Item 1.01 Entry into a Material Definitive Agreement
Sale of Assets
On December 10, 2019, we entered into an Asset Purchase Agreement (the "Purchase
Agreement") with NoNoDerma, LLC (the "Buyer") pursuant to which the Company
agreed to sell and transfer to Buyer all or substantially all of the Company's
assets (the "Asset Sale"). In connection with the execution of the Purchase
Agreement, on December 10, 2019, shareholders holding a majority of the
Company's voting power, acting by written consent in lieu of a meeting,
consented to the Asset Sale. The Board of Directors of the Company also
approved the Asset Sale acting by written consent in lieu of a meeting on
December 10, 2019. The closing of the Asset Sale occurred on the same day as the
execution of the Purchase Agreement.
The aggregate purchase price for the Asset Sale is equal to the sum of:
(i) A Promissory Note from Buyer in the amount of $600,000, bearing interest at
7%, fully amortizing over 36 monthly payments, secured by a blanket security
interest in the assets of Buyer, subordinate to Buyer's existing senior secured
lender, and guaranteed by LeoGroup Private Investment Access, LLC, the parent of
Buyer.
(ii) 7.5% ownership of Buyer.
(iii) Cancellation of existing senior secured debt from the Company to LeoGroup
Private Investment Access, LLC in the remaining amount of $400,000.
(iv) Cancellation of existing royalty obligation of the Company to LeoGroup
Private Investment Access, LLC in the remaining amount of $1,400,000.
The Purchase Agreement provides that the Buyer will not assume nor have any
responsibility for, any liability of the Company.
As a result of the Asset Sale, the Company will have conveyed substantially all
of its assets. The Company will retain the ownership interest it is being issued
in the Buyer.
The Purchase Agreement contains customary representations, warranties and
covenants by each of the Company and Buyer as well customary indemnification
provisions among the parties.
Item 2.01 Completion of Acquisition or Disposition of Assets
Reference is made to the disclosure set forth under Item 1.01 of this report,
which disclosure is incorporated herein by reference.
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