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Ocuphire Pharma(OCUP) - 2024 Q3 - Quarterly Results
OCUPOcuphire Pharma(OCUP)2024-11-12 13:23

Merger Agreement Details - The merger agreement involves OCUPHIRE PHARMA, INC. and OPUS GENETICS INC., with the effective date set for October 22, 2024[1]. - The first merger will result in OPUS GENETICS INC. becoming a wholly owned subsidiary of OCUPHIRE PHARMA, INC.[11]. - Following the first merger, OPUS GENETICS INC. will merge into ORANGE MERGER SUB II, LLC, with the latter being the surviving entity[12]. - The transactions are intended to qualify as a "reorganization" under Section 368(a) of the Code[13]. - The Parent Board has unanimously determined that the contemplated transactions are fair and in the best interests of its stockholders[14]. - The aggregate merger consideration to be paid by Parent for all outstanding shares of Company Capital Stock at Closing will include 5,237,063 shares of Parent Common Stock and 14,145.374 shares of Parent Convertible Preferred Stock, representing 42% of the outstanding capital stock of Parent immediately following the Merger[30]. - The First Merger will result in the Company continuing as the surviving corporation, and the Second Merger will lead to the formation of a new entity named "OPUSTX LLC" as the surviving entity[24][29]. - The First Merger is set to be consummated remotely via electronic exchange of documents on the Closing Date, with the Second Merger to occur no earlier than the tenth Business Day after the Closing Date[26]. - All directors and officers of Parent and certain Company stockholders are executing lock-up agreements and support agreements to facilitate the merger[20][21]. - The Company stockholders have irrevocably approved the merger and waived any rights to receive payment of the fair value of their capital stock under the Delaware General Corporation Law[18]. - The merger will result in the issuance of shares of Parent Common Stock and Parent Convertible Preferred Stock to Company stockholders, with each Parent Preferred Stock Payment Share convertible into 1,000 shares of Parent Common Stock[30]. - The First Effective Time will occur upon the filing of the First Certificate of Merger with the Secretary of State of Delaware, while the Second Effective Time will follow the filing of the Second Certificate of Merger[26][29]. - The certificate of incorporation of Parent will be amended to change its name to "Opus Genetics, Inc." following the First Effective Time[27]. - The merger is structured to ensure that no fractional shares of Parent Common Stock will be issued, with cash payments made for any fractional shares[33]. - The Company will transmit a Stockholder Notice to each stockholder who did not execute the Stockholder Written Consent immediately following the execution of the Agreement[19]. - At the First Effective Time, each share of common stock of First Merger Sub will be converted into one share of common stock of the First Step Surviving Corporation[34]. - The Preferred Stock Exchange Ratio will be adjusted to reflect any changes in outstanding shares due to stock dividends or other similar changes[35]. - At the Second Effective Time, each share of common stock of the First Step Surviving Corporation will be canceled without any conversion or payment[36]. - All holders of Company Capital Stock will cease to have rights as stockholders immediately prior to the First Effective Time[37]. - The Exchange Fund will include Parent Common Stock, Parent Convertible Preferred Stock, and cash for fractional shares[38]. - Dissenting Shares will not convert into the Merger Consideration but will receive the appraised value under the DGCL[44]. - Company Options will be canceled without payment at the First Effective Time[46]. - Company Convertible Notes will be converted into 6,223,538.51 shares of Series Seed-1 Preferred Stock at the First Effective Time[47]. Company Financials and Operations - The Company is duly incorporated and has all necessary corporate power to conduct its business[51]. - The Company has no subsidiaries and does not own any capital stock or equity interests in other entities[53]. - The Company has 77,341,000 authorized shares of Common Stock, with 6,548,709 shares issued and outstanding[63]. - The Company has 65,236,000 authorized shares of Preferred Stock, with 56,053,000 designated as Series Seed Preferred Stock and 33,382,450 shares issued and outstanding[63]. - The Company maintains accurate books and records reflecting its assets and liabilities, ensuring reasonable assurance over financial reporting[73]. - The Company has reserved 5,576,465 shares of Common Stock for issuance under the 2021 Stock Option Plan, with 21,500 shares already issued[66]. - The Company has not declared or paid any dividends or repurchased any shares of its capital stock since the date of the Unaudited Interim Balance Sheet[76]. - The Company has not identified any significant deficiencies or material weaknesses in its internal accounting controls since inception[75]. - The Company has not conducted any mergers, consolidations, or similar transactions except for the Contemplated Transactions[76]. - The Company has not incurred or guaranteed any indebtedness for borrowed money since the date of the Unaudited Interim Balance Sheet[76]. - The Company Financials fairly present the financial position and operating results as of the specified dates[72]. - The Company does not hold any shares of its capital stock in its treasury[63]. - The Company has no undisclosed liabilities as of the date hereof, except for those disclosed in the Unaudited Interim Balance Sheet[81]. - The Company owns all tangible properties and assets used in its business, free and clear of any encumbrances, except for permitted encumbrances[82]. - The Company does not own any real property and has valid leasehold interests in all leased properties[83]. - The Company has identified all material registered intellectual property (IP) and has no pending or threatened challenges to its validity[85]. - The Company exclusively owns or has exclusively licensed all material IP necessary for its business operations[86]. - The Company has not experienced any data breaches or security violations related to sensitive data since its inception[92]. - The Company has a list of material contracts in effect, including those requiring payments exceeding 50,000[94].−TheCompanyhasnotbreachedanymaterialcontractsthatwouldallowotherpartiestocancelorseekdamages,ensuringallmaterialcontractsarevalidandenforceable[98].−TheCompanyholdsallrequiredGovernmentalAuthorizationsnecessaryforitsoperations,andnopermitshavebeenrevokedorsuspended[101].−TherearenopendingorthreatenedinvestigationsagainsttheCompanyregardingcompliancewithdrugregulations,indicatingastronglegalstanding[103].−AllclinicalstudiesconductedbytheCompanyhaveadheredtoapplicableregulations,withnostudiesterminatedforsafetyornoncompliancereasons[105].−TheCompanyhascompliedwithalllawsrelatedtopatienthealthinformation,includingHIPAA,andhasnotreceivedanyallegationsofnoncompliance[109].−Manufacturingoperationsforproductcandidateshavebeenconductedinaccordancewithgoodmanufacturingpractices,withnosignificantcomplianceissuesreported[111].−TheCompanyhasmadeavailableallmaterialcorrespondencewithregulatorybodies,ensuringtransparencyinitscomplianceefforts[112].−AsofthedateoftheAgreement,therearenopendinglegalproceedingsthatcouldinterferewiththecontemplatedtransactions[113].−TheCompanyhastimelyfiledallrequiredTaxReturnsandallsuchreturnsarecorrectandcompleteinallmaterialrespects[117].−AllamountsofTaxesdueandowingbytheCompanyhavebeenfullyandtimelypaid,andunpaidTaxesdidnotmateriallyexceedthereserveforTaxliability[118].−Therearenopendingorongoingaudits,assessments,orotheractionsforanymaterialamountofTaxesoftheCompany[120].−TheCompanyhasnotincurredanyLiabilityforTaxesoutsidetheOrdinaryCourseofBusinesssincethedateoftheUnauditedInterimBalanceSheet[118].−TheCompanyhasnotparticipatedinanytransactionthatconstitutesa"listedtransaction"undertheCode[127].EmployeeandLaborCompliance−TheCompanyhasprovidedatrueandcorrectlistofallcurrentemployeesandindependentcontractors,includingcompensationdetails[144].−TheCompanyisincompliancewithallapplicableLawsregardinglaborandemploymentpractices[147].−TherearenopendingauditsorinvestigationsinvolvinganyCompanyBenefitPlan[137].−TheCompanyhasnotbeenapartytoanycollectivebargainingagreementorsimilarlabororganization[145].−TheCompanyhasnotmadeanyelectionunderSection965(h)oftheCode[123].−TheCompanyhasnotimplementedany"plantclosing"or"masslayoff"sinceitsinception,ensuringcompliancewiththeWARNAct[148].−TheCompanyhasbeeninmaterialcompliancewithallCOVID−19−relatedlawsandregulations,includingthosefromtheOccupationalSafetyandHealthAdministrationandtheCentersforDiseaseControl[148].EnvironmentalandRegulatoryCompliance−TheCompanyhascompliedwithallapplicableEnvironmentalLawsandhasnotreceivedanynoticesofnon−compliancesinceitsinception[149].−TheCompanyhasdeliveredaccurateandcompletecopiesofallmaterialinsurancepolicies,andnocancellationsordenialsofcoveragehavebeenreportedsinceitsinception[151].−TherearenoundisclosedtransactionswithaffiliatesthatwouldrequiredisclosureunderItem404ofRegulationS−K[153].−TheCompanyhasprovidedallmaterialenvironmentalreportsandassessmentstotheParentpriortothedateoftheAgreement[149].−TheCompanyhasnotbeensubjecttoanyinvestigationsregardingpotentialviolationsofAnti−BriberyLaws[155].ParentCompanyFinancials−EachholderofCompanyPreferredStockisanaccreditedinvestorasdefinedinRegulationD[157].−TheCompanyhasmadenorepresentationsorwarrantiesoutsideofthoseexpresslysetforthintheAgreement[158].−TheCompanyhasobtainedallnecessarycorporateapprovalsfortheexecutionanddeliveryoftheAgreement[168].−AsoftheReferenceDate,Parenthas125,000,000authorizedsharesofcommonstock,with26,198,444sharesissuedandoutstanding[174].−Parenthas10,000,000authorizedsharesofpreferredstock,noneofwhichhavebeenissued[174].−Parenthasoutstandingoptionsforthepurchaseof4,759,037sharesandwarrantsfor7,204,299sharesofcommonstock[177][178].−Parent′sfinancialstatementscomplywithGAAPandfairlypresentitsconsolidatedfinancialpositionasoftherespectivedates[184].−Parenthasmaintainedasystemofinternalcontroloverfinancialreportingdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreporting[190].−AsofthedateoftheAgreement,therearenounresolvedcommentsfromtheSECregardingParent′sSECDocuments[187].−ParenthasnotreceivedanycommentlettersfromtheSECregardingdelistingormaintenanceoflistingonNasdaqsinceDecember31,2022[187].−Parent′scashandcashequivalentsasofthecloseofbusinessontheBusinessDayprecedingthedateoftheAgreementhavenotmateriallychanged[193].−Parenthasnotbeenclassifiedasa"shellcompany"underSection12b−2oftheExchangeAct[194].−AlldistributionsandrepurchasesofParentCommonStockhavebeenundertakenincompliancewithapplicablelawsandregulations[181].−ParentanditsSubsidiarieshaveconductedbusinessonlyintheOrdinaryCourseofBusinesssincethedateoftheParentBalanceSheet[195].−Nodividendsweredeclaredorpaid,andnoshareswererepurchasedorreacquired,exceptforstockplanexercises[195].−ParenthasnotincurredorguaranteedanyindebtednessforborrowedmoneysincethedateoftheParentBalanceSheet[197].−NomaterialtransactionsoutsidetheOrdinaryCourseofBusinesshavebeenenteredinto,exceptinconnectionwiththeContemplatedTransactions[197].−Parenthasnotmadeanyexpendituresexceeding50,000[94]. - The Company has not breached any material contracts that would allow other parties to cancel or seek damages, ensuring all material contracts are valid and enforceable[98]. - The Company holds all required Governmental Authorizations necessary for its operations, and no permits have been revoked or suspended[101]. - There are no pending or threatened investigations against the Company regarding compliance with drug regulations, indicating a strong legal standing[103]. - All clinical studies conducted by the Company have adhered to applicable regulations, with no studies terminated for safety or noncompliance reasons[105]. - The Company has complied with all laws related to patient health information, including HIPAA, and has not received any allegations of noncompliance[109]. - Manufacturing operations for product candidates have been conducted in accordance with good manufacturing practices, with no significant compliance issues reported[111]. - The Company has made available all material correspondence with regulatory bodies, ensuring transparency in its compliance efforts[112]. - As of the date of the Agreement, there are no pending legal proceedings that could interfere with the contemplated transactions[113]. - The Company has timely filed all required Tax Returns and all such returns are correct and complete in all material respects[117]. - All amounts of Taxes due and owing by the Company have been fully and timely paid, and unpaid Taxes did not materially exceed the reserve for Tax liability[118]. - There are no pending or ongoing audits, assessments, or other actions for any material amount of Taxes of the Company[120]. - The Company has not incurred any Liability for Taxes outside the Ordinary Course of Business since the date of the Unaudited Interim Balance Sheet[118]. - The Company has not participated in any transaction that constitutes a "listed transaction" under the Code[127]. Employee and Labor Compliance - The Company has provided a true and correct list of all current employees and independent contractors, including compensation details[144]. - The Company is in compliance with all applicable Laws regarding labor and employment practices[147]. - There are no pending audits or investigations involving any Company Benefit Plan[137]. - The Company has not been a party to any collective bargaining agreement or similar labor organization[145]. - The Company has not made any election under Section 965(h) of the Code[123]. - The Company has not implemented any "plant closing" or "mass layoff" since its inception, ensuring compliance with the WARN Act[148]. - The Company has been in material compliance with all COVID-19-related laws and regulations, including those from the Occupational Safety and Health Administration and the Centers for Disease Control[148]. Environmental and Regulatory Compliance - The Company has complied with all applicable Environmental Laws and has not received any notices of non-compliance since its inception[149]. - The Company has delivered accurate and complete copies of all material insurance policies, and no cancellations or denials of coverage have been reported since its inception[151]. - There are no undisclosed transactions with affiliates that would require disclosure under Item 404 of Regulation S-K[153]. - The Company has provided all material environmental reports and assessments to the Parent prior to the date of the Agreement[149]. - The Company has not been subject to any investigations regarding potential violations of Anti-Bribery Laws[155]. Parent Company Financials - Each holder of Company Preferred Stock is an accredited investor as defined in Regulation D[157]. - The Company has made no representations or warranties outside of those expressly set forth in the Agreement[158]. - The Company has obtained all necessary corporate approvals for the execution and delivery of the Agreement[168]. - As of the Reference Date, Parent has 125,000,000 authorized shares of common stock, with 26,198,444 shares issued and outstanding[174]. - Parent has 10,000,000 authorized shares of preferred stock, none of which have been issued[174]. - Parent has outstanding options for the purchase of 4,759,037 shares and warrants for 7,204,299 shares of common stock[177][178]. - Parent's financial statements comply with GAAP and fairly present its consolidated financial position as of the respective dates[184]. - Parent has maintained a system of internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting[190]. - As of the date of the Agreement, there are no unresolved comments from the SEC regarding Parent's SEC Documents[187]. - Parent has not received any comment letters from the SEC regarding delisting or maintenance of listing on Nasdaq since December 31, 2022[187]. - Parent's cash and cash equivalents as of the close of business on the Business Day preceding the date of the Agreement have not materially changed[193]. - Parent has not been classified as a "shell company" under Section 12b-2 of the Exchange Act[194]. - All distributions and repurchases of Parent Common Stock have been undertaken in compliance with applicable laws and regulations[181]. - Parent and its Subsidiaries have conducted business only in the Ordinary Course of Business since the date of the Parent Balance Sheet[195]. - No dividends were declared or paid, and no shares were repurchased or reacquired, except for stock plan exercises[195]. - Parent has not incurred or guaranteed any indebtedness for borrowed money since the date of the Parent Balance Sheet[197]. - No material transactions outside the Ordinary Course of Business have been entered into, except in connection with the Contemplated Transactions[197]. - Parent has not made any expenditures exceeding 100,000 individually or $300,000 in the aggregate[199]. - As of the date hereof, Parent has no undisclosed liabilities that would be material to the Parent[200]. - Parent has not obtained a loan under the Paycheck Protection Program under the CARES Act[200].