Refer to Note
12
- Convertible Notes Payable for subsequent events related to the notes.
On
warrants were exercised for
211,000
shares of common stock.
On
warrants were exercised for
475,500
shares of common stock.
On
the Company entered into an
underwriting agreement (the
“Underwriting Agreement”) with Maxim Group LLC, as representative of the several underwriters named therein (the
“Underwriters”) with respect to the issuance and sale of: (i)
29,130,000
shares (the
“Shares”) of common stock,
$0.0001
par value per share (
“Common Stock”), (ii) pre-funded warrants to purchase
4,100,000
shares of Common Stock at an exercise price of
$0.01
per share (the
“Pre-Funded Warrants”), and (iii) warrants to purchase an aggregate of
33,230,000
shares of Common Stock at an exercise price of
$0.65
per share (the
“Common Warrants” and, together with the Pre-Funded Warrants, the
“Warrants” and, together with the Shares and the Pre-Funded Warrants, the
“Securities”), in an underwritten public offering (the
“Offering”) pursuant to the
Underwriting Agreement.
Each Share was sold together with a Common Warrant to purchase
one
share of Common Stock, at a combined price to the public of
$0.65
per share of Common Stock and accompanying Warrant. Each Pre-Funded Warrant was sold together with a Common Warrant to purchase
one
share of Common Stock, at a combined price to the public of
$0.64
per Pre-Funded Warrant and accompanying Warrant.
Each Pre-Funded Warrant is immediately exercisable upon issuance and will expire when exercised in full. The Common Warrants have a term of
five
years and are immediately exercisable. If a registration statement under the Securities Act of
1933,
as amended (the
“Securities Act”), registering the issuance of the shares of Common Stock underlying the Common Warrants is
not
effective or available and an exemption from registration under the Securities Act is
not
available for the issuance of such shares, the holders of the Common Warrants
may,
in their sole discretion, elect to exercise their Common Warrants through a cashless exercise. The exercise of the Common Warrants is subject to certain beneficial ownership limitations. The warrants were issued pursuant to the terms of a warrant agency agreement between
the Company and Broadridge Issuer Solutions, Inc., as warrant agent.
Pursuant to the
Underwriting Agreement,
the Company granted the Underwriters a
45
-day option to purchase up to an additional
4,984,500
shares of Common Stock and/or
4,984,500
Warrants to cover over-allotments, if any (the
“Over-Allotment”). On
the Underwriter exercised its Over-Allotment option in full on both the Common Stock and the Warrants.
Pursuant to the
Underwriting Agreement,
the Company paid the Underwriter a cash fee equal to
8%
of the aggregate gross proceeds sold in the Offering and also agreed to reimburse the Underwriter for reasonable out-of-pocket expenses related to the Offering, including the reasonable fees and expenses of counsel to the Underwriters, in the aggregate maximum amount of up to
$80,000.
The
Underwriting Agreement contains customary representations, warranties and agreements by
the Company, customary conditions to closing, indemnification obligations of
the Company and the Underwriters, including for liabilities under the Securities Act, other obligations of the parties and termination provisions. The representations, warranties and agreements made by the parties in the
Underwriting Agreement were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties, and should
not
be deemed to be a representation, warranty or agreement to or in favor of any party. In addition, the assertions embodied in any representations, warranties and agreements contained in the
Underwriting Agreement may
be subject to qualifications with respect to knowledge and materiality different from those applicable to security holders generally. Moreover, such representations, warranties and agreements should
not
be relied on as accurately representing the current state of
the Company's affairs at any time.
The Securities were offered by
the Company pursuant to an effective registration statement on Form S-
1,
as amended, which was originally filed with the Securities and Exchange Commission on
and was declared effective on
File
No.
333
-
239782
) (the
“Registration Statement”), and registration statement on Form S-
1MEF
(File
No.
333
-
239966
).
The Company filed a final prospectus with the SEC on
in connection with the sale of the Securities.
The Offering and the Over-Allotment option closed on
The net proceeds of the Offering including the full exercise of the Over-Allotment were approximately
$22.8
million, after deducting the underwriting discounts and commissions and estimated offering expenses.
The Company used approximately
$4.2
million of the net proceeds of the Offering to satisfy all outstanding amounts due under convertible promissory notes previously issued. The prefunded warrants were exercised on
and
resulting in an increase of common stock of
4,100,000
shares. Total shares of common stock outstanding increased by
for the underwriting transaction through date of this report.
Nasdaq Capital Market listing requirements
On
the Company received a notice (the
“Notice”) from the Staff of the Listing Qualifications Department (the
“Staff”) of The Nasdaq Capital Market LLC (
“Nasdaq”) indicating
the Company was
not
in compliance with Nasdaq Listing Rule
5550
(b)(
1
) because,
the Company did
not
have a minimum of
$2,500,000
in stockholders' equity for continued listing on Nasdaq (the
“Stockholders' Equity Requirement”). On
the Company's plan to regain compliance with the Stockholders' Equity Requirement previously submitted to the Nasdaq was accepted and Nasdaq granted us an extension of
180
calendar days from the date of the Notice (
for to provide evidence of compliance.
As discussed above , on
the Company completed an underwritten public offering resulting in net cash proceeds of approximately
$22.8
million which was used, in part, to repay approximately
$4.2
million of outstanding convertible promissory notes. Accordingly, as of the date of this report
the Company believes that it has satisfied compliance with the Stockholders' Equity Requirement and has been advised that Nasdaq will continue to monitor
the Company's ongoing compliance with the Stockholders' Equity Requirement and, if at the time of
the Company's next periodic report
the Company does
not
evidence compliance, that it
may
be subject to delisting.
