Item 1.01
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Entry into a Material Definitive Agreement
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On September 22, 2016, Apricus Biosciences, Inc. (the
Company) entered into a Securities Purchase Agreement (the Purchase Agreement) with certain investors (the Investors) for the sale by the Company of 13,142,858 shares (the Common Shares) of the
Companys common stock, par value $0.001 per share (the Common Stock), at a purchase price of $0.35 per share (the Purchase Price). Concurrently with the sale of the Common Shares, pursuant to the Purchase Agreement the
Company also sold warrants to purchase 0.75 shares of Common Stock (the Warrants). The aggregate gross proceeds for the sale of the Common Shares and Warrants will be approximately $4.6 million. Subject to certain ownership limitations,
the Warrants will be exercisable six months following the closing date at an exercise price equal to $0.45 per share of Common Stock, subject to adjustments as provided under the terms of the Warrants. The Warrants are exercisable for five years
from the initial exercise date. The closing of the sales of these securities under the Purchase Agreement is expected to occur on September 28, 2016.
The net proceeds to the Company from the transactions, after deducting the placement agents fees and expenses but before paying the Companys
estimated offering expenses, and excluding the proceeds, if any, from the exercise of the Warrants, are expected to be approximately $4.2 million. The Company intends to use the net proceeds from the transactions for general corporate and working
capital purposes.
The Common Shares (but not the Warrants or shares issuable upon exercise of the Warrant) were offered and sold by the Company pursuant
to an effective shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission (the SEC) on August 12, 2014 and subsequently declared effective on August 25, 2014 (File
No. 333-198066) (the Registration Statement), and a related prospectus.
The Warrants and the shares issuable upon exercise of the
Warrants are being sold and issued 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 transactions not
involving a public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.
The representations, warranties and covenants contained in the Purchase Agreement were made solely for the benefit of the parties to the Purchase Agreement.
In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the Purchase Agreement and not as statements of fact, and (ii) may apply standards of materiality in a way
that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the Purchase Agreement is filed with this report only to provide investors with information regarding the terms of
transaction, and not to provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of
facts or condition of the Company. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in
public disclosures.
The Company also entered into an engagement letter (the Engagement Letter) on September 20, 2016 with
Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC (Wainwright), pursuant to which Wainwright agreed to serve as exclusive placement agent for the issuance and sale of the Common Shares and Warrants. The Company has
agreed to pay Wainwright an aggregate fee equal to 7.0% of the gross proceeds received by the Company from the sale of the securities in the transaction. Pursuant to the Engagement Letter, the Company also agreed to grant to Wainwright or its
designees warrants to purchase up to 5.0% of the aggregate number of shares of Common Stock sold in the transactions (the Wainwright Warrants). The Engagement Letter has a six month tail and right of first offer period (subject to
certain limitations), indemnity and other customary provisions for transactions of this nature. The Wainwright Warrants have substantially the same terms as the Warrants, except that the Wainwright Warrants will have a term of five years and an
exercise price equal to 125% of the Purchase Price. The Wainwright Warrants and the shares issuable upon exercise of the Wainwright Warrants will be issued in reliance on the exemption from registration provided by Section 4(a)(2) of the
Securities Act as transactions not involving a public offering and in reliance on similar exemptions under applicable state laws. The Company will also pay Wainwright a reimbursement for legal fees and expenses of the placement agent in the amount
of $50,000.
The forms of the Purchase Agreement and the Warrant, as well as the Engagement Letter, are filed as Exhibits
10.1, 4.1 and 10.2, respectively, to this Current Report on Form 8-K. The foregoing summaries of the terms of these documents are subject to, and qualified in their entirety by, such documents, which are incorporated herein by reference.