| Item 1.01. | Entry into a Material Definitive Agreement. |
On July 30, 2018, Fuse Medical, Inc., a Delaware corporation (the “Company”), entered into that certain Securities Purchase Agreement (the “Purchase Agreement”), by and between the Company, Palm Springs Partners, LLC d/b/a Maxim Surgical, a Texas limited liability company (“Maxim”), Reeg Medical Industries, Inc., a Texas Corporation (“RMI”), Mr. Amir David Tahernia, an individual (“Tahernia”, together with RMI, the “Sellers”), and Mr. Amir David Tahernia in his capacity as the representative of the Sellers (the “Sellers’ Representative”) dated July 30, 2018, attached hereto asExhibit 2.1, pursuant to which the Company agreed to purchase all of the outstanding equity securities of Maxim (“Maxim Interests”) from the Sellers (such transaction, the “Maxim Acquisition”) for aggregate consideration of approximately $3,400,000.Mr. Christopher C. Reeg (“Reeg”), the president of RMI, is also the Chief Executive Officer, Secretary, and a member of the Board of Directors (the “Board”) of the Company. Before the Maxim Acquisition, Reeg was a beneficial owner of more than five percent (5%) of the common stock, par value $0.01 (the “Common Stock”), of the Company as reported on the Company’s Annual Report on Form10-K, filed with the Securities and Exchange Commission on April 6, 2018.
On May 17, 2018,the Board voted to approve the formation of a special committee (the “Special Committee”) to evaluate the potential acquisition (the “Transaction”) of Maxim and conduct independent negotiations with respect to the Transaction. The Special Committee consisted of Board members Ricky “Raj” S. Kalra, MD and Renato V. Bosita Jr., MD, neither of whom were “interested directors” (as that term is used in Delaware General Corporation Law) with respect to the Transaction.
The Special Committee (i) engaged ValueScope, Inc. (“ValueScope”), a business valuation company based in Dallas, Texas, to provide an opinion with respect to fairness of the Transaction to the stockholders of the Company; and (ii) negotiated the terms of a nonbinding letter of intent (the “Letter of Intent”) between the Company and Maxim with respect to the acquisition of Maxim. Following those negotiations, the Special Committee approved the entrance by the Company into the Letter of Intent by and between the Company and Maxim, and executed the Letter of Intent on behalf of the Company. Following the execution of the Letter of Intent, the Special Committee began negotiation of the Purchase Agreement. Those negotiations were substantially completed on July 24, 2018.
On July 25, 2018,ValueScope delivered to the Special Committee a Fairness Opinion Related to the Acquisition of Palm Springs Partners, LLC d/b/a Maxim Surgical by Fuse Medical, Inc., dated July 25, 2018, attached hereto asExhibit 99.1(the “Fairness Opinion”), based on a review by ValueScope of the of the Purchase Agreement.
Following ValueScope’s delivery of the Fairness Opinion, the Special Committee approved the Purchase Agreement and Maxim Acquisition contemplated by the Purchase Agreement. On July 27, 2018, the Special Committee recommended that the Board approve the Purchase Agreement. On July 30, 2018, the Board approved the Purchase Agreement and the Maxim Acquisition contemplated by the Purchase Agreement.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On August 1, 2018, the Company completed the Maxim Acquisition (the “Closing”) pursuant to the Purchase Agreement by and between the Company, Maxim, the Sellers, and the Sellers’ Representative dated July 30, 2018, attached hereto asExhibit 2.1. The Company issued 4,311,169 restricted shares of its Common Stock to the Sellers in exchange for 100% of the outstanding Maxim Interests, at an agreed-upon value of $0.76 per share of Common Stock, which was equal to the30-day volume-weighted average price of the Common Stock as of three (3) business days prior to the Closing. Due to the Maxim Acquisition, Reeg is a beneficial owner of more than ten percent (10%) of the Common Stock of the Company.
| Item 3.02. | Unregistered Sale of Equity Securities. |
The information set forth inItem 1.01 andItem 2.01 regarding the issuance of shares of Common Stock pursuant to the Purchase Agreement is incorporated into thisItem3.02 by reference. The offer and sale of such securities were made to two purchasers, RMI and Tahernia, in an offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the exemption from registration provided by Rule 506(b) of Regulation D promulgated under the Securities Act and correlating provisions of state securities laws.
