Item 1.01 Entry into Material Definitive Agreement
On July 30, 2021, Adamis Pharmaceuticals
Corporation (the “Company”) and the Company’s wholly-owned subsidiary US Compounding, Inc. (“USC”)
entered into an Asset Purchase Agreement (the “Agreement”) effective as of July 30, 2021 (the “Effective
Date”) with Fagron Compounding Services, LLC d/b/a Fagron Sterile Services (the “Purchaser”), providing for the
sale and transfer by USC and the purchase by the Purchaser, effective as of the Effective Date, of certain assets of USC related to
its human compounding pharmaceutical business (the “Business”), including certain customer information and information
on products sold to such customers by USC (together, the “Book of Business”), including related formulations, know-how,
and expertise regarding the compounding of pharmaceutical preparations, clinical support knowledge and other data and certain other
information relating to the customers and products (collectively, the “Assets”). After the Effective Date, Purchaser may
use the Book of Business to secure customers for its products and services and may otherwise use the Book of Business. Pursuant to
the Agreement, the Purchaser will not assume any liabilities of USC, and the transaction does not include the sale or transfer of
any USC equipment, buildings or real property, or any products, information, agreements, relationships or other assets relating to
the veterinary business of USC.
The Agreement provides that the consideration
payable by the Purchaser to the Company for the Assets sold and transferred will consist of the following amounts: (i) a payment of $107,500
on the Effective Date; and (ii) monthly payments in an amount equal to (a) two (2.0) times the amount actually collected by Purchaser
or its affiliates for sales of products or services made to certain identified customers included in the Book of Business during the 12-month
period following the Effective Date (the “Payment Term”), and (b) a lower multiple of the amount actually collected by Purchaser
or its affiliates for sales of products or services made to certain other customers included in the Book of Business. In addition, to
the extent that such product or service is supplied by USC pursuant to the supply arrangement provided for by the Agreement (the “Supply
Agreement”), the Purchaser agreed to reimburse USC for the cost of such product or service, as set forth in the Supply Agreement.
The Agreement provides that during the Payment Term, the Purchaser will maintain the Book of Business and use commercially reasonable
efforts to maximize the consideration payable to the Company and collect amounts outstanding related to sales of products or services
made to customers included in the Book of Business. However, the Agreement does not provide for any minimum purchase price consideration
to the Company or USC. Accordingly, there is no assurance as to the amount of purchase price consideration that the Company or USC may
ultimately receive as a result of the transactions contemplated by the Agreement. Certain of the customers included in the Book of Business
may decide to not purchase products or to reduce their purchases of products from Purchaser after the Effective Date, and Purchaser may,
in good faith, decide not to change its product mix from those products offered by Purchaser as of the Effective Date and may decide not
to carry all of the products offered and sold by USC as part of the Business prior to the Effective Date.
The Agreement includes certain restrictive covenants
of the Company and USC, including noncompetition provisions, pursuant to which, for a period of five years from the Effective Date (the
“Restricted Period”), the Company and USC have agreed not to solicit any Business from any customers included in the Book
of Business, including employment by, ownership of, assistance to, contracting with, or in any other way supporting or working with an
outsourcing facility registered pursuant to Section 503B of the Food Drug and Cosmetic Act with the intent to compete against Purchaser
in the Business; however, (a) the sale of equipment by USC or its affiliates, (b) the fulfillment by USC or the Company of their respective
duties under the Agreement and the Supply Agreement, and (c) the passive ownership by USC or its affiliates of less than 5% of the outstanding
stock of any publicly-traded corporation, are not prohibited by the restrictive covenants.
Each of the Agreement and the Supply Agreement
includes standard indemnification provisions, and a number of other covenants and agreements of the parties concerning the transactions
contemplated by the Agreement and the Supply Agreement, including concerning cooperation and assistance, confidentiality, non-disparagement
and the transfer of information and documents, compliance with laws, and personnel matters.
In connection with the transaction, the Company
will pay a fee to a financial advisor of $700,000, and may pay an additional amount depending on the total consideration received by the
Company, in connection with advisory services relating to the transaction.
The preceding description of the Agreement does
not purport to be complete, and is qualified in its entirety by reference to the Agreement, including the Supply Agreement, which is filed
as an Exhibit to this Current Report on Form 8-K. The representations, warranties and covenants contained in the Agreement have been made
solely for the benefit of the parties to the Agreement and: (i) may be intended not as statements of fact but rather as a way of allocating
risk among the parties if those statements prove to be inaccurate; and (ii) were made only as of the date of the Agreement or such other
dates as may be specified in the Agreement and are subject to more recent developments. Accordingly, any such representations and warranties
should not be relied upon as characterizations of the actual state of facts or affairs on the date they were made or at any other time.