Cibus, Inc. current report, 31 May 2023

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Business Context and Reporting Period

This Form 8-K reports the completion of a business combination between Calyxt, Inc. and Cibus Global, LLC on May 31, 2023. Following the transaction, the registrant changed its name from Calyxt, Inc. to Cibus, Inc. The combined entity operates under an "Up-C" structure, where the Company holds all Cibus Common Units, and Class A Common Stock (voting and economic rights) and Class B Common Stock (voting only) are issued to shareholders. Legacy Calyxt stockholders own approximately 4.8% of the combined company, while legacy Cibus unitholders own approximately 95.2%.

Key Financial Metrics and Capital Structure

This filing is a current report regarding a corporate transaction and does not contain audited financial statements, revenue, profit, or cash flow data for the reporting period. Key capital structure metrics disclosed include:

  • Stock Issuance: Approximately 16,527,484 shares of Class A Common Stock were issued to Cibus unitholders.
  • Total Outstanding: Approximately 17,601,881 shares of Class A Common Stock were outstanding immediately following the merger.
  • Reverse Stock Split: Calyxt effected a 1-for-5 reverse stock split effective May 31, 2023.
  • Trading Symbol: The company commenced trading under the ticker symbol "CBUS" on The Nasdaq Capital Market on June 1, 2023.
  • Unregistered Securities: 4,642,635 Up-C Units were issued in reliance on Section 4(a)(2) of the Securities Act.

Material Changes Versus Prior Period

The filing details a fundamental transformation of the registrant's corporate structure and operations:

  • Corporate Identity: The company name changed from Calyxt, Inc. to Cibus, Inc.
  • Ownership Structure: The company transitioned to an Up-C structure. The Company's only material asset is now Cibus Common Units. Legacy Calyxt shareholders hold a minority stake (4.8%) compared to legacy Cibus holders (95.2%).
  • Management and Board: The entire Board of Directors and executive officers were replaced. Former Calyxt leadership (including CEO Michael A. Carr) resigned, and Cibus leadership (including Rory Riggs as CEO) assumed control.
  • Accounting Firm: The Company dismissed Ernst & Young LLP and appointed BDO USA, LLP as its independent registered public accounting firm.
  • Agreements: The Company entered into a Registration Rights Agreement, Exchange Agreement, and Tax Receivable Agreement. It also terminated its Management Services Agreement with Cellectis and entered into an amended license agreement.

Guidance, Outlook, Risks, and Unusual Items

Management Commentary and Outlook: The filing includes forward-looking statements regarding the anticipated benefits of the transaction, future financial position, and market growth. Management expects to realize benefits from the combination but notes that actual results may differ materially.

Risks and Contingencies: The filing highlights significant risks, including:

  • Failure to realize anticipated benefits of the transaction.
  • Challenges in obtaining additional funding to finance activities.
  • Dependence on distributions from Cibus to pay taxes and cover corporate expenses.
  • Regulatory developments regarding gene-editing processes.
  • Intellectual property protection challenges and competition.
  • Going Concern: The prior auditor's report for Calyxt (fiscal years 2021 and 2022) contained a "going concern" qualification due to recurring losses and cash utilization, though the transaction is intended to resolve this.

Unusual Items: The transaction involved a complex series of mergers (Blocker Mergers and Cibus Merger) and the creation of a Tax Receivable Agreement requiring the Company to pay 85% of net income tax savings to Electing Members.

Important Facts for Investor Verification

  • Ownership Dilution: Verify the 4.8% ownership stake retained by legacy Calyxt shareholders versus the 95.2% held by legacy Cibus unitholders.
  • Up-C Structure Implications: Understand the mechanics of the Up-C structure, specifically that the Company holds Cibus Common Units and that Class B shares have voting rights but no economic rights.
  • Tax Receivable Agreement (TRA): Review the TRA terms, as the Company is obligated to pay 85% of tax savings to Electing Members, which could impact future cash flows.
  • Going Concern Status: Note the historical "going concern" warning in Calyxt's prior audits and assess the post-transaction liquidity position.
  • Executive Compensation: Review the new employment agreements for significant severance provisions (e.g., 18-24 months of base salary upon termination without cause or change in control) and transaction-related equity awards.
  • Lock-Up Periods: Confirm the six-month lock-up agreement entered into by directors and officers restricting the transfer of 90% of their shares.