted average number of common shares outstanding     3,175,040       1,807,403  
Diluted weighted average number of common shares outstanding     3,175,040       1,807,403  

 

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AMERI HOLDINGS, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 

   

Twelve Months

Ended December 31,

 
    2019     2018  
    (as revised)        
Net revenue   $ 39,914,675     $ 42,998,280  
Cost of revenue     31,763,955       34,014,776  
Gross profit     8,150,720       8,983,504  
                 
Operating expenses:                
Selling, general and administration     12,210,317       10,794,822  
Depreciation and amortization     2,265,297       2,903,662  
Acquisition related expenses     -       333,237  
Changes in estimate for consideration payable     -       (6,940,310 )
Impairment charges on goodwill and intangible assets     -       9,038,553  
Operating expenses     14,475,614       16,129,964  
Operating Income (loss):     (6,324,894 )     (7,146,460 )
Other income /(expenses)                
Interest expense     (694,926 )     (729,896 )
Other income     4,540       88,161  
Change in fair value of warrant liability     1,796,174       (2,760,819 )
Total other income /(expenses)     1,105,788       (3,402,554 )
Income (loss) before income taxes     (5,219,106 )     (10,549,014 )
Income tax benefit     (388,657 )     (6,348,502 )
Net Income (loss)     (5,607,763 )     (16,897,516 )
Dividend on preferred stock     (426,003 )     (2,583,185 )
Net (loss) attributable to common stock holders     (6,033,766 )     (19,480,701 )
Other comprehensive income/ (loss), net of tax:                
Foreign exchange translation adjustment     (26,985 )     50,122  
Total comprehensive income (loss)   $ (6,060,751 )     (19,430,579 )
Comprehensive (loss) attributable to the Company     (6,060,751 )     (19,430,579 )
Comprehensive (loss) attributable to the non-controlling interest     -       -  
      (6,060,751 )     (19,430,579 )
Basic income (loss) per share   $ (2.83 )   $ (20.47 )
Diluted income (loss) per share   $ (2.83 )   $ (20.47 )
                 
Basic weighted average number of shares     2,128,806       951,601  
Diluted weighted average number of shares     2,1 28,806       951,601  

 

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AMERI HOLDINGS, INC.

 

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

 

    Common Stock     Preferred Stock                          
    Shares    

Par

Value at
$0.01

    Shares    

Par

Value

at
$0.01

   

Additional

paid-in

capital

   

Foreign

Currency

Translation

Reserve

   

Retained

earnings

 

 

Total
stockholders’
equity

 
Balance at Dec 31, 2018     1,693,165     $ 16,932       420,720     $ 4,207     $ 45,129,214     $ 86,997     $ (34,478,253 )   $ 10,759,097  
Net Loss for the period                                                     (1,965,677 )     (1,965,677 )
Other comprehensive income (loss)                                             18,714               18,714