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Item 3.02
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Unregistered Sales of Equity Securities.
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On January 22, 2021, the Company sold an aggregate of 1,250,000 shares of restricted common stock to an accredited investor, pursuant to subscription agreements entered into with the investor, in a private offering, at a purchase price of $0.40 per share (raising $500,000 in aggregate). The investor was also granted warrants to purchase the same number of shares purchased, with an exercise price of $0.85 per share. The warrants are exercisable for cash, or on a cashless basis, if the shares underlying the warrants haven’t been registered with the SEC, at any time prior to January 22, 2022 (the “warrants”). The warrants include a 4.99% ownership blocker, preventing the exercise of any specific warrant by the holder thereof, if upon such exercise the holder would beneficially own more than 4.99% of the Company’s then outstanding common stock, which percentage may be increased on a holder-by-holder basis, to up to 9.99%, with 61 days prior written notice from each holder. In total, the Company granted warrants to purchase an aggregate of 1,250,000 shares of common stock to the investor described above, and if exercised in full, the maximum number of shares of common stock issuable upon exercise thereof would total 1,250,000 shares of common stock. The investor also entered into a trading agreement with the Company, whereby it agrees to not sell the shares held by such investor for a period of time after the sales, subject in certain cases, to volume limitations and certain other exemptions.
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The sales described above were exempt from registration pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act, since the foregoing sales did not involve a public offering, the recipients took the securities for investment and not resale, we took take appropriate measures to restrict transfer, and the recipients were “accredited investors”. The securities are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. The securities were not registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.
On January 11, 2021, pursuant to the terms of the Employment Agreement, discussed above in Item 1.01, the Company agreed to issue up to 2,000,000 shares of a to-be designated series of preferred stock to Dr. Drinkwine, subject to the terms of the Employment Agreement, which will be issuable to Dr. Drinkwine under certain circumstances. If earned in full and converted in full, such preferred stock would be convertible into 2,000,000 shares of common stock. Such preferred stock has not been designated by the Company to date, and the designation of, and final terms of, such preferred stock, will be disclosed on a subsequent Current Report on Form 8-K filing.
The offer of the preferred stock was exempt from registration pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act, since the foregoing offer did not involve a public offering, the recipient will take the securities for investment and not resale, we will take appropriate measures to restrict transfer, and the recipient was (a) an “accredited investor”; and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. The securities will be subject to transfer restrictions, and the certificates evidencing the securities will contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.