RESPIRERX PHARMACEUTICALS INC. (OTCMKTS:RSPI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On March 28, 2017, RespireRx Pharmaceuticals Inc. (the Company)
entered into Common Stock and Warrant Purchase Agreements
(Purchase Agreement) with each of two accredited investor (each,
a Purchaser and, together with purchasers in the initial closing
under the Private Placement, the Purchasers), to which, the
Company sold units for aggregate cash consideration of $300,000,
with each unit consisting of (i) one share of the Companys Common
Stock, par value $0.001 per share (Common Stock), and (ii) one
Warrant to purchase an additional share of Common Stock (each a
Warrant and collectively, the Warrants). This closing was the
second closing of a private placement of up to $1,500,000 (the
Private Placement), bringing the aggregate amount raised under
the Private Placement as of March 28, 2017 to $350,000.
The initial closing of the Private Placement for $50,000 occurred
on March 10, 2017. The Company filed a Current Report on Form 8-K
in connection with that initial closing on March 16, 2017.
| Closing Date | Number of Shares Issued | Number of Shares Issuable Upon Exercise of Warrants | ||||||
| March 10, 2017 | 20,000 | 20,000 | ||||||
| March 28, 2017 | 120,000 | 120,000 | ||||||
| Total | 140,000 | 140,000 | ||||||
The price per unit in the private placement (Private Placement)
was $2.50 (the Per Unit Price). The Warrants are exercisable
until 5:00 p.m. on December 31, 2021 and may be exercised at 110%
of the Per Unit Price, or $2.75 per share of Common Stock. The
Warrants have a cashless exercise provision and certain blocker
provisions limiting the percentage of shares of Common Stock of
the Company that the purchaser can hold upon exercise. The
Warrants are also subject to a call by the Company at $0.001 per
share upon ten (10) days written notice if the Companys Common
Stock closes at 200% or more of the Unit Purchase Price for any
five (5) consecutive trading days. The Purchasers were
non-affiliated investors. In total, 120,000 shares of Common
Stock were purchased in the second closing of the Private
Placement, together with Warrants to purchase an additional
120,000 shares of Common Stock. There may be subsequent closings
with other purchasers until a maximum of $1.5 million has been
raised. Closings may take place until June 30, 2017.
In addition, as set forth in the Purchase Agreement, each
Purchaser has an unlimited number of exchange rights, which are
options and not obligations, to exchange such Purchasers entire
investment (but not less than the entire investment) into one or
more subsequent equity financings (consisting solely of
convertible preferred stock or common stock or units containing
preferred stock or common stock and warrants exercisable only
into preferred stock or common stock) that would be considered as
permanent equity under United States Generally Accepted
Accounting Principles and the rules and regulations of the United
States Securities and Exchange Commission, and therefore
classified as stockholders equity, and excluding any form of debt
or convertible debt (each such financing a Subsequent Equity
Financing). These exchange rights are effective until the earlier
of: (i) the completion of any number of Subsequent Equity
Financings that aggregate at least $15 million of gross proceeds,
or (ii) December 30, 2017. For clarity, an investors entire
investment is the entire amount invested (Investment Amount) (for
purposes of the multiple described below) and all of the Common
Stock and Warrants purchased (for purposes of the exchange) to
the Purchase Agreement, however, if the Warrants have been
exercised in part or in whole on a cashless basis, then the
Investment Amount (for purposes of the multiple described below)
will be the Investment Amount (for purposes of the multiple
described below) and all of the Common Stock initially purchased
to the Purchase Agreement plus any shares of Common Stock issued
to a cashless exercise and any Warrants remaining after such
cashless exercise (for purposes of the exchange), or, if the
Warrants have been exercised for cash, then the entire Investment
Amount will be the amount initially invested plus the amount of
cash paid upon cash exercise (for purposes of the multiple
described below) and all of the Common Stock initially purchased
to the Purchase Agreement plus any shares of Common Stock issued
to the cash exercise and any Warrants remaining after such cash
exercise (for purposes of the exchange).
At the time of a Subsequent Equity Financing, Purchaser has a
right to either: (a) retain the securities purchased or
subsequently acquired in a Subsequent Equity Financing into which
they had previously exchanged, or (b) exchange the all the
securities purchased or acquired in a Subsequent Equity Financing
into which such Purchaser had previously exchanged, into
securities issued in the next Subsequent Equity Financing
(assuming the next Subsequent Equity Financing is one for which
an exchange right is available).
The dollar amount (calculated as a ratio) used to determine the
measurement amount for the exchange into a Subsequent Equity
Financing will be 1.2 times the entire Investment Amount
described above. Under certain circumstances, as described in
Section 2(h) of the Purchase Agreement, the multiple will be 1.4
times the entire Investment Amount described above.
There is a floor price of $1.00 per common share equivalent in
any exchange transaction.
In the case of an Acquisition (as defined in the Purchase
Agreement) in which the Company is not the surviving entity, the
holder of each Warrant would receive from any surviving entity or
successor to the Company, in exchange for such Warrant, a new
warrant from the surviving entity or successor to the Company,
substantially in the form of the existing Warrant and with an
exercise price adjusted to reflect the nearest equivalent
exercise price of common stock (or other applicable equity
interest) of the surviving entity that would reflect the economic
value of the Warrant, but in the surviving entity.
Unlimited piggy-back registration rights have been granted with
respect to the Common Stock, and the Common Stock underlying the
Warrants, unless such Common Stock is eligible to be sold without
volume limits under an exemption from registration under any rule
or regulation of the SEC that permits the holder to sell
securities of the Company to the public without registration.
Placement agent fees, brokerage commissions, finders fees or
similar payments are due and payable in the form of cash and
warrants to qualified referral sources in connection with certain
sales of the shares of Common Stock and Warrants, while other
sales did not result in any fees or commissions. Accordingly, the
amount of such fees, on a percentage basis, varies in each
closing. No such fees were paid to referral sources for the
initial closing. In connection with the second closing, fees
payable to referral sources in cash totaled $20,000, or 6.7% of
the aggregate amount paid for the units sold, and 8,000 warrants
(the warrants issuable to qualified referral sources are referred
to herein as the Placement Agent Warrants) are issuable, or
warrants for that number of shares equal to 6.7% of the number of
shares of Common Stock issued as part of the units, but not the
shares underlying the Warrants. Placement Agent Warrants are
exercisable until December 31, 2021 at $2.75 per share. The
Placement Agent Warrants have a cashless exercise provision. The
placement agent that is due Placement Agent Warrants is Aurora
Capital LLC (Aurora). Both Arnold S. Lippa and Jeff E. Margolis,
officers and directors of the Company, have indirect ownership
interests in Aurora through interests held in its members, and
Jeff E. Margolis is also an officer of Aurora. As a result, both
Arnold S. Lippa and Jeff E. Margolis, or entities in which they
have interests, will receive a portion of the Placement Agent
Warrants awarded in the Private Placement.
The shares of Common Stock and Warrants were offered and sold
without registration under the Securities Act of 1933, as amended
(the Securities Act) in reliance on the exemptions provided by
Section 4(a)(2) of the Securities Act as provided in Rule 506(b)
of Regulation D promulgated thereunder. None of the shares of
Common Stock issued as part of the units, the Warrants, the
Common Stock issuable upon exercise of the Warrants or any
warrants issued to a qualified referral source have been
registered under the Securities Act or any other applicable
securities laws, and unless so registered, may not be offered or
sold in the United States except to an exemption from the
registration requirements of the Securities Act.
This description of the Purchase Agreement, including the form of
Warrant, does not purport to be complete and is qualified in its
entirety by reference to the form of Purchase Agreement
(including the Form of Warrant attached as Exhibit A thereto),
which is included as Exhibit 10.1 to this Current Report on Form
8-K and is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity
Securities.
The information provided in response to Item 1.01 of this report
is incorporated by reference into this Item 3.02. Each Purchaser
of shares of Common Stock and Warrants sold in the Private
Placement made representations to the Company that such Purchaser
met the accredited investor definition of Rule 501 of the
Securities Act, and the Company relied on such representations.
The offer and sale of the shares of Common Stock and Warrants in
the Private Placement were made in reliance on the exemption from
registration afforded by Section 4(a)(2) of the Securities Act as
provided in Rule 506(b) of Regulation D promulgated thereunder.
The offering of the shares of Common Stock and Warrants in the
Private Placement was not conducted in connection with a public
offering, and no public solicitation or advertisement was made or
relied upon by any investor in connection with the offering. This
Current Report on Form 8-K shall not constitute an offer to sell
or the solicitation of an offer to buy any securities, nor shall
such securities be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
A list of exhibits required to be filed as part of this report is
set forth in the Exhibit Index, which is presented elsewhere in
this document, and is incorporated herein by reference.
Cautionary Statement Regarding Forward-Looking
Statements
This report contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 and the
Company intends that such forward-looking statements be subject
to the safe harbor created thereby. In some cases,
forward-looking statements may be identified by words including
anticipates, believes, intends, estimates, expects, plans, and
similar expressions include, but are not limited to, statements
regarding (i) future research plans, expenditures and results,
(ii) potential collaborative arrangements, (iii) the potential
utility of the Companys proposed products, and (iv) the need for,
and availability of, additional financing.
The forward-looking statements included herein are based on
current expectations that involve a number of risks and
uncertainties. These forward-looking statements are based on
assumptions regarding the Companys business and technology, which
involve judgments with respect to, among other things, future
scientific, economic and competitive conditions, and future
business decisions, all of which are difficult or impossible to
predict accurately and many of which are beyond the Companys
control. Although the Company believes that the assumptions
underlying the forward-looking statements are reasonable, actual
results may differ materially from those set forth in the
forward-looking statements. In light of the significant
uncertainties inherent in the forward-looking information
included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person
that the Companys objectives or plans will be achieved.
Factors that could cause or contribute to such differences
include, but are not limited to, regulatory policies or changes
thereto, available cash, research and development results,
competition from other similar businesses, and market and general
economic factors. This discussion should be read in conjunction
with the Companys Annual Report on Form 10-K for the fiscal year
ended December 31, 2015, including the section entitled Item 1A.
Risk Factors. The Company does not intend to update or revise any
forward-looking statements to reflect new information, future
events or otherwise.
About RESPIRERX PHARMACEUTICALS INC. (OTCMKTS:RSPI)
RespireRx Pharmaceuticals Inc., formerly Cortex Pharmaceuticals, Inc., is engaged in the discovery, development and commercialization of pharmaceuticals for the treatment of neurological and psychiatric disorders. The Company is focused on the clinical development in the areas of respiratory disorders, including respiratory depression and sleep apnea. It is engaged in research and clinical development of a class of compounds referred to as ampakines, which act to enhance the actions of the excitatory neurotransmitter glutamate at a-amino-3-hydroxy-5-methyl-4-isoxazolepropionic acid (AMPA) glutamate receptors. Its ampakines, including CX717, CX1739 and CX1942, were efficacious in treating drug induced respiratory depression caused by opioids or certain anesthetics without offsetting the analgesic effects of the opioids or the anesthetic effects of the anesthetics. Its dronabinol is indicated for the treatment of sleep-related breathing disorders, including sleep apnea. RESPIRERX PHARMACEUTICALS INC. (OTCMKTS:RSPI) Recent Trading Information
RESPIRERX PHARMACEUTICALS INC. (OTCMKTS:RSPI) closed its last trading session down -0.01 at 3.79 with 713 shares trading hands.