ITEM
1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On
February 5, 2018 (“
Closing Date
”), Vera Acquisition LLC, a Utah limited liability company (“
Vera
”),
Biotech Product Services and Research Inc., a Nevada corporation (“
Registrant
”), Albert Mitrani, Ian T. Bothwell,
Maria Mitrani, Bruce Werber and Terrell Suddarth, stockholders and officers of the Registrant (collectively, the “
Controlling
Stockholders
”), Anu Life Sciences, Inc. (“
ANU
”), a Florida corporation and wholly owned subsidiary
of the Registrant, and General Surgical Florida, Inc., a Florida corporation and wholly owned subsidiary of the Registrant (“
GSF
”),
executed an Asset Purchase Agreement (“
Purchase Agreement
”) pursuant to which ANU sold or transferred to Vera
its right, title and interest in certain tangible and other assets associated with its manufacturing operations, including, prepaid
expenses, raw and finished goods inventory, a long term lease for ANU’s laboratory facility in Sunrise, Florida (including
associated security deposits), furniture and equipment, and certain intellectual property rights, and GSF assigned its rights
to certain third-party distribution agreements between GSF and distributors of products manufactured by ANU (“
Sold Assets
”)
in exchange for a cash payment of $950,000 and execution of a long term distribution agreement with the Registrant (“
BPSR
Distribution Agreement
”) which provides BPSR certain exclusive and non-exclusive rights to distribute future products
to be manufactured by Vera, including products that were developed and produced by ANU prior to the Closing Date and additional
products that may be developed and produced by Vera in the future (“
Transaction
”). In connection with the Transaction,
Vera received credit for $100,000 previously paid to ANU for prepaid product supply which was not yet delivered to Vera as of
the Closing date. In addition, in connection with the Transaction, Vera executed employment agreements with Dr. Bruce Werber and
Mr. Terrell Suddarth, the Registrant’s Chief Operating Officer and Chief Technology Officer, respectively, upon the Closing
of the Transaction, under terms and conditions mutually agreed to among the respective parties, and Dr. Werber and Mr. Suddarth
each provided their immediate resignations of all their respective executive and Board of Director positions held with the Registrant
and/or any of the Registrant’s subsidiaries.
ANU
and GSF retained all cash on hand as of the Closing Date and GSF retained all accounts receivable existing at the Closing Date,
the trademark and trademark rights for the name “Organicell” and trademark rights for “Frozen Facelift,”
and certain agreements between GSF and distributors of the ANU products that GSF intends to continue to supply after the Closing
Date pursuant to the BPSR Distribution Agreement. After the completion of the Transaction, the Registrant will still be in the
business of selling and distributing regenerative biologic therapies based on amnion placental tissue derived products to doctors
and hospitals but will now rely on the BPSR Distribution agreement, rather than from products manufactured internally by ANU,
for the supply of these advanced biologically processed cellular and tissue based products, including those same products previously
produced by ANU and newly developed products that may become available from Vera in the future. The term of the Distribution Agreement
commenced on the Closing Date and continues for a term of three (3) years (the “
Initial Term
”). Thereafter,
the Distribution Agreement shall automatically renew for additional one (1) year periods (each a “
Renewal Term
,”
and collectively with the Initial Term, the “
Term
”);
provided, that
, during the one (1) year period
immediately prior to the commencement of each such Renewal Term, Distributor shall have met the Minimum Requirements, subject
to earlier termination by either party upon the other party’s declaration of bankruptcy, material breach that remains uncured
after 30 days’ notice, any governmental authority determines that substantially all of the Products need FDA approval, claim
of patent infringement by a third party.
The
Purchase Agreement required that the cash proceeds at Closing be used to satisfy and extinguish the outstanding debt obligations
related to the Registrant’s 10% Original Issue Discount Secured Convertible Promissory Note, dated March 29, 2017, totaling
approximately $762,477, which were secured by a first priority lien on all of the Registrants assets
1
, including
the Sold Assets, and to be used to pay all of ANU’s remaining trade accounts payable outstanding as of the Closing Date.
In addition, the Purchase Agreement required ANU to fund the placental donor tissue costs that will be required by Vera to process
additional product subsequent to the Closing to replace the shortfall of the actual inventory product amounts as of the Closing
Date and the specified inventory quantities provided for in the Purchase Agreement. The Purchase Agreement also required ANU to
escrow $47,500 (or 5%) of the cash purchase price and for GSF to escrow $47,500 of accounts receivable existing as of the Closing
Date for a period of 90 days subsequent to the Closing Date to cover pre-closing related liabilities of ANU that were not identified
as of the Closing Date, if any, and other obligations of ANU associated with the Purchase Agreement. The Purchase Agreement also
required the Registrant to indemnify Vera for future claims made against Vera related to activities of ANU occurring prior to
the Closing Date and for the Registrant, each of Mr. Albert Mitrani, Ms. Maria Mitrani and Mr. Ian Bothwell, the Registrant’s
Chief Executive Officer, Chief Science Officer and Chief Financial Officer, respectively, agreed to non-compete with Vera activities
in the future other than in performance of the BPSR Distribution Agreement. ANU received approximately $40,022 of the cash purchase
price at closing.
1
The Registrant filed a Current Report on Form 8-K on April 3, 2017, therein disclosing the terms of that certain Securities
Purchase Agreement and 10% Original Issue Discount Secured Convertible Promissory Note and filed copies of such documents as exhibits
thereto.
As
described earlier, in connection with the Transaction, Vera arranged for the employment of Dr. Werber and Mr. Suddarth, the Registrant’s
Chief Operating Officer and Chief Technology Officer, respectively, effective upon the consummation of the Transaction on the
Closing Date. In connection with such employment, Dr. Werber and Mr. Suddarth each entered into a Separation and General Release
Agreement with the Registrant effective upon the closing of the Transaction which provided for their immediate resignation from
positions with the Registrant and any of the Registrant’s subsidiaries, and settlement of all obligations of each party
to the other pursuant to the respective employment agreements, including the release of all rights the Registrant may have held
in any intellectual property of Dr. Werber and Ms. Suddarth and any non-compete restrictions. In connection with such releases,
each Dr. Werber and Mr. Suddarth agreed to forfeit all warrants previously granted and outstanding (a total of 77,150,000 warrants
to purchase shares of common stock of the Registrant), forfeit any and all accrued and unpaid amounts owing under the employment
agreements for past due wages, benefits, severance obligations, unreimbursed expenses and any other obligations owing to one another
as of the Closing Date in exchange for a grant of 7,500,000 unregistered shares of common stock of the Registrant to each of Dr.
Werber and Mr. Suddarth.
The
Board of Directors of the Registrant and ANU made the decision to sell the assets comprising the manufacturing operations operated
by ANU based on; (1) Vera agreeing to provide the Registrant with the BPSR Distribution Agreement that provides BPSR with supply
of all of the same products that were previously produced by ANU under terms that will allow BPSR the ability to realize improved
operating cash flow based on projected sales levels, and (2) the ability for the Registrant to mitigate the substantial ongoing
operating risks associated with the operations of the manufacturing facility, including (a) the lack of adequate working capital
which has prevented the ability of the Registrant to pay wages to any of its key executives since November 2016, and the looming
realization that their services would not remain indefinitely without additional funding, (b) the lack of working capital which
has prevented the ability of the Registrant to hire additional sales and manufacturing personnel and other critically needed staff
and to make required payments to vendors, (c) existing and newly issued FDA guidelines governing ANU’s manufacturing operations
that are projected to require significant additional capital resources to be deployed to satisfactorily meet regulatory requirements
within specified deadlines, (d) continuing difficulties to demonstrate to the Registrant’s current and potential distributors
and customers of the Registrant’s and ANU’s financial stability and ability to remain a going concern and in compliance
with FDA guidelines, important considerations of distributors and customers in selecting suppliers for the products which were
being manufactured and supplied by ANU, and (e) the ability to make the upcoming principal and interest payments due on the Registrant’s
convertible promissory notes which become due and payable in full on March 29, 2018 or sooner, in the event of default. The convertible
promissory notes are secured by all of the Registrant’s assets and any event of default in the future may have a material
adverse impact on ANU’s, GSF’s and the Registrant’s operations.
In
connection with Transaction, the Registrant obtained unanimous recommendation and approval from its Board of Directors and received
executed “Written Consent in Lieu of a Special Meeting of Shareholders” approving the Transaction from holders of
approximately 80% of the total voting stock of the Registrant, comprised of 100% of the holders of the Registrant’s issued
and outstanding Series A Preferred Stock.