2017 At Market Issuance of Common Stock
On May 19, 2017, the Company entered into an At Market Issuance Sales Agreement (the 2017 At Market Agreement) with a sales
agent under which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $30.0 million from time to time through the sales agent. Sales of the Companys common stock through the sales agent,
if any, will be made by any method that is deemed an at the market offering as defined by the U.S. Securities and Exchange Commission. The Company will pay to the sales agent a commission rate equal to 3.0% of the gross proceeds from the
sale of any shares of common stock sold through the sales agent under the 2017 At Market Agreement. During June 2018, the Company issued 618,614 shares of common stock for net proceeds of approximately $5,241,000 under the 2017 At Market Agreement.
In July 2018, the Company issued 51,100 shares of common stock for net proceeds of approximately $362,000 under the 2017 At Market Agreement.
2017
Private Placement
On February 28, 2017, the Company closed a transaction with five individual investors through a private
placement of common stock and warrants. In total, the Company issued 102,368 shares of common stock for proceeds of $200,000. The Company also issued, to the five investors, warrants to purchase 76,776 shares of common stock at $5.00 per share. The
warrants have an expiration date of February 28, 2024. The exercise price of each warrant is adjustable in the event of a stock split or stock combination, capital reorganization, merger or similar event. The warrants were valued at
approximately $101,000 as of the date of issuance, using the closing price of $1.86, a life of 7 years, a volatility of 97% and a risk-free interest rate of 1.92%. Based upon the Companys analysis of the criteria contained in ASC Topic
815-40,
Derivatives and Hedging Contracts in Entitys Own Equity the Company has determined that warrants issued in connection with this financing transaction were not derivative liabilities
and therefore, were recorded as additional
paid-in
capital.
Other
In 2018, the Company entered an agreement with a vendor whereby the Company will issue common stock to vendor in lieu of paying in cash in
amount up to $100,000 for the year. For the nine months ended September 30, 2018, the Company has issued 2,883 shares of common stock and 290 warrants to purchase shares of common stock pursuant to this agreement and the value of such shares
has been recorded as research and development expense.
For the nine months ended September 30, 2018, the Company has issued a total
of 166,072 shares of common stock for dividends on Series A, Series B and Series C Preferred Stock.
9. Commitments and Contingencies
The Company records accruals for such contingencies to the extent that the Company concludes that their occurrence is probable, and
the related damages are estimable. There are no other significant pending legal proceedings.
10. Galectin Sciences LLC
In January 2014, we created Galectin Sciences, LLC (the LLC or Investee), a collaborative joint venture
co-owned
by SBH Sciences, Inc. (SBH), to research and develop small organic molecule inhibitors of
galectin-3
for oral administration. The LLC was initially
capitalized with a $400,000 cash investment to fund future research and development activities, which was provided by the Company, and specific
in-process
research and development (IPR&D)
contributed by SBH. The estimated fair value of the IPR&D contributed by SBH, on the date of contribution, was $400,000. Initially, the Company and SBH each had a 50% equity ownership interest in the LLC, with neither party having
control over the LLC. Accordingly, from inception through the fourth quarter of 2014, the Company accounted for its investment in the LLC using the equity method of accounting. Under the equity method of accounting, the Companys
investment was initially recorded at cost with subsequent adjustments to the carrying value to recognize additional investments in or distributions from the Investee, as well as the Companys share of the Investees earnings, losses and/or
changes in capital. The estimated fair value of the IPR&D contributed to the LLC was immediately expensed upon contribution as there was no alternative future use available at the point of contribution. The operating agreement provides that
if either party does not desire to contribute its equal share of funding required after the initial capitalization, then the other party, providing all of the funding, will have its ownership share increased in proportion to the total amount
contributed from inception. In the fourth quarter of 2014, after the LLC had expended the $400,000 in cash, SBH decided not to contribute its share of the funding required. Since then, the Company has contributed a total of $1,756,000, including
$34,000 for the three months ended September 30, 2018, for expenses of the LLC. Since the end of 2014, SBH has contributed $123,000 for expenses in the LLC. As of September 30, 2018, the Companys ownership percentage in the LLC was
80.5%. The Company accounts for the interest in the LLC as a consolidated, less than wholly owned subsidiary. Because the LLCs equity is immaterial, the value of the
non-controlling
interest is also
deemed to be immaterial.
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