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Subsequent Events
12 Months Ended
Jul. 31, 2018
Subsequent Events [Abstract]  
Subsequent Events

Note 17 - Subsequent Events:

 

The Company has evaluated subsequent events occurring after the balance sheet date through the date the consolidated financial statements were issued.

 

On October 3, 2018, we entered into an Asset Purchase Agreement (the “Agreement”) with Veneto Holdings, L.L.C. (“Veneto”) to purchase certain assets of Veneto and its subsidiaries (the “Assets”).   The Agreement bifurcated the closing.  On October 3, 2018 (the “First Closing”), the Company purchased the operating assets of (a) seven dispensing pharmacies, (b) a wholesale pharmacy purchasing company, and (c) an in-network laboratory in exchange for a secured promissory note in the principal amount of $15,000,000 (the “Promissory Note”) guaranteed by Generex and Generex’s Chief Executive Officer, Joseph Moscato.   On or before November 1, 2018, we will complete the second closing (the ‘Second Closing”) to purchase Veneto’s interests in, and contracts with, Management Service Organizations (MSO’s) serving pharmacies, laboratories, and other ancillary service providers. The Agreement can be cancelled by either party if the Second Closing does not occur on or before November 1, 2018.  

 

Effective as at October 3, 2018, NuGenerex Distribution Solutions, LLC assigned the Veneto Asset Purchase Agreement to NuGenerex Distribution Solutions 2, LLC.  The sole member of that LLC is NuGenerex Management Services, Inc., a wholly-owned subsidiary of Generex Biotechnology Corporation.

 

The aggregate purchase price for the Assets, is $30,000,000 including the Promissory Note.  At the Second Closing, the Company will pay the principal of the Promissory Note plus interest to Veneto, (ii) $9,000,000 will be paid by the Company into a trust or other fiduciary account acceptable to Veneto to be used exclusively for satisfaction of certain contingent liabilities of Veneto and subsidiaries of Veneto not being acquired by the Company, (iii) $3,000,000 will be paid by the Company into an escrow account to secure potential obligations of Veneto in respect of the Second Closing date working capital and under the indemnification provisions of the Agreement and (iv) the balance will be payable directly to Veneto in cash.

 

The Company has received a non-binding letter of intent from a lender to provide the funds necessary to complete the Second Closing. The lender is continuing its due diligence at this time and has not yet supplied definitive loan documents.

 

The Company have also entered into a temporary fee-for-service arrangement with Veneto and one of its subsidiaries for Veneto to provide managements, personnel, operational, administrative and other services with respect to the First Closing Assets pending the Second Closing. At the Second Closing, all of Veneto personnel providing these services are expected to become employees or consultants of the Company, and Veneto will no longer provide the services. If the Agreement terminated without a Second Closing, those arrangements will continue for one year from the First Closing.

 

The Promissory Note issued to Veneto in the original principal amount of $15,000,000 calls for payment in full on the Second Closing with interest at an annual rate of 5.0% and guaranteed by Generex and Joseph Moscato, and secured by a first priority security interest in Generex’s assets other than the First Closing Assets. If the Agreement is terminated and the Second Closing does not occur, Generex will have 90 days after termination of the Agreement to repay the loan.

 

On October 3, 2018, we declared a stock dividend on our outstanding Common Stock for stockholders of record date to be determined (the “Record Date”). As a result, all stockholders on the Record Date will receive twenty new shares of Common Stock for each share of Common Stock owned by them as of that date.