8-K - NOTV - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 27, 2021


INOTIV, INC.
(Exact name of registrant as specified in its charter)


Indiana	0-23357	35-1345024
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer Identification No.)
incorporation or organization)


2701 KENT AVENUE
WEST LAFAYETTE, INDIANA		47906-1382
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (765) 463-4527

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))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Ticker symbol(s)		Name of each exchange on which<br>registered
Common Shares		NOTV		NASDAQ Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined 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 check mark 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On September 27, 2021, Inotiv, Inc. (the “Company”) and Joseph E. Flynn, the Company’s former Chief Commercial Officer, entered into an agreement (the “Separation and Release Agreement”) in connection with the termination of Mr. Flynn’s employment on September 8, 2021. Under the terms of the Separation and Release Agreement, (i) the Company will pay Mr. Flynn a severance benefit in the form of salary continuation for a period of four months, (ii) Mr. Flynn will be entitled to exercise 7,000 outstanding stock options until the earlier of October 8, 2021 or the expiration date of such stock options and will forfeit all of his unvested stock options and restricted stock awards, (iii) the Company will reimburse Mr. Flynn an amount equal to his monthly COBRA premium for a period of four months after September 30, 2021, provided that such payments will cease should he become entitled to other health insurance, and (iv) the Company agreed to reduce Mr. Flynn's existing post-employment non-solicitation obligations from 24 months to six months and to limit those obligations to customers or entities with whom Mr. Flynn had contact.

As consideration for receiving the payments under the Separation and Release Agreement, Mr. Flynn agreed to release substantially all claims against the Company. The Separation and Release Agreement also (i) prohibits Mr. Flynn and the Company from disparaging each other, (ii) includes a covenant not to sue (iii) during the period in which Mr. Flynn receives severance benefits, generally requires Mr. Flynn to provide reasonable assistance to the Company with transitional matters relating to his former duties and (iv) reaffirms existing covenants and obligations and the rights and remedies of the Company regarding confidentiality, restrictive covenants and the assignment of inventions.

Mr. Flynn has seven calendar days from September 26, 2021 (the date he signed the Separation and Release Agreement) to revoke the Separation and Release Agreement, and the Separation and Release Agreement provides that the terms thereof, including the Company's obligations to provide the severance benefits described above, will not become effective until the eighth calendar day after the date the agreement was executed by Mr. Flynn.

The foregoing summary of the Separation and Release Agreement does not purport to be complete and is qualified in its entirety by reference to the Separation and Release Agreement, a copy of which will be filed with the Company’s Form 10-K for the year ended September 30, 2021.

Item 8.01 Other Events.

As previously announced, the Company entered into, and subsequently closed the transactions related to, an Agreement and Plan of Merger to acquire Bolder BioPATH, Inc. and an Asset Purchase Agreement to acquire the business of HistoTox Labs, Inc. Exhibits 99.1 and 99.2 hereto provide certain historical financial statements for Bolder BioPATH, Inc. and HistoTox Labs, Inc., respectively.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1	Unaudited financial statements of Bolder BioPATH, Inc. as of and for the three months ended March 31, 2021 and the unaudited balance sheet of Bolder BioPATH, Inc. as of December 31, 2020, together with the notes thereto.
99.2	Unaudited financial statements of HistoTox Labs, Inc. as of and for the three months ended March 31, 2021 and the unaudited balance sheet of HistoTox Labs, Inc. as of December 31, 2020, together with the notes thereto.
104	Cover page interactive data file (embedded within the inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Inotiv, Inc.
Date: September 28, 2021	By:	/s/ Beth A. Taylor
		Beth A. Taylor
		Chief Financial Officer and Vice President - Finance

Exhibit 99.1

Bolder BioPATH, Inc.

Financial Statements (unaudited)

March 31, 2021

Bolder BioPATH, Inc.

Balance Sheets (unaudited)

March 31, 2021 and December 31, 2020


	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash	$	747,391	$	41,398
Accounts receivable, net		2,070,991		2,886,869
Right of use asset - operating		1,785,070		1,845,438
Unbilled revenue		1,778,690		1,456,126
Prepaid expenses		47,834		45,326
Total current assets		6,429,976		6,275,157
Property and equipment, net		5,076,576		5,094,384
Security deposit		69,637		69,637
Total long-term assets		5,146,213		5,164,021
Total assets	$	11,576,189	$	11,439,178
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	319,831	$	147,113
Accrued liabilities		310,838		199,599
Deferred revenue		633,104		777,775
Lease liability - operating, current portion		319,060		328,984
Long-term debt - related party, current portion		660,413		1,439,632
Long-term debt, current portion		260,421		196,114
Total current liabilities		2,503,667		3,089,217
Lease liability - operating, non-current portion		2,237,576		2,307,174
Long-term debt, non-current portion		97,768		173,672
Total liabilities	$	4,839,011	$	5,570,063
Common stock, 0.01 par value: 100,000 shares authorized, issued and outstanding		1,000		1,000
Retained earnings		6,736,178		5,868,115
Total stockholders' equity		6,737,178		5,869,115
Total liabilities and stockholders' equity	$	11,576,189	$	11,439,178

All values are in US Dollars.

Bolder BioPATH, Inc.

Statement of Operations (unaudited)

For the Quarter Ended March 31, 2021


	For the Quarter EndedMarch 31, 2021
Revenues, net	$	3,742,659

Cost of revenues		1,134,327

Gross profit		2,608,332

Operating expenses
General and administrative		526,804
Salaries, wages, and employee benefits		937,996
Depreciation expense		253,400
Total operating expenses		1,718,200

Income from operations		890,132

Other income (expense)
Other income		143
Interest (expense)		(22,212)
Total other (expense)		(22,069)

Net income	$	868,063

Bolder BioPATH, Inc.

Statement of Changes in Stockholders’ Equity (unaudited)

For the Quarter Ended March 31, 2021


	Common Stock
	Shares	Amount		Retained Earnings		Stockholders’ Equity
Balance at December 31, 2020	100,000	$	1,000	$	5,868,115	$	5,869,115
Net income					868,063		868,063
Balance at March 31, 2021	100,000	$	1,000	$	6,736,178	$	6,737,178

Bolder BioPATH, Inc.

Statement of Cash Flows (unaudited)

For the Quarter Ended March 31, 2021


	March 31, 2021
Cash flows from operating activities:
Net income	$	868,063
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense		(14,998)
Depreciation expense		253,400
Changes in assets and liabilities:
Accounts receivable		800,880
Unbilled revenue		(322,564)
Prepaid expenses		(2,508)
Accounts payable		172,718
Accrued liabilities		21,151
Deferred revenue		(144,671)
Net cash provided by operating activities		1,631,471
Cash flows from investing activities:
Cash paid for the purchase of property and equipment		(146,259)
Net cash (used in) investing activities		(146,259)
Cash flows from financing activities:
Principal payments on long-term debt, related party		(779,219)
Net cash (used in) financing activities		(779,219)
Net change in cash during the quarter		705,993
Cash - beginning of year		41,398
Cash - end of quarter	$	747,391
Supplemental disclosure of cash flow information:
Cash paid for interest expense	$	21,549

Bolder BioPATH, Inc.

Notes to the Financial Statements

March 31, 2021

1 - Description of the Business and Basis of Presentation

Bolder BioPATH, Inc. (the "Company") , incorporated on May 14, 2002, is headquartered in Boulder, Colorado and provides contract pharmacology, toxicology, and pathology services specializing in In Vivo models of rheumatoid arthritis, osteoarthritis, and cancer as well as other autoimmune and inflammation models with the goal of providing pre-clinical data to support advancing proteins and small molecules to investigational new drug or new drug application ("IND/NDA") stage.

The Company has prepared the accompanying unaudited interim condensed financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”), and therefore should be read in conjunction with the Company’s audited financial statements, and the notes thereto, included in the Company’s annual financial statements for the year ended December 31, 2020. In the opinion of management, the condensed financial statements as of and for the three months ended March 31, 2021 include all adjustments which are necessary for a fair presentation of the results of the interim periods and of the Company’s financial position as of March 31, 2021.

2 - Debt

Promissory Notes

The Company regularly purchases vehicles through promissory notes in the ordinary course of operations. As of March 31, 2021, the notes bear interest at fixed rates ranging from 1.90% to 3.74%. The notes require monthly principal and interest payments of $956 to $2,374 with maturity dates ranging from May 2020 to September 2023 as of March 31, 2021. The notes are secured by the underlying asset, as defined in each respective note agreement. The principal amounts due on the vehicle loans were $133,725 as of March 31, 2021.

PPP Loan

On April 20, 2020, the Organization entered into a Paycheck Protection Program ("PPP") loan agreement with an original principal balance of $224,464 and a fixed interest rate of 1.00%. Once released, the Company will reduce the liability by the amount forgiven and record a gain extinguishment in accordance with ASC 450-30, *"Gain contingencies."*As of March 31, 2021, the outstanding principal balance was $224,464.

Line of Credit

The Company has a revolving line of credit with a maximum amount available of $1,000,000. The line of credit bears interest at variable rate equal to the annual prime rate plus an applicable percentage of 2.00%. The effective interest rate was 5.25% as of March 31, 2021. The line of credit calls for monthly interest only payments with all unpaid principal and interest due at maturity on April 16, 2021. The line is secured by substantially all assets of the Company. The Company had no principal amounts outstanding as of March 31, 2021 and through the date of issuance of these financial statements.

3 - Related Parties

Related Party Note Payable

On August 1, 2019 the Company entered into an unsecured note payable agreement with the owners of the Company with an original principal amount not to exceed $2,000,000 to assist with the expansion cost of the Company’s facility. The Company borrowed $1,000,000 on the effective date of the agreement and an additional $1,000,000 on November 1, 2019. The related party note payable bore interest at a fixed rate of 8.00% per annum through December 31, 2019 and decreased to 5.00% on January 1, 2020. The fixed rate is subject to change at the demand of the owners, however, will not exceed 8.00% per annum, as defined in the agreement. The related party note payable requires, at minimum, monthly interest

payments in addition to an undefined amount of principal. All unpaid amount of principal and interest are due at maturity on August 1, 2021. The principal amounts due on the related party note payable was $660,413 as of March 31, 2021.

Related Party Transaction

The Company receives report writing services from Report Right, LLC ("Report Right"), a related entity owned by a direct relative of a stockholder. Amounts paid to Report Right totaled $87,341 for the quarter ended March 31, 2021. There were no amounts due to Report Right as of March 31, 2021.

4 - Subsequent Events

On April 15, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Inotiv, Inc., an Indiana corporation (the “Inotiv”). On April 30, 2021, the Company closed the transaction contemplated by the Merger Agreement, and the merger under the Merger Agreement was consummated on May 3, 2021 (the “Merger”). Following the Merger, Inotiv Boulder, as the surviving wholly owned subsidiary of Inotiv, serves as a contract pharmacology and pathology company specializing in in vivo models of rheumatoid arthritis, osteoarthritis, and inflammatory bowel disease as well as other autoimmune and inflammation models. Consideration for the merger consisted of $18.5 million in cash, $1.5 million in seller notes and $34.5 million in Inotiv shares.

Exhibit 99.2

HistoTox Labs, Inc.

Financial Statements (unaudited)

March 31, 2021

HistoTox Labs, Inc.

Balance Sheet (unaudited)

March 31, 2021


	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash	$	665,078	$	923,781
Accounts receivable		1,581,280		1,157,426
Right of use asset - operating		1,176,711		1,218,109
Unbilled revenue		10,509		8,562
Total current assets		3,433,578		3,307,878

Long-term assets:
Property and equipment, net		3,126,268		3,130,010
Security deposit		25,124		25,124
Total long-term assets		3,151,392		3,155,134

Total assets	$	6,584,970	$	6,463,012

Liabilities and Stockholder's Equity
Current liabilities:
Accounts payable	$	132,904	$	262,356
Accrued liabilities		427,000		380,355
Deferred revenue		561,780		457,646
Lease liability - operating, current portion		207,891		214,348
Long-term debt, current portion		144,524		497,980
Total current liabilities		1,474,099		1,812,685

Lease liability - operating, non-current portion		1,441,956		1,486,746
Long-term debt, non-current portion		116,290		400,696
Total liabilities		3,032,345		3,700,127

Common stock, no par value: 10 shares authorized, issued and outstanding		10		10
Retained earnings		3,552,615		2,762,875
Total stockholder's equity		3,552,625		2,762,885

Total liabilities and stockholder's equity	$	6,584,970	$	6,463,012

HistoTox Labs, Inc.

Statement of Operations (unaudited)

For the Quarter Ended March 31, 2021


Revenues, net	$	2,624,507

Cost of revenues		405,750

Gross profit		2,218,757

Operating expenses
Salaries, wages, and employee benefits		1,032,302
General and administrative		378,637
Depreciation and amortization expense		189,591
Selling expenses		9,046
Total operating expenses		1,609,576

Income from operations		609,181

Other income (expense)
Other income		357,500
Interest (expense)		(4,681)
Total other (expense)		352,819

Net income	$	962,000

HistoTox Labs, Inc.

Statement of Changes in Stockholder’s Equity (unaudited)

For the Quarter Ended March 31, 2021


		Common Stock					Retained			Stockholder's
	****	Shares	****	Amount		****	Earnings		****	Equity
Balance, December 31, 2020		10		$	10		$	2,762,875		$	2,762,885
Distributions to stockholder		—			—			(172,260)			(172,260)
Net income		—			—			962,000			962,000
Balance, March 31, 2021		10		$	10		$	3,552,615		$	3,552,625

HistoTox Labs, Inc.

Statement of Cash Flows (unaudited)

For the Quarter Ended March 31, 2021

Cash flows from operating activities:
Net income	$	962,000

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		189,591
PPP loan forgiveness		(357,500)
Changes in assets and liabilities:
Accounts receivable		(423,854)
Unbilled revenue		(1,947)
Accounts payable		(129,452)
Accrued liabilities		36,795
Deferred revenue		104,134

Net cash provided by operating activities		379,767

Cash flows from investing activities:
Cash paid for the purchase of property and equipment		(185,848)

Net cash (used in) investing activities		(185,848)

Cash flows from financing activities:
Principal payments on long-term debt		(280,362)
Distributions to stockholder		(172,260)

Net cash (used in) financing activities		(452,622)

Net change in cash during the year		(258,703)

Cash - beginning of year		923,781

Cash - end of quarter	$	665,078

Supplemental information:
Cash paid for interest expense	$	4,681

HistoTox Labs, Inc.

Notes to the Financial Statements

March 31, 2021 and December 31, 2020

1 - Description of the Business and Basis of Presentation

HistoTox Labs, Inc. (the "Company") incorporated on March 27, 2003, is headquartered in Boulder, Colorado and is a Good Laboratory Practices ("GLP") compliant contract histology laboratory providing routing and specialized histology and histopathology, immunohistochemistry ("IHC"), whole-slide scanning (Aperio AT2), and digital image analysis services. The Company specializes in areas of preclinical toxicology, cancer, fibrosis, bone histology and a variety of inflammation models.

The Company has prepared the accompanying unaudited interim condensed financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”), and therefore should be read in conjunction with the Company’s audited financial statements, and the notes thereto, included in the Company’s annual financial statements for the year ended December 31, 2020. In the opinion of management, the condensed financial statements as of and for three months ended March 31, 2021 include all adjustments which are necessary for a fair presentation of the results of the interim periods and of the Company’s financial position as of March 31, 2021.

2 - Debt

The Company finances the purchase of various vehicles and equipment in the ordinary course of operations. As of March 31, 2021, the notes bore interest at fixed rates ranging from 4.95% to 7.99%. The notes require monthly principal and interest payments ranging from $1,439 to $26,621 with maturity dates ranging from May 2021 to December 2026, respectively, as of March 31, 2021. The notes are secured by the underlying asset, as defined in each respective note agreement. The principal amounts due on the equipment and vehicle notes were $260,814 as of March 31, 2021.

PPP Loan

On April 15, 2020, the Company entered into a Paycheck Protection Program ("PPP") loan agreement with an original principal balance of $357,500 and a fixed interest rate of 1.00%. On February 23, 2021, all outstanding principal and accrued interest was forgiven by the government and was recorded as a gain in the statement of operations. As of March 31, 2021, the outstanding principal balance was zero.

Line of Credit

The Company has a revolving line of credit with a maximum amount available of $100,000. The line of credit bears interest at variable rate equal to the annual prime rate plus an applicable percentage of 2.00%. The effective interest rate was 5.25% as of March 31, 2021. The line of credit calls for monthly interest only payments with all unpaid principal and interest due at maturity on July 30, 2021. The line is secured by substantially all assets of the Company. The Company had no principal amounts outstanding as of March 31, 2021 and through the date of the issuance of these financial statements.

3 - Related Party Transactions

The Company outsources services from HTL Clinical, LLC ("HTL"), a company related through common ownership. Effective August 19, 2019, the Company and HTL entered into promissory note agreement with an original principal amount of $350,000. Accordingly, the Company is jointly and severally liable with HTL on amounts due to the lender. The promissory note bears interest at a fixed rate of 6.00% per annum and calls for monthly principal and interest payments of $9,274 through maturity on February 19, 2023. Effective March 19, 2021, the promissory note agreement with the lender was amended and the Company was removed as a co-obligor and accordingly, has no future obligation related to this arrangement. The Company engaged in business activity with HTL during the quarter, however, the amount due to HTL was zero as of March 31, 2021.

4 - Subsequent Events

On April 13, 2021, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Inotiv, Inc., an Indiana corporation (the “Inotiv”). On April 30, 2021, the Company closed the transactions contemplated by the Purchase Agreement, transferring substantially all of the assets of the Company used or useful by the Company in connection with the Company’s business of non-clinical consulting, laboratory and strategic support services and products related to routine and specialized histology, immunohistology, histopathology and image analysis/digital pathology. Consideration for the acquisition consisted of $22.3 million in cash.