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Subsequent Events
6 Months Ended
Jun. 30, 2018
Subsequent Events [Abstract]  
Subsequent Events

NOTE 14 – Subsequent Events

 

Extinguishment and Conversion of Convertible Notes and Short-Term Notes

 

Effective as of July 2, 2018, the Company entered into debt conversion agreements (the “Conversion Agreements”) with each Convertible Note and Short-Term Note subscriber to (i) convert the outstanding principal and accrued and unpaid interest under both the Convertible Notes and the Short-Term Notes into shares of the Company’s common stock based on the Outstanding Balance divided by $1.80 per share (the “Conversion Shares”); (ii) cancel and extinguish the Convertible Notes and Short-Term Notes; and (iii) amend and restate the Warrants, Replacement Warrants and Additional Warrants to make them immediately exercisable upon the conversion, at a per share exercise price equal to $1.80 per share. As consideration for the early conversion of the Convertible Notes and Short-Term Notes, the Company issued each subscriber a new warrant (the “Payment Warrants”), exercisable for up to the number of shares of common stock equal to the number of Conversion Shares received by such subscriber; at a per share exercise price of $1.80 per share. The Payment Warrants are exercisable commencing on July 2, 2018, and expire on November 21, 2021.

 

Pursuant to the Conversion Agreements, $1,804,064 of the outstanding principal and interest of the Convertible Notes was converted into 1,002,258 shares of common stock and $259,297 of the outstanding principal and interest of the Short-Term Notes was converted into 144,053 shares of common stock. As of July 2, 2018, 2,482,372 shares of common stock were issuable upon exercise of the Warrants, Replacement Warrants, Additional Warrants and Payment Warrants.

  

Private Placement and Corresponding Issuance of Common Stock and Warrants

 

From July 9, 2018 through August 3, 2018, the Company entered into subscription agreements (each, a “Purchase Agreement”) with certain accredited investors (the “Purchasers”), pursuant to which the Company, in a private placement (the “2018 Private Placement”), agreed to issue and sell to the Purchasers units (each, a “Unit”), each consisting of (i) 1 share (each, a “Share”) of the Company’s common stock and (ii) a warrant to purchase 1 share of common stock at an initial exercise price of $3.00 per share (the “2018 Warrants”). The initial closing of the 2018 Private Placement was consummated on July 9, 2018 (the “First Closing”). As of August 8, 2018, the Company has issued and sold an aggregate of 295,200 Units to the Purchasers, for total gross proceeds to the Company of approximately $738,000, inclusive of the advances received in June 2018 in the amount of $188,000, before deducting offering expenses.

 

In connection with the 2018 Private Placement, the Company has agreed to issue and sell to accredited investors up to a maximum of 4,000,000 Units (the “Maximum Offering”) at a price of $2.50 per Unit for total gross proceeds to the Company of up to $10,000,000. If the 2018 Private Placement is over-subscribed, the Company may, in its discretion sell up to an additional 600,000 Units (the “Over-Allotment”) to cover such over subscriptions. If the Company issues the Maximum Offering amount, 4,000,000 shares of Common Stock (4,600,000 shares of Common Stock if the Over-Allotment is exercised) would be issuable upon exercise of the 2018 Warrants. The Company may conduct any number of additional closings so long as the final closing occurs on or before October 4, 2018, which period may be extended by the Company in its discretion for up to 90 days as long as the amount of Units sold does not exceed the Maximum Offering and, if applicable, the Over-Allotment. Under the Purchase Agreement, the Company has agreed to use the net proceeds from the 2018 Private Placement to pay the outstanding principal and accrued interest on its 2017 Convertible Notes if such notes do not convert prior to maturity, to pay the principal on its unsecured term loans, for research and development, clinical studies, legal fees and sales and marketing expenses, as well as working capital and general corporate purposes. The Company has granted the Purchasers indemnification rights with respect to its representations, warranties and agreements under the Purchase Agreement.

 

In connection with the 2018 Private Placement, the Company entered into registration rights agreements with each of the Purchasers pursuant to which the Company has agreed to file a registration statement with the SEC covering the resale of the shares of common stock sold in the 2018 Private Placement and the shares of Common Stock issuable upon exercise of the 2018 Warrants. The Company has agreed to file such registration statement within 75 days of the final closing of the 2018 Private Placement. Each registration rights Agreement includes customary indemnification rights in connection with the registration statement.

 

The 2018 Warrants are exercisable beginning on the date of issuance and will expire on July 9, 2023, five years from the date of the First Closing. Prior to expiration, subject to the terms and conditions set forth in the 2018 Warrants, the holders of such 2018 Warrants may exercise the 2018 Warrants for shares of Common Stock by providing notice to the Company and paying the exercise price per share for each share so exercised.

 

In connection with the 2018 Private Placement, the brokers will receive a cash commission equal to 10% of the gross proceeds from the sale of the Units. In addition to the brokers’ commission, the Company will issue 5-year warrants to the brokers to purchase an amount of Common Stock equal to 10% of the total amount of Shares sold in the 2018 Private Placement at an exercise price of $3.45 per share.