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Item 5.03.
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Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.
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On December 22, 2017, Biostage, Inc. (the
“Company”) effected a reverse stock split of its shares of common stock, par value $0.01 per share (the “Common
Stock”) at a ratio of 1-for-20 (the “Reverse Split”). The Common Stock will begin trading on the OTCQB marketplace
on a reverse stock split-adjusted basis at the open of the market on December 22, 2017.
Upon the commencement of trading on December
22, 2017, the Company's symbol on the OTCQB marketplace will change to “BSTGD” for a period of 20 business days, after
which the "D" will be removed from the Company's trading symbol, which will revert to the original symbol of "BSTG".
In connection with the Reverse Split, the CUSIP number for the Common Stock has been changed to 09074M202.
The Reverse Split was previously authorized
at the annual meeting of the Company’s stockholders on April 26, 2017, and the Company’s Board of Directors approved
the ratio and timing of the Reverse Split on December 11, 2017. The requisite Certificate of Amendment to the Company’s Amended
and Restated Certificate of Incorporation was filed with the Delaware Secretary of State on December 21, 2017, with an effective
time of 12:01 a.m. on December 22, 2017.
As previously disclosed, the Company entered
into a binding Memorandum of Understanding (the “MOU”) with Bin Zhao (including such investor’s designees, the
“Investors”), pursuant to which the Company will issue to the Investors in a private placement (the “Private
Placement”) 40,000,000 shares of its common stock at a purchase price of $0.10 per share or, to the extent the Investors,
following the transaction, would own more than 49.99% of the Company’s common stock, shares of a new class of preferred stock
of the Company (the “Preferred Stock”) with a per-share purchase price of $1,000. Consummation of the Reverse Split
is a condition to closing the Private Placement, as set forth in the MOU.
As a result of the Reverse Split, the Company’s
issued and outstanding shares of Common Stock will decrease to approximately 2.0 million post-split shares (prior to effecting
the rounding of fractional shares into whole shares as described below) from approximately 39.8 million pre-split shares. As a
result of the Reverse Split, the total number of shares of Common Stock held by each stockholder will be converted automatically
into the number of whole shares of Common Stock equal to (i) the number of shares of common stock held by the stockholder immediately
prior to the Reverse Split, divided by (ii) 20.
No fractional shares will be issued. Instead,
the Company will pay cash to any stockholder holding fractional shares as a result of the Reverse Split equal to such fraction
multiplied by $1.32, which represents the closing price per share of $0.066 for the Common Stock on the OTCQB marketplace as of
December 21, 2017, as adjusted to reflect the Reverse Split.
The
par value and other terms of the Common Stock will not be affected by the Reverse Split. The authorized capital of the Company
of 120,000,000 shares of Common Stock and 2,000,000 shares of preferred stock also will not be affected by the Reverse Split.
The Company has retained its transfer agent,
Computershare, to act as exchange agent for the Reverse Split. Computershare will manage the exchange of pre-split shares for post-split
shares. Stockholders of record will receive a letter of transmittal providing instructions for the exchange of their shares. Stockholders
who hold their shares in street name will be contacted by their banks or brokers with any instructions. For further information,
stockholders and securities brokers should contact Computershare at (800) 522-6645.
All options and warrants of the Company
outstanding immediately prior to the Reverse Split will be appropriately adjusted. In general, the Reverse Split will effect a
reduction in the number of shares of Common Stock subject to such outstanding stock options and warrants proportional to the exchange
ratio of the Reverse Split and will effect a proportionate increase in the exercise price of such outstanding options and warrants.