Item 1.01 Entry into a Definitive Material Agreement
On May 8, 2019, the Company entered into Warrant Exercise Agreements (the “Exercise Agreements”) with five substantial holders
of outstanding warrants (“Warrants”) to purchase an aggregate of 7,541,279 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The Warrants had exercise prices ranging from $0.30 to $1.35
per share and were issued in various financing transactions between July 10, 2015 and January 8, 2019, expiring five years from their respective dates of issuance.
Pursuant to the Exercise Agreements, as an inducement to exercise the Warrants immediately for cash, the Company agreed to reduce the
applicable exercise price to the lower of (i) the current exercise price and (ii) $0.40. In addition, the Company agreed to issue an additional
one-half
share of Common Stock (collectively, the
“Additional Shares”) for every share of Common Stock underlying the Warrants. In the aggregate, 11,311,917 shares of Common Stock, including the Additional Shares, will be issued in these transactions for aggregate gross proceeds to the
Company of approximately $3.0 million. Final settlements are expected to occur on or before May 10, 2019.
2,733,333 of the shares of
Common Stock issuable upon exercise of the Warrants will be sold pursuant to the Company’s Registration Statement on Form
S-3
(File
No. 333-223195),
declared
effective on March 7, 2018, including the prospectus supplement dated March 7, 2018 thereunder. The remaining 8,578,584 shares issuable upon exercise of the Warrants, as well as all of the Additional Shares, will be sold to accredited
investors in reliance upon the exemption provided by Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act of 1933, as amended. Pursuant to the Exercise Agreements, all shares are subject to contractual lock up restrictions for a
six-month period following the closing of these transactions.
In connection with the foregoing transactions, Dr. David F. Welch
entered into Exercise Agreements for Warrants beneficially owned by him, covering an aggregate of 1,651,281 shares of Common Stock and 825,640 Additional Shares. Additionally, Michael A. Klump entered into Exercise Agreements for Warrants
beneficially owned by him, covering an aggregate of 3,625,000 shares of Common Stock and 1,812,499 Additional Shares. Dr. Welch and Mr. Klump are members of the Company’s board of directors and participated on terms identical to those
applicable to other investors.
The form of Exercise Agreement is filed as Exhibit 10.1 to this Current Report
on Form 8-K.
The foregoing summary of the terms of the Exercise Agreement is subject to, and qualified in its entirety by, such document, which is incorporated herein by reference.