Blueprint
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): August 31,
2018
WOUND
MANAGEMENT TECHNOLOGIES, INC.
(Exact
name of registrant as specified in its charter)
Texas
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000-11808
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59-2219994
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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1200
Summit Avenue, Suite 414
Fort
Worth, Texas
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76102
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(Address
of principal executive offices)
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(zip
code)
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Registrant’s
telephone number, including area code: (817)-529-2300
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): August 31,
2018
WOUND
MANAGEMENT TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Registrant’s telephone number, including area code:
(817)-529-2300
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth company ☐
If an emerging growth company, indicate by
checkmark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Wound
Management Technologies, Inc., a Texas corporation doing business
as WNDM Medical Inc. (“WNDM”), entered into definitive
agreements, effective August 28, 2018, to transfer its current
operations that market its principal product,
CellerateRX® Activated
Collagen®, to a newly
formed limited liability company, Cellerate, LLC
(“Cellerate”) in which WNDM holds a 50% ownership
interest. The remaining 50% ownership interest is held by
CellerateRX, LLC (“CGI”), which is owned indirectly by
The Catalyst Group, a middle market private equity firm with
offices in Houston and Austin, Texas. Cellerate will conduct
operations with an exclusive sublicense to distribute
CellerateRX® Activated
Collagen® Adjuvant into the wound care and surgical markets in
the United States, Canada and Mexico.
WNDM
will not consolidate the operations and financial position of
Cellerate with that of WNDM. In accordance with generally accepted
principles, WNDM will account for Cellerate’s operations on
the equity method of accounting, which will consist of a single
line item on WNDM’s Statement of Operations and on its
Balance Sheet that reflect WNDM’s 50% ownership interest in
Cellerate.
Contribution
Agreement
Wound
Care Innovations, LLC (“Wound Care”), a wholly owned
subsidiary of WNDM, transferred to Cellerate all of its existing
product inventories and certain Wound Care trademarks and UPC
numbers in exchange for its 50% ownership interest in Cellerate.
Additionally, as part of the transaction, WNDM issued a 30-month
promissory note to CGI in the principal amount of $1,500,000,
bearing interest at a 5% annual interest rate, compounded
quarterly. Interest is payable quarterly, but may be deferred at
WNDM’s election to the maturity of the Note. Outstanding
principal and interest is convertible at CGI’s option into
shares of WNDM common stock at a conversion price of $.09 per
share.
CGI
transferred to Cellerate in exchange for its 50% ownership interest
an exclusive sublicense to distribute CellerateRX® Activated
Collagen® Adjuvant into the wound care and surgical markets in
the United States, Canada and Mexico. The term of the sublicense
extends through August 2028, with automatic one-year renewals
through December 31, 2049, subject to termination at the end of any
renewal term by CGI or Wound Care on six-months'
notice.
The
agreed upon fair market value of the contributions to Cellerate by
each of Wound Care and CGI is $2,000,000. Wound Care and CGI will
each provide regulatory and operational support to
Cellerate.
The
foregoing summary of the Contribution Agreement does not purport to
be complete and is qualified in its entirety by reference to the
Contribution Agreement. WNDM expects to file a copy of the
Contribution Agreement as an exhibit to its Quarterly Report on
Form 10-Q for its quarter ending September 30, 2018.
Operating Agreement
Cellerate’s
Operating Agreement provides for the business and affairs of
Cellerate to be managed by a Board of Managers consisting of two
persons. CGI and Wound Care each has the right to appoint one
person to the Board of Managers who serve indefinite terms until
their resignation, removal or death. The Board of Managers act by a
vote of the Managers, but in the event of a deadlocked vote, the
vote of the CGI designated manager will be controlling, except (i)
in the case of a transaction with a related party or affiliate
(other than Cellerate) of the CGI designee or (ii) CGI transfers
any portion of its ownership interest in Cellerate to a third party
or more that 50% of CGI’s ownership is transferred to a third
party. The initial Board of Managers is Mr. Ron Nixon as the CGI
designee, and Mr. Michael Carmena as the Wound Care designee. The
Board of Managers manages the general operations of Cellerate,
subject however to a vote by members of Cellerate holding
two-thirds of the membership interests in Cellerate to approve
major actions of Cellerate.
When
sufficient cash is available, distributions to Cellerate’s
owners will be made at times and in amounts determined by a vote of
the Board of Managers. Cellerate, however, will make distributions
on an annual basis sufficient for each owner to pay such
owner’s income taxes arising from its ownership interest in
Cellerate.
The
Operating Agreement contains restrictions on transfer of ownership
interests with customary rights of first refusal, co-sale and
buy/sell provisions applicable to each owner.
The
foregoing summary of Cellerate’s Operating Agreement does not
purport to be complete and is qualified in its entirety by
reference to the Operating Agreement. WNDM expects to file a copy
of the Operating Agreement as an exhibit to its Quarterly Report on
Form 10-Q for its quarter ending September 30, 2018.
Sublicense Agreement
Cellerate has an
exclusive sublicense to distribute CellerateRX® Activated
Collagen® products into the wound care and surgical markets in
the United States, Canada and Mexico. The wound care market
comprises the care for external wounds, including the treatment of
external, tunneled or undermined wounds. This would include
pressure ulcers (Stages I-IV), venous stasis ulcers, diabetic
ulcers, ulcers resulting from arterial insufficiency, surgical
wounds, traumatic wounds, first and second-degree burns,
superficial wounds, cuts, scrapes, skin tears, skin flaps and skin
grafts. The term of the sublicense extends through August 2028,
with automatic one-year renewals through December 31, 2049, subject
to termination at the end of any renewal term by either party on
six-months' notice.
Cellerate pays
specified royalties to CGI based on Cellerate’s annual net
sales of CellerateRX® Activated
Collagen® Adjuvant.
The
foregoing summary of the Sublicense Agreement does not purport to
be complete and is qualified in its entirety by reference to the
Sublicense Agreement. WNDM expects to file a copy of the Sublicense
Agreement as an exhibit to its Quarterly Report on Form 10-Q for
its quarter ending September 30, 2018.
Professional Services Agreement
WNDM
and CGI have agreed to provide Cellerate with certain professional
services needed to conduct the affairs of Cellerate through
December 31, 2018. WNDM and CGI will be reimbursed on a monthly
basis by Cellerate for services performed, consistent with
historical costs to provide the services. WNDM will also receive
reimbursement for office lease and other overhead costs dedicated
to supporting Cellerate’s activities. Commencing January 1,
2019, Cellerate is expected to employ certain of the WNDM and CGI
employees on a permanent basis.
The
foregoing summary of the Professional Services Agreement does not
purport to be complete and is qualified in its entirety by
reference to the Professional Services Agreement. WNDM expects to
file a copy of the Professional Services Agreement as an exhibit to
its Quarterly Report on Form 10-Q for its quarter ending September
30, 2018.
Item
2.01 Completion of Acquisition or Disposition of
Assets
The
transaction described in Item 1.01 may constitute the disposition
of a significant amount of assets of WNDM.
The
information included, or incorporated by reference, in Item 1.01 of
this Current Report is incorporated by reference into this Item
2.01 of this Current Report.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a
Registrant.
The
information included, or incorporated by reference, in Item 1.01 of
this Current Report is incorporated by reference into this Item
2.03 of this Current Report.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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WOUND
MANAGEMENT TECHNOLOGIES, INC.
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Date:
August
31, 2018
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By:
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/s/
Michael McNeil
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Name:
Michael McNeil
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Title:
Chief Financial Officer
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