Item 1.01 Entry into a Material Definitive Agreement
On June 26, 2020, Veru Inc. (the "Company") entered into a common stock purchase
agreement (the "Purchase Agreement") with Aspire Capital Fund, LLC, an Illinois
limited liability company ("Aspire Capital"), which provides that, upon the
terms and subject to the conditions and limitations set forth therein, the
Company has the right, from time to time in its sole discretion during the
36-month term of the Purchase Agreement, to direct Aspire Capital to purchase up
to $23.9 million of the Company's common stock (the "Common Stock") in the
aggregate. Upon execution of the Purchase Agreement, the Company issued and sold
to Aspire Capital under the Purchase Agreement 1,644,737 shares of Common Stock
at a price per share of $3.04, for an aggregate purchase price of $5,000,000
(the "Initial Purchase Shares"). Based on information currently available
including giving effect to the sale of the Initial Purchase Shares to Aspire
Capital under the Purchase Agreement, the Company expects its cash and cash
equivalents as of June 30, 2020 to be approximately $13.5 million, compared to
$2.6 million as of March 31, 2020.
Concurrently with entering into the Purchase Agreement, the Company also entered
into a registration rights agreement with Aspire Capital (the "Registration
Rights Agreement"), pursuant to which the Company agreed to file with the
Securities and Exchange Commission (the "SEC") one or more registration
statements (each, a "Registration Statement") as necessary to register for sale
under the Securities Act of 1933, as amended (the "Securities Act"), the Initial
Purchase Shares, the Commitment Shares (as defined below) and the additional
shares of Common Stock that may be issued to Aspire Capital under the Purchase
Agreement. The Company has filed with the SEC a prospectus supplement to the
Company's effective shelf registration statement on Form S-3 (File
No. 333-221120) registering all of the shares of Common Stock that may be
offered to Aspire Capital from time to time under the Purchase Agreement.
Under the Purchase Agreement, on any trading day selected by the Company, the
Company has the right, in its sole discretion, to present Aspire Capital with a
purchase notice (each, a "Purchase Notice"), directing Aspire Capital (as
principal) to purchase up to 200,000 shares of Common Stock per business day at
a per share price (the "Purchase Price") equal to the lesser of the lowest sale
price of the Common Stock on the purchase date or the arithmetic average of the
three lowest closing sale prices for the Common Stock during the ten consecutive
trading days ending on the trading day immediately preceding the purchase date.
In addition, on any date on which the Company submits a Purchase Notice to
Aspire Capital in an amount equal to 200,000 shares of Common Stock and the
closing sale price of the Common Stock is equal to or greater than $0.50 per
share, the Company also has the right, in its sole discretion, to present Aspire
Capital with a volume-weighted average price purchase notice (each, a "VWAP
Purchase Notice") directing Aspire Capital to purchase shares of Common Stock
equal to up to 30% of the aggregate shares of the Common Stock traded on its
principal market on the next trading day (the "VWAP Purchase Date"), subject to
a maximum number of shares of Common Stock the Company may determine. The
purchase price per share pursuant to such VWAP Purchase Notice is generally 97%
of the volume-weighted average price for the Common Stock traded on its
principal market on the VWAP Purchase Date.
The Purchase Price will be adjusted for any reorganization, recapitalization,
non-cash dividend, stock split, or other similar transaction occurring during
the period(s) used to compute the Purchase Price. The Company may deliver
multiple Purchase Notices and VWAP Purchase Notices to Aspire Capital from time
to time during the term of the Purchase Agreement, so long as the most recent
purchase has been completed.
The Purchase Agreement provides that the Company and Aspire Capital shall not
effect any sales under the Purchase Agreement on any purchase date where the
closing sale price of the Common Stock is less than $0.25 per share. There are
no trading volume requirements or restrictions under the Purchase Agreement, and
the Company will control the timing and amount of sales of shares of Common
Stock to Aspire Capital. Aspire Capital has no right to require any sales by the
Company, but is obligated to make purchases from the Company as directed by the
Company in accordance with the Purchase Agreement. There are no limitations on
use of proceeds, financial or business covenants, restrictions on future
fundings, rights of first refusal, participation rights, penalties or liquidated
damages in the Purchase Agreement. In consideration for entering into the
Purchase Agreement, concurrently with the execution of the Purchase Agreement,
the Company issued to Aspire Capital 212,130 shares of Common Stock (the
"Commitment Shares"). The Purchase Agreement may be terminated by the Company at
any time, at its discretion, without any cost to the Company. Aspire Capital has
agreed that neither it nor any of its agents, representatives and affiliates
shall engage in any direct or indirect short-selling or hedging of the Common
Stock during any time prior to the termination of the Purchase Agreement. Any
proceeds the Company receives under the Purchase Agreement are expected to be
used for working capital and general corporate purposes, which may include
research and development, clinical trial and marketing expenditures.
The foregoing is a summary description of certain terms of the Purchase
Agreement and the Registration Rights Agreement and, by its nature, is
incomplete. Copies of the Purchase Agreement and Registration Rights Agreement
are filed herewith as Exhibits 10.1 and 10.2, respectively, to this report and
are incorporated herein by reference. All readers are encouraged to read the
entire text of the Purchase Agreement and the Registration Rights Agreement.
The Company is filing the opinion of its counsel, Reinhart Boerner Van Deuren
s.c., relating to the legality of the shares of Common Stock offered and sold
pursuant to the Purchase Agreement, as Exhibit 5.1 hereto.
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Item 1.02 Termination of a Material Definitive Agreement
Effective June 26, 2020, upon the execution of the Purchase Agreement, the
Company's prior common stock purchase agreement with Aspire Capital dated
December 29, 2017 (the "Prior Purchase Agreement") was terminated. Under the
Prior Purchase Agreement, the Company had the right, upon the terms and subject
to the conditions and limitations set forth therein, from time to time in its
sole discretion during the 36-month term of the Prior Purchase Agreement, to
direct Aspire Capital to purchase up to $15.0 million of the Common Stock in the
aggregate. As of the date of termination of the Prior Purchase Agreement, the
Company sold a total of 6,214,343 shares of Common Stock to Aspire Capital under
the Prior Purchase Agreement for aggregate proceeds of $14,999,999. Since
inception of the Prior Purchase Agreement through March 31, 2020, the Company
sold a total of 4,017,010 shares of Common Stock to Aspire Capital under the
Prior Purchase Agreement resulting in proceeds to the Company of $7.8 million.
Subsequent to March 31, 2020 through the termination of the Prior Purchase
Agreement, the Company sold a total of 2,197,333 shares of Common Stock to
Aspire Capital under the Prior Purchase Agreement resulting in proceeds to the
Company of $7.2 million.
Forward-Looking Statements
This report contains "forward-looking statements" as that term is defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements in
this report can be identified by the use of forward-looking words or phrases
such as "anticipate," "believe," "could," "expect, " "intend," "may,"
"opportunity," "plan," "predict," "potential," "estimate," "should, " "will,"
"would" or the negative of these terms or other words of similar meaning. Any
forward-looking statements in this report are based upon the Company's current
plans and strategies and reflect the Company's current assessment of the risks
and uncertainties related to its business and are made as of the date of this
report. The Company assumes no obligation to update any forward-looking
statements contained in this report because of new information or future events,
developments or circumstances. Such forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions, and if any such risks or
uncertainties materialize or if any of the assumptions prove incorrect, our
actual results could differ materially from those expressed or implied by such
statements. Factors that may cause actual results to differ materially from
those contemplated by such forward-looking statements include, but are not
limited to, uncertainties related to market conditions and the satisfaction of
closing conditions related to sales under the Purchase Agreement and the
Company's expectations regarding the use of proceeds therefrom. The Company's
expectation of its cash and cash equivalents as of June 30, 2020 is subject to
uncertainties, including the timing of receipt of payments from customers. This
list is not exhaustive and other risks are detailed in the Company's periodic
reports filed with the SEC, including the Company's Form 10-K for the year ended
September 30, 2019 and subsequent Quarterly Reports on Form 10-Q, which are
available at www.sec.gov.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
The following exhibits are filed herewith:
Exhibit
No. Document
5.1 Opinion of Reinhart Boerner Van Deuren s.c.
10.1 Common Stock Purchase Agreement, dated as of June 26, 2020, between
Veru Inc. and Aspire Capital Fund, LLC.
10.2 Registration Rights Agreement, dated as of June 26, 2020, between
Veru Inc. and Aspire Capital Fund, LLC.
23.1 Consent of Reinhart Boerner Van Deuren s.c. (included in
Exhibit 5.1).
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