Scienture Holdings, Inc 8-K, filed Jan 20, 2023
Scienture Holdings, Inc. (SCNX)
About this 8-K
Scienture Holdings, Inc filed this 8-K on January 20, 2023, reporting on events of January 16, 2023.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of Earliest Event Reported):
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
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 (see General Instruction A.2. below):
| 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 | Trading Symbol(s) | Name of each exchange on which registered | ||
$0.00001 Par Value Per Share |
The
(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.
Officer and Employee Compensation
As previously reported in the Current Report on Form 8-K filed by TRxADE HEALTH, INC. (“TRxADE”, the “Company”, “we” and “us”) with the Securities and Exchange Commission on September 1, 2022 (the “September 1, 2022 Form 8-K”), effective on September 1, 2022, the Board of Directors and the Compensation Committee of the Company, with the approval of each of the following officers, agreed to reduce the annual cash compensation payable to Suren Ajjarapu, the Company’s Chief Executive Officer; Prashant Patel, the Company’s President and Chief Operating Officer and Janet Huffman, the Company’s Chief Financial Officer, in an effort to conserve cash. The annual salaries of each of the executive officers were reduced by $60,000 (Mr. Ajjarapu); $10,000 (Mr. Patel); and $25,000 (Ms. Huffman), and as additional consideration for such reduced salaries, each officer received shares of common stock equal to the total annual reduction in such salaries, vesting at the rate of 1/4th of such shares on each of September 30, 2022, October 31, 2022, November 30, 2022, and December 31, 2022. The Board of Directors provided the equity compensation to each officer as additional consideration to incentivize them to remain employed by the Company after such reductions in salary and anticipated increasing the executive’s salaries back to their pre-reduction levels at such time as the Board and Compensation Committee determined that the Company had sufficient cash on hand to pay such salaries.
On January 16, 2023, and effective on January 1, 2023, the Board of Directors and the Compensation Committee of the Company, increased the annual salaries of each of Mr. Ajjarapu, Mr. Patel and Ms. Huffman to the levels of such salaries prior to the September 1, 2022 decreases discussed above – Mr. Ajjarapu’s annual salary was increased back to $360,000 per year; Mr. Patel’s annual salary was increased back to $150,000 per year; and Ms. Huffman’s annual salary was increased back to $225,000 per year. There were no changes made to terms of the restricted stock shares discussed above.
The increases in officer salaries were documented by (a) a Third Amendment to Employment Agreement with Mr. Ajjarapu, (b) a Second Amendment to Employment Agreement with Mr. Patel; and (c) a Second Amendment to Offer Letter with Ms. Huffman, which were entered into between the Company (or as to Mr. Patel, Trxade, Inc., the Company’s wholly-owned subsidiary) and each officer, as applicable, on January 17, 2023 and effective on September 1, 2022 (collectively, the “Employment Amendments”). The Employment Amendments also clarified that the equity compensation issuable to each officer was additional compensation and not specifically a result of the reduction in salaries effective on September 1, 2022, and that the amount of reduced salary from September 1, 2022 to December 31, 2022 was forgiven by each officer.
Separately, the compensation payable to certain employees of the Company which were reduced effective September 1, 2022 as discussed in the September 1, 2022 Form 8-K, in consideration for the issuance of restricted shares of common stock, with the same vesting terms as the officers as discussed above, were increased back to their prior pre-reduction levels.
The description of the Employment Amendments above are not complete and are qualified in their entirety by the Employment Amendments copies of which are attached hereto as Exhibits 10.4, 10.7, and 10.10, respectively, and which are incorporated by reference into this Item 5.02 by reference in their entirety.
Item 8.01 Other Events.
Independent Director Cash Compensation
As previously disclosed in the September 1, 2022 Form 8-K, effective on September 1, 2022, in an effort to conserve cash for operations, the Board approved a reduction in the annual cash retainer payable to independent members of the Board of Directors from $35,000 per year to $26,750 per year (pro rata for the remaining portion of the year). Effective January 1, 2023, the annual cash retainer payable to each independent member of the Board was increased back to $35,000.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
* Filed herewith.
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.
| TRxADE HEALTH, INC. | ||
| Date: January 20, 2023 | By: | /s/ Suren Ajjarapu |
| Name: | Suren Ajjarapu | |
| Title: | Chief Executive Officer | |
Exhibit 10.4
TRXADE HEALTH, INC.
THIRD AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS THIRD AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment”) is entered into on January 17, 2023, and effective as of September 1, 2022 (the “Effective Date”), by and between TRxADE HEALTH, INC., a Delaware corporation (the “Company”), and Suren Ajjarapu, an individual (the “Executive”) (each of the Company and Executive are referred to herein as a “Party”, and collectively referred to herein as the “Parties”).
WHEREAS, effective on April 14, 2020, the Parties entered into an Executive Employment Agreement1, which was amended on May 5, 2020, by the entry into the First Amendment to Executive Employment Agreement2 and on August 29, 2022 and effective as of September 1, 2022, by the entry into a Second Amendment to Employment Agreement3 (as amended, the “Agreement”); and
WHEREAS, the Parties desire to amend the Agreement on the terms set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, and considerations herein contained, and other good and valuable consideration, which consideration the parties hereby acknowledge and confirm the receipt and sufficiency thereof, the parties hereto agree as follows:
1. Amendments to Agreement.
(a) Effective as of the Effective Date, Section 2.1 of the Agreement is amended and restated to read as follows:
“2.1. Base Salary. So long as this Agreement remains in effect, for all services rendered by Executive hereunder and all covenants and conditions undertaken by the Parties pursuant to this Agreement, the Company shall pay, and Executive shall accept, as compensation, an annual base salary (“Base Salary”) of $360,000, which shall be payable in cash; provided that solely during the four month period from September 1, 2022 to December 31, 2022, the Base Salary shall be paid by way of a pro rata portion of $300,000 in cash. In addition, Executive shall be issued $60,000 in shares of the Company’s common stock, issuable pursuant to the Company’s Second Amended and Restated 2019 Equity Incentive Plan, and valued at the closing sales price of the Company’s common stock on the Nasdaq Capital Market on the date that the Second Amendment to Executive Employment Agreement effective September 1, 2022, is approved by the Board of Directors and Compensation Committee of the Company, and with such vesting terms as approved by the Board of Directors and Compensation Committee, which shares shall be issued by September 15, 2022. The Base Salary shall be payable in regular installments in accordance with the normal payroll practices of the Company, in effect from time to time, but in any event no less frequently than on a monthly basis (except as discussed above). For so long as Executive is employed hereunder, beginning December 31, 2020, and on each December 31st thereafter, the Base Salary may be increased as determined by the Compensation Committee of the Board (the “Compensation Committee”), in its sole and absolute discretion. Additionally, in the event that Executive meets at least 70% of the requirements for any annual Performance Bonus, as determined in the reasonable discretion of the Compensation Committee of the Board of Directors, pursuant to the timeline and requirements of Section 2.3 hereof, Executive’s Base Salary shall increase by 20% (effective upon confirmation by the Compensation Committee that such metrics were met)(the “Base Salary Increase”). Executive shall be eligible for the Base Salary Increase on an annual basis with such increases being cumulative. Such increases in salary shall be documented in the Company’s records, but shall not require the Parties enter into a new or amended form of this Agreement. Any unpaid amount of Base Salary not paid during the four-month period from September 1, 2022 to December 31, 2022 shall be deemed forgiven.”
1 https://www.sec.gov/Archives/edgar/data/1382574/000149315220006512/ex10-4.htm
2 https://www.sec.gov/Archives/edgar/data/1382574/000149315220007876/ex10-2.htm
3 https://www.sec.gov/Archives/edgar/data/1382574/000149315222024846/ex10-3.htm
Third Amendment to Executive Employment Agreement
January 2023
Suren Ajjarapu
Page 1 of 2
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written to be effective as of the Effective Date.
| “COMPANY” | ||
| TRXADE HEALTH, INC. | ||
| a Delaware corporation | ||
| By: | /s/ Donald G. Fell | |
| Name: | Donald G. Fell | |
| Title: | Chairman of the Compensation Committee of the Board of Directors | |
| “EXECUTIVE” | ||
| /s/ Suren Ajjarapu | ||
| Suren Ajjarapu | ||
Third Amendment to Executive Employment Agreement
January 2023
Suren Ajjarapu
Page 2 of 2
Exhibit 10.7
TRXADE, INC.
SECOND AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this “Amendment”) is entered into on January 17, 2023, and effective as of September 1, 2022 (the “Effective Date”), by and between TRxADE, INC., a Florida corporation (the “Company”), and Prashant Patel, an individual (the “Executive”) (each of the Company and Executive are referred to herein as a “Party”, and collectively referred to herein as the “Parties”).
WHEREAS, effective on May 24, 2013, the Parties entered into an Executive Employment Agreement1 which was amended on August 29, 2022 to be effective September 2, 2022 by the entry into a First Amendment to Executive Employment Agreement2 (as amended, the “Agreement”); and
WHEREAS, the Parties desire to amend the Agreement on the terms set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, and considerations herein contained, and other good and valuable consideration, which consideration the parties hereby acknowledge and confirm the receipt and sufficiency thereof, the parties hereto agree as follows:
1. Amendment to Agreement.
(a) Effective as of the Effective Date, Section 6(c) of the Agreement shall be amended and restated to provide as follows:
“(c) Solely during the four-month period from September 1, 2022 to December 31, 2022, the Base Salary payable to Executive shall be paid by way of a pro rata portion of $140,000 in cash. In addition, Executive shall be issued a total of $10,000 in shares of common stock of TRxADE HEALTH, INC., the Company’s parent corporation (the “Parent”), issuable pursuant to the Parent’s Second Amended and Restated 2019 Equity Incentive Plan, and valued at the closing sales price of the Parent’s common stock on the Nasdaq Capital Market on the date that the Amendment to Executive Employment Agreement effective September 1, 2022, is approved by the Board of Directors and Compensation Committee of the Parent, and with such vesting terms as approved by the Board of Directors and Compensation Committee of the Parent, which shares shall be issued by September 15, 2022. Any unpaid amount of Base Salary not paid during the four-month period from September 1, 2022 to December 31, 2022 shall be deemed forgiven.”
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written to be effective as of the Effective Date.
| “COMPANY” | ||
| TRXADE, INC. | ||
| a Florida corporation | ||
| By: | /s/ Donald G. Fell | |
| Name: | Donald G. Fell | |
| Title: | Chair of Compensation Committee | |
| “EXECUTIVE” | ||
| /s/ Prashant Patel | ||
| Prashant Patel | ||
1 https://www.sec.gov/Archives/edgar/data/1382574/000107878214001329/form10_ex10z6.htm
2 https://www.sec.gov/Archives/edgar/data/1382574/000149315222024846/ex10-5.htm
Exhibit 10.10
TRXADE HEALTH, INC.
SECOND AMENDMENT TO
OFFER LETTER
THIS SECOND AMENDMENT TO OFFER LETTER (this “Amendment”) is entered into on January 17, 2023, and effective as of September 1, 2022 (the “Effective Date”), by and between TRxADE HEALTH, INC., a Delaware corporation (the “Company”), and Janet Huffman, an individual (the “Executive”) (each of the Company and Executive are referred to herein as a “Party”, and collectively referred to herein as the “Parties”).
WHEREAS, effective on February 3, 2022, the Parties entered into an Offer Letter1 which was amended by the First Amendment to Offer Letter dated August 29, 2022, and effective as of September 1, 20222 (as amended, the “Agreement”); and
WHEREAS, the Parties desire to amend the Agreement on the terms set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, and considerations herein contained, and other good and valuable consideration, which consideration the parties hereby acknowledge and confirm the receipt and sufficiency thereof, the parties hereto agree as follows:
1. Amendment to Agreement.
(a) Effective as of the Effective Date, Section 4(c) of the Agreement shall be amended and restated to provide as follows:
| “c. | Solely during the period from September 1, 2022 to December 31, 2022, the Annual Base Salary payable to Executive shall be paid by way of a pro rata portion of $200,000 in cash. In addition, you shall be issued $25,000 in shares of the Company’s common stock, issuable pursuant to the Company’s Second Amended and Restated 2019 Equity Incentive Plan, and valued at the closing sales price of the Company’s common stock on the Nasdaq Capital Market on the date that the Amendment to Offer Letter effective September 1, 2022, is approved by the Board of Directors and Compensation Committee of the Company, and with such vesting terms as approved by the Board of Directors and Compensation Committee, which shares shall be issued by September 15, 2022. Any unpaid amount of Annual Base Salary not paid during the four-month period from September 1, 2022 to December 31, 2022 shall be deemed forgiven.” |
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written to be effective as of the Effective Date.
| “COMPANY” | TRXADE HEALTH, INC. | |
| a Delaware corporation | ||
| By: | /s/ Donald G. Fell | |
| Name: | Donald G. Fell | |
| Title: | Chairman of the Compensation Committee of the Board of Directors | |
| “EXECUTIVE” | ||
| /s/ Janet Huffman | ||
| Janet Huffman | ||
1 https://www.sec.gov/Archives/edgar/data/1382574/000149315222008842/ex10-1.htm
2 https://www.sec.gov/Archives/edgar/data/1382574/000149315222024846/ex10-7.htm