Item
1.01. Entry into a Material Definitive Agreement.
On
August 31, 2022, Interpace Biosciences, Inc. (the “Company”), Interpace Pharma Solutions, Inc. (the “Subsidiary”,
and together with the Company, “Interpace”) entered into an Asset Purchase Agreement (the “Purchase Agreement”)
with Flagship Biosciences, Inc. (the “Purchaser”) pursuant to which the Purchaser agreed to (i) acquire substantially all
of the assets of the Subsidiary used in Subsidiary’s business of complex molecular analysis for the early diagnosis and treatment
of cancer and supporting the development of targeted therapeutics (the “Business”) and (ii) assume and pay certain liabilities
related to the purchased assets as set forth in the Purchase Agreement (collectively, the “Transaction”). The Transaction
closed on August 31, 2022.
As
consideration for the Transaction, under the Purchase Agreement, Interpace received a total purchase price of approximately $7,000,000
($500,000 of which has been deposited into escrow), subject to a potential post-closing working capital adjustment, and the assumption
by the Purchaser of certain specified liabilities. In addition, subject to the terms and conditions set forth in the Purchase Agreement,
Purchaser will pay the Subsidiary an earnout of up to $2,000,000 based on revenue for the period beginning September 1,
2021 and ending August 31, 2022.
The
Purchase Agreement includes a one-year commitment of Interpace not to compete with the Business, recruit or hire any former employees
of the Subsidiary who accept employment with the Purchaser in connection with the Transaction, or divert or attempt to divert from Purchaser
any business to be performed from any of the contracts or agreements with customers as set forth in the Purchase Agreement. The Purchase
Agreement also contains customary representations and warranties, post-closing covenants and mutual indemnification obligations for,
among other things, any inaccuracy or breach of any representation or warranty and any breach or non-fulfillment of any covenant.
In
connection with the Transaction, on August 31, 2022, Interpace and Purchaser entered into a Shared Services Agreement (the “Shared
Services Agreement”) pursuant to which Interpace agreed to provide, or cause its affiliates to provide, to the Purchaser certain
services set forth in the Shared Services Agreement on a transitional basis and subject to the terms and conditions set forth in the
Shared Services Agreement (the “Services”). As consideration for the Services provided
by Interpace, Purchaser will pay Interpace the amounts specified for each Service as set forth in the Shared Services Agreement. Interpace’s
obligations to provide the Services will terminate with respect to each Service as set forth in the Shared Services Agreement.
The
Purchaser has disclosed that an affiliate of Ampersand Management LLC (“Ampersand”) and
an affiliate of BroadOak Capital Partners (“BroadOak”) have each provided equity financing to the Purchaser,
collectively own a majority of the Purchaser’s outstanding equity securities and are represented on its Board of Directors. The
affiliate of Ampersand also owns 28,000 shares of the Company’s Series B Preferred Stock, convertible into 4,666,666
shares of the Company’s common stock, par value $0.01 per share, pursuant to that certain Securities
Purchase and Exchange Agreement dated January 10, 2020. The affiliate of Ampersand has designated two directors to the Company’s
Board of Directors, Robert Gorman and Vijay Aggarwal. In addition, an affiliate of BroadOak provided the Company a term loan in the aggregate
principal amount of $8,000,000 pursuant to that certain Loan and Security Agreement dated October 29, 2021 and a Convertible Note which
converted into a term loan advance in the aggregate amount of $2,000,000. The total purchase price for the Transaction was determined
following a sales process conducted by the Company and its advisors and an arms length negotiation between Purchaser and the Company.
The purchase price was based on a market consistent multiple of anticipated revenue for a non-profitable, cash-negative business.
The Transaction was approved by a majority of the disinterested directors of the Company.
The
foregoing descriptions of the Purchase Agreement and the Shared
Services Agreement do not purport to be complete and are qualified in their entirety by reference
to the full text of the Purchase Agreement and the Shared Services Agreement, which are
filed herewith as Exhibits 2.1 and 10.1, respectively, and are incorporated herein by reference.