Business Context and Reporting Period
This Form 8-K is filed by Spherix Incorporated (not Dominari Holdings Inc.) on December 5, 2019, reporting the completion of an asset acquisition. The filing details the closing of the acquisition of substantially all assets, properties, and rights of CBM BioPharma, Inc. ("CBM") pursuant to an Asset Purchase Agreement originally dated May 15, 2019, and amended on December 5, 2019.
Key Financial Metrics and Transaction Details
The total consideration for the acquisition is valued at $8,000,000, structured as follows:
- Cash Consideration: $1,000,000. This amount is currently retained by Spherix and is payable to CBM only upon the consummation of a "Qualified Financing" (defined as equity financing with gross proceeds exceeding $2,000,000). Upon such financing, Spherix retains the first $2,000,000 of proceeds, and CBM receives 100% of proceeds in excess of that amount until the $1,000,000 obligation is satisfied.
- Stock Consideration: 1,939,058 shares of Spherix Common Stock valued at $3.61 per share.
- Escrow Arrangement: 7% of the stock consideration (135,734 shares) was deposited with VStock Transfer, LLC, to be held in escrow for six months to satisfy indemnification obligations. The remaining 93% (1,803,324 shares) was issued immediately to CBM.
The filing text does not provide specific revenue, profit, cash flow, margin, debt, or liquidity metrics for the reporting period, as this is a transactional report rather than a periodic financial statement.
Material Changes and Amendments
On December 5, 2019, Spherix entered into Amendment No. 2 to the Purchase Agreement, resulting in the following material changes:
- Removal of Preferred Stock: References to the issuance of Series L Convertible Preferred Stock were removed. All stock consideration is now in the form of Common Stock.
- Escrow Adjustment: The percentage of stock consideration held in escrow was adjusted to 7%.
- Regulatory Filing Removal: The requirement to file a Certificate of Designations for the Series L Preferred Stock with the Delaware Secretary of State was removed.
Outlook, Risks, and Contingencies
Contingent Liability: The $1,000,000 cash payment is contingent upon Spherix securing a Qualified Financing. If no such financing occurs, the cash consideration remains unpaid.
Indemnification Risk: A portion of the stock consideration (135,734 shares) is held in escrow for six months to cover potential indemnification claims arising from the acquisition.
Management Commentary: The filing references a press release issued on December 10, 2019, announcing the closing, but does not include specific forward-looking guidance or management commentary within the text of this 8-K.
Investor Verification Checklist
- Verify the current status of the $1,000,000 contingent cash payment and whether a Qualified Financing has occurred since December 2019.
- Confirm the release of the 135,734 shares held in escrow after the six-month period.
- Review the full text of the Asset Purchase Agreement (Exhibits 10.1, 10.2, and 10.3) for detailed indemnification terms and representations.
- Check subsequent filings for any equity financing activities that would trigger the cash payment obligation.