Enhance Skin Products Inc (OTCMKTS:EHSK) and Integumen Limited (“Integumen”) entered into an Asset Purchase Agreement (the “APA”). Under the APA the Company will sell substantially all of its assets to Integumen. The consideration payable to the Company is a sum equal to £3,030,000 ($3,939,000), subject to adjustment depending on the level of Enhance’ s current liabilities as at completion. The consideration is comprised of £2,715,000 ( $3,529,500), subject to any adjustment under the APA and less all sums due and owing under the secured promissory note issued by the Company to Integumen on July 7, 2016 (the “Note”), to be settled by the allotment of ordinary shares of Integumen at a price of £1 per share at par credited as fully paid, and the assumption of certain liabilities of the Company up to the value of £315,000 ($409,500 ). In addition, Integumen will assume the costs of Enhance from the date of signature of the APA until Completion and certain post completion costs.
Under the terms of the APA the Company has given Integumen customary warranties and indemnities in respect of the Company’s business and assets and the Company has received customary warranties and indemnities from Integumen in respect of Integumens’s business and assets.
The completion of the APA is subject to the Company (i) obtaining the consent of such number of shareholders as is required in order to approve the sale of its assets; (ii) complying with its obligations under the Securities and Exchange Act of 1934 in respect of the sale of its assets, including but not limited to the issue of a Schedule 14C; (iii) the release of the related party security interests on the issue of shares to related parties under the respective loan agreements, security agreements, consultancy agreements and employment agreements; and (iv) meeting other customary closing conditions.
Although the Company understands that Integumen intends to complete the above transaction and related transactions there is no guarantee that all or any of these will be completed. If Integumen is unsuccessful in acquiring the other businesses and/or concluding a fundraise, management intends to seek alternative wider strategic collaborations and in parallel pursue alternative funding structures including debt and equity finance, asset sales, licensing and marketing partnerships. The Company would seek to appoint a broker to help it identify suitable alternative collaboration partners.
The UK Pound Sterling (£) amounts have been converted into US dollars at the closing US$/£ sterling interbank spot rate on September 30, 2016 of 1.3 for the convenience of readers.
The foregoing description of APA and the Note does not purport to be complete and is qualified in its entirety by reference to the complete text of the APA which is filed as Exhibit 10.1 hereto and to the complete text of the Note which was filed as Exhibit 10.2 to the Company’s current report on Form 8-K which was filed on July 12, 2016, both of which are incorporated herein by reference.
