Business Context and Reporting Period
This Form 6-K filing by Therapix Biosciences Ltd. (not Scisparc Ltd.) covers the month of November 2018, with the report dated November 27, 2018. The filing discloses a private placement transaction entered into on November 23, 2018, involving the issuance of unsecured convertible debentures to YA II PN Ltd., a fund managed by Yorkville Advisors Global.
Key Financial Metrics
The filing does not provide standard financial statements such as revenue, profit, cash flow, or operating margins. The primary financial data relates to the capital raise:
- Total Debt Capacity: Up to $2.5 million in principal amount of unsecured convertible debentures.
- Initial Tranche: $1.5 million issued on November 23, 2018.
- Interest Rate: 5% per annum, payable at maturity (12 months from issuance).
- Commitment Fee: 9,171 ADSs issued to the investor for the first tranche.
- Conversion Price: Lower of $7.00 or 95% of the lowest daily VWAP during the 5 trading days preceding conversion.
Material Changes
The material change reported is the execution of the Securities Purchase Agreement and Registration Rights Agreement. This transaction introduces new debt obligations and potential equity dilution. The deal is structured in three tranches: the initial $1.5 million and two subsequent tranches of $500,000 each. The issuance of the remaining tranches is conditional on the passage of time or specific triggering events, including the termination of the previously announced acquisition by FSD Pharma Inc. or the date of March 1, 2019.
Outlook, Risks, and Contingencies
Acquisition Contingency: The debentures are tied to the pending acquisition of Therapix by FSD Pharma Inc. Upon consummation of this acquisition, the debentures will automatically convert into shares of FSD Pharma Inc. as if converted at $7.00 per ADS. The investor has agreed to vote in favor of this acquisition.
Redemption Rights: If the ADS trading price remains below $7.00, the Company retains the right to redeem the debentures at 110% of the principal plus accrued interest.
Risks: The filing includes standard forward-looking statement disclaimers, noting that actual results may differ due to risks associated with the proposed FSD transaction and other factors detailed in the Company's Form 20-F. The securities sold are unregistered under the U.S. Securities Act of 1933.
Investor Verification Checklist
- Verify the current status of the acquisition by FSD Pharma Inc., as it triggers automatic conversion of the debt.
- Confirm the current trading price of ADSs relative to the $7.00 conversion floor and redemption threshold.
- Review the full text of the Securities Purchase Agreement (Exhibit 10.1) for specific conditions regarding the two remaining $500,000 tranches.
- Assess the impact of the 9,171 ADS commitment fee and potential future fees on existing shareholder dilution.
- Check for any subsequent filings regarding the redemption of the debentures if the stock price remains below $7.00.