8-K: SensaSure Technologies Amends Merger Agreement, Extends Termination Date to June 30, 2024

SensaSure Technologies Inc. has amended its merger agreement with Verde Bio Holdings, extending the termination date to June 30, 2024, and clarifying share issuance details to Spartan Capital Securities.

Summary

• SensaSure Technologies Inc. has entered into a side letter agreement with Spartan Capital Securities, LLC, regarding the issuance of shares related to the merger with Verde Bio Holdings, Inc.
• Spartan is set to receive 5,000,000 shares of SensaSure common stock, which will represent 5.1% of the fully diluted shares after the merger.
• The side letter includes an anti-dilution provision, ensuring Spartan's ownership doesn't fall below 4.0% after an uplist event, unless due to their own sales.
• An amendment to the merger agreement extends the termination date from February 1, 2024, to June 30, 2024.
• The amendment also clarifies SensaSure's obligation to issue shares to Spartan in the form of common stock.
• The company intends to file a registration statement on Form S-4, including a joint proxy statement, with the SEC.

Sentiment

Score: 6

Explanation: The document is neutral to slightly positive. While there are risks and delays, the company is taking steps to complete the merger and protect its advisors' interests. The extension of the termination date is a negative, but the clarification of the share issuance is a positive.

Positives

• The anti-dilution clause protects Spartan's investment, ensuring a minimum 4.0% ownership after an uplist event.
• The extension of the merger termination date provides more time to complete the transaction.
• The clarification of share issuance to Spartan reduces ambiguity in the merger agreement.

Negatives

• The merger has been delayed with the termination date extended to June 30, 2024.
• The potential for dilution exists if the company needs to issue more shares to maintain Spartan's ownership percentage.

Risks

• The merger may not be completed by the new termination date of June 30, 2024.
• The company may face challenges in obtaining regulatory approvals for the merger.
• The company may not be able to maintain its listing on the OTC market prior to the merger.
• The company may need to raise additional capital to execute its business plan.
• The post-merger company may not be approved for listing on a major exchange.
• The company may not achieve or sustain profitability.

Future Outlook

The company is focused on completing the merger with Verde Bio Holdings and uplisting to a major exchange. The company is also preparing a registration statement and proxy statement for the merger.

Management Comments

• The company confirmed its obligation to issue the Spartan Shares pursuant to the Merger Agreement.
• The company agreed that, subject to the terms and conditions of the Side Letter Agreement and the Merger Agreement, and applicable securities laws, if upon an Uplist Event Spartans (and/or its designees) percentage ownership of Company Common Stock is less than 4.0% of the number of shares of Company Common Stock issued and outstanding (and not as a result of Spartan and/or its designees selling, transferring or otherwise disposing of shares of Company Common Stock), then the Company will promptly issue to Spartan a number of shares of Company Common Stock such that Spartan will own 4.0% of the number of shares of Company Common Stock issued and outstanding on a fully-diluted basis immediately following the consummation of such Uplist Event.

Industry Context

The merger is part of a broader trend of consolidation in the biotechnology and life sciences sectors. Companies are seeking to combine resources and expertise to accelerate growth and development.

Comparison to Industry Standards

• The share issuance to Spartan is a common practice in mergers and acquisitions, often used to compensate advisors for their services.
• The anti-dilution clause is a standard protection for investors, ensuring their ownership stake is not significantly reduced by future share issuances.
• The extension of the termination date is not uncommon in complex mergers, allowing more time to address regulatory and other hurdles.
• Comparable companies in the biotech space often use similar structures for mergers and advisor compensation, such as the merger between Jazz Pharmaceuticals and GW Pharmaceuticals, which included advisor fees and share issuances.

Stakeholder Impact

• Shareholders of SensaSure and Verde will be impacted by the merger, including the exchange of shares.
• Spartan Capital Securities will receive shares in exchange for their services.
• Employees of both companies may be affected by the merger.

Next Steps

• The company will file a registration statement on Form S-4 with the SEC.
• The company will prepare and distribute a joint proxy statement to shareholders.
• The company will seek shareholder approval for the merger.
• The company will work to complete the merger by the new termination date of June 30, 2024.

Key Dates

Keywords

Merger Agreement, SensaSure Technologies, Verde Bio Holdings, Spartan Capital Securities, Share Issuance, Uplist Event, Anti-dilution, Termination Date, Proxy Statement, Registration Statement