Item 8.01 Other Events.
StemoniX Shareholder Approval of Merger Agreement
Effective March 15, 2021, the shareholders of StemoniX, Inc. ("StemoniX"),
acting by written action in lieu of a special meeting of the shareholders,
approved the Agreement and Plan of Merger and Reorganization dated August 21,
2020, as amended on February 8, 2021 and February 26, 2021 (the "Merger
Agreement") with Cancer Genetics, Inc. ("CGI") and CGI Acquisition, Inc., a
wholly owned subsidiary of CGI ("Merger Sub"), whereby Merger Sub will be merged
with and into StemoniX, with StemoniX surviving the merger as a wholly-owned
subsidiary of CGI (the "Merger"), subject to approval by CGI's shareholders and
satisfaction of other closing conditions.
In the same written action described above, the shareholders of StemoniX
approved the exercise of the drag-along rights contained in the Fifth Amended
and Restated Shareholder Agreement of StemoniX (the "Shareholder Agreement") to
compel the remaining shareholders of StemoniX who are a party to the Shareholder
Agreement to vote their shares in favor of the Merger and execute all other
documents required to be executed by the shareholders in connection with the
Merger.
StemoniX Convertible Note Offering
On March 12, 2021, StemoniX completed its offering of Convertible Promissory
Notes (the "Convertible Notes"). As of March 12, 2021, StemoniX had outstanding
$12,673,134 in principal amount of Convertible Notes, plus $418,154 in accrued
interest. The Convertible Notes are convertible into StemoniX common stock based
on the lesser of (i) a percent of the then-fair market value per share of
StemoniX common stock and (ii) a per share price reflecting a pre-money,
fully-diluted StemoniX valuation of $57,000,000, assuming conversion or exercise
of all outstanding StemoniX securities convertible or exercisable for equity
securities (other than the Convertible Notes or any other convertible promissory
notes issued after the date of the Convertible Notes) and the exercise of all
outstanding options and warrants to purchase equity securities of StemoniX,
calculated as of immediately prior to their conversion. The Convertible Notes
will be converted into shares of StemoniX common stock immediately prior to the
Merger.
StemoniX Series C Preferred Stock Offering
As previously reported, on January 28, 2021, StemoniX entered into a stock
purchase agreement (the "Series C Preferred Stock Purchase Agreement") with two
institutional accredited investors pursuant to which StemoniX agreed to issue
shares of its Series C Convertible Preferred Stock (the "Series C Preferred
Stock"). Also as previously reported, one of those investors determined
thereafter to acquire a $3 million StemoniX Convertible Note in lieu of
investing the same amount in Series C Preferred Stock. On February 18, 2021,
StemoniX and the remaining investor committed to issuing and purchasing,
respectively, $2 million of Series C Preferred Stock and, in light of the
consummation of CGI's other financing activities, amended and restated the
Series C Preferred Stock Purchase Agreement to provide that only $2 million of
Series C Preferred Stock would be issued in the aggregate.
On March 15, 2021, StemoniX and the remaining institutional investor closed the
purchase and sale of Series C Preferred Stock as contemplated under the Series C
Preferred Stock Purchase Agreement.
Additional Information about the Proposed Merger and Where to Find It
In connection with the proposed merger between CGI and StemoniX, CGI has filed
relevant materials with the SEC, including a registration statement on Form S-4,
as amended, that contains a proxy statement/prospectus/information statement.
INVESTORS AND SECURITY HOLDERS OF CGI AND STEMONIX ARE URGED TO READ THESE
MATERIALS (AS WELL AS AMENDMENTS AND SUPPLEMENTS THERETO AND ANY DOCUMENTS
INCORPORATED BY REFERENCE THEREIN) WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT CGI, STEMONIX AND THE PROPOSED MERGER. The
proxy statement/prospectus/information statement and other relevant materials
(when they become available), and any other documents filed by CGI with the SEC,
may be obtained free of charge at the SEC website at www.sec.gov. In addition,
investors and security holders may obtain free copies of the documents filed
with the SEC by CGI by directing a written request to: Cancer Genetics, Inc.,
c/o John A. Roberts, Chief Executive Officer, 201 Route 17 North 2nd Floor,
Rutherford, NJ 07070. Investors and security holders are urged to read the
Registration Statement and the other relevant materials when they become
available before making any voting or investment decision with respect to the
proposed merger.
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This report shall not constitute an offer to sell or the solicitation of an
offer to sell or the solicitation of an offer to buy any securities, nor shall
there be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offering of securities in
connection with the proposed merger shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Participants in the Solicitation
CGI and its directors and executive officers and StemoniX and its directors and
executive officers may be deemed to be participants in the solicitation of
proxies from the shareholders of CGI in connection with the proposed transaction
under the rules of the SEC. Information about the directors and executive
officers of CGI and their ownership of shares of CGI's common stock is set forth
in its Annual Report on Form 10-K for the year ended December 31, 2019, which
was filed with the SEC on May 29, 2020, and in subsequent documents filed and to
be filed with the SEC, including the Registration Statement referred to above.
Additional information regarding the persons who may be deemed participants in
the proxy solicitations and a description of their direct and indirect interests
in the proposed merger, by security holdings or otherwise, are included in the
Registration Statement and other relevant materials to be filed with the SEC
when they become available. These documents are available free of charge at the
SEC web site (www.sec.gov) and from the Chief Executive Officer at CGI at the
address described above.
Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. CGI and StemoniX generally
identify forward-looking statements by terminology such as "may," "should,"
"expects," "plans," "anticipates," "could," "intends," "target," "projects,"
"contemplates," "believes," "estimates," "predicts," "potential" or "continue"
or the negative of these terms or other similar words. These statements are only
predictions. CGI and StemoniX have based these forward-looking statements
largely on their then-current expectations and projections about future events
and financial trends as well as the beliefs and assumptions of management.
Forward-looking statements are subject to a number of risks and uncertainties,
many of which involve factors or circumstances that are beyond each of CGI's and
StemoniX's control. CGI's and StemoniX's actual results could differ materially
from those stated or implied in forward-looking statements due to a number of
factors, including but not limited to: (i) risks associated with CGI's and
StemoniX's ability to obtain the approval of Nasdaq for continued listing and
listing after the merger, and the shareholder approvals required to consummate
the proposed merger transaction and the timing of the closing of the proposed
merger transaction, including the risks that a condition to closing would not be
satisfied within the expected timeframe or at all or that the closing of the
proposed merger transaction will not occur; (ii) the outcome of any legal
proceedings that may be instituted against the parties and others related to the
Merger Agreement relating to the merger; (iii) the occurrence of any event,
change or other circumstance or condition that could give rise to the
termination of the Merger Agreement, (iv) unanticipated difficulties or
expenditures relating to the proposed merger transaction, the response of
business partners and competitors to the announcement of the proposed merger
transaction, and/or potential difficulties in employee retention as a result of
the announcement and pendency of the proposed merger transaction; (v) volatility
and uncertainty in the financial markets and general economic conditions, which
could have an adverse impact on CGI and/or StemoniX, and (vi) those risks
detailed in CGI's most recent Annual Report on Form 10-K and Quarterly Report on
Form 10-Q, and its registration statement on Form S-4, as amended, and
subsequent reports filed with the SEC, as well as other documents that may be
filed by CGI from time to time with the SEC. Accordingly, you should not rely
upon forward-looking statements as predictions of future events. Neither CGI nor
StemoniX can assure you that the events and circumstances reflected in the
forward-looking statements will be achieved or occur, and actual results could
differ materially from those projected in the forward-looking statements. The
forward-looking statements made in this communication relate only to events as
of the date on which the statements are made. Except as required by applicable
law or regulation, CGI and StemoniX undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of unanticipated
events.
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