Business Context and Reporting Period
This Form 8-K was filed by BioZone Pharmaceuticals, Inc. (not Cocrystal Pharma, Inc.) on September 9, 2013, reporting events occurring on September 3, 2013. The filing details the completion of an asset disposition involving the company's dermatology product line.
Key Financial Metrics and Transaction Details
- Transaction Type: Asset Purchase Agreement (APA) to sell the Glyderm® brand assets.
- Assets Sold: Trademarks, patents, product formulations, domain names, website, and entire inventory of Glyderm® products.
- Buyer: Lautus Pharmaceuticals LLC, a new entity formed by pharmaceutical executives.
- Base Purchase Price: $1,000,000 total, structured as:
- $600,000 payable at closing.
- $200,000 payable six months post-closing.
- $200,000 payable twelve months post-closing.
- Inventory Price: Calculated based on units sold at BZL's non-retail customer price; payment occurs as the buyer resells inventory.
- Future Revenue Stream: A five-year Supply Agreement allows BioZone Laboratories, Inc. (BZL) to manufacture Glyderm® products for Lautus, with no minimum purchase obligation for the buyer.
- Services Agreement: BZL will provide operational support to Lautus for 12 months.
Material Changes and Use of Proceeds
The company divested its entire interest in the Glyderm® brand. Proceeds from the transaction are designated for:
- Repaying a portion of principal and interest on outstanding promissory notes issued to a shareholder in 2012 that are currently in default.
- General working capital purposes.
Outlook, Risks, and Contingencies
- Operational Shift: The company transitions from selling Glyderm® directly to manufacturing it for a third party under a contract with no guaranteed volume.
- Termination Risk: The Supply Agreement can be terminated by the buyer with 90 days' prior written notice.
- Related Parties: The filing states no material relationships exist between the buyer and the company other than this transaction.
- Documentation: Full copies of the APA and Supply Agreement are not included in this filing but will be filed in the subsequent Form 10-Q.
Investor Verification Checklist
- Verify the exact amount of inventory sold and the resulting total consideration received, as the inventory price is variable.
- Confirm the specific terms of the defaulted promissory notes being repaid and the remaining balance after this transaction.
- Review the upcoming Form 10-Q for the full text of the Supply Agreement to assess pricing terms and termination clauses.
- Assess the impact of losing direct sales revenue from Glyderm® versus the potential margin from the new manufacturing contract.