Business Context and Reporting Period
This Form 8-K, dated November 25, 2014, reports the completion of a reverse merger transaction. Cocrystal Holdings, Inc. (the "Company") merged with and into Cocrystal Pharma, Inc. (formerly Cocrystal Discovery, Inc.), with Cocrystal Pharma, Inc. becoming the surviving publicly traded entity. The Company also acquired RFS Pharma, LLC through a subsidiary merger. As a result of the transaction, the Company changed its name to Cocrystal Pharma, Inc., and the former public company was renamed Cocrystal Merger Sub, Inc.
Key Financial Metrics and Capital Structure
The filing does not provide specific revenue, profit, cash flow, or debt figures for the reporting period. The primary financial disclosures relate to capital structure changes:
- Series A Preferred Stock: The Company issued 1,000,000 shares of Series A Convertible Preferred Stock to RFS Pharma members.
- Conversion Terms: Series A converts to common stock at an initial rate of 340.760802 shares per Series A share upon a capital increase. If not effected by July 1, 2015, the conversion rate increases by 3% initially, then 1% monthly thereafter.
- Dividends and Redemption: Beginning July 1, 2015, Series A accrues dividends at 12% per year. Shares are redeemable for cash starting November 25, 2015, based on the conversion amount and the 30-day volume-weighted average trading price preceding the merger.
- Equity Incentives: The Company assumed the Cocrystal 2007 Equity Incentive Plan and converted RFS Pharma options. Total outstanding options are now 19,600,102 shares. New options issued to former RFS Pharma holders cover 16,542,538 shares with exercise prices between $0.05 and approximately $0.15.
Material Changes Versus Prior Period
The filing details a fundamental change in corporate structure and ownership rather than operational performance changes:
- Corporate Identity: The reporting entity changed from Cocrystal Holdings, Inc. to Cocrystal Pharma, Inc.
- Board Composition: The Board of Directors was reconstituted to seven members. New appointees include Dr. David S. Block, Dr. Phillip Frost, Dr. Jane Hsiao, Mr. Jeffrey Meckler, Mr. Steven Rubin, Dr. Raymond Schinazi, and Dr. Gary Wilcox. Drs. Schinazi and Wilcox serve as Co-Chairmen.
- Executive Leadership: Gary Wilcox was appointed Chief Executive Officer and Secretary; Sam Lee was appointed President; and Gerald McGuire was appointed Chief Financial Officer and Treasurer.
- Departures: Dr. Roger Kornberg and Dr. Sam Lee resigned from the Cocrystal board effective November 22, 2014, prior to the merger.
Guidance, Risks, and Contingencies
The filing does not contain forward-looking financial guidance or operational outlook. Key contingencies and risks identified include:
- Capital Increase Requirement: The conversion of Series A and Series B preferred stock is contingent on the Company obtaining sufficient authorized capital. Failure to do so by July 1, 2015, triggers an increase in the conversion rate, diluting existing shareholders.
- Transfer Restrictions: A Stockholder Rights Agreement imposes transfer restrictions on shares and requires security holders to vote for the capital increase and elect specific board designees.
- Unregistered Securities: The Series A shares and options issued to former RFS Pharma holders were sold under Section 4(a)(2) and Rule 506(b) exemptions and cannot be resold without registration or an exemption.
- Financial Reporting: Financial statements required by Item 9.01 are not included in this filing and will be submitted by amendment within 71 calendar days.
Investor Verification Checklist
- Verify the status of the "Capital Increase" required to convert Series A and Series B preferred stock before the July 1, 2015 deadline.
- Review the full text of the Merger Agreement (Exhibit 2.1) and Series A Certificate of Designation (Exhibit 3.1) for detailed liquidation preferences and voting rights.
- Monitor the upcoming filing of financial statements (due within 71 days) to assess the combined entity's liquidity and cash position.
- Confirm the vesting schedules and exercise prices of the 19.6 million outstanding options to evaluate potential dilution.
- Check for any subsequent filings regarding the resignation of Dr. Sam Lee, who resigned as a director but was appointed President.