|
Delaware
|
|
87-0458888
|
(State or other jurisdiction of incorporation)
|
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
o
|
|
Accelerated filer
o
|
|
|
|
Non-accelerated filer
o
|
|
Smaller reporting company
x
|
(Do not check if a smaller reporting company)
|
|
|
|
|
|
|
PAGE
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
•
|
the potential advantages of our product candidates and technologies;
|
•
|
our expectation to dose the first subject in the Phase I portion of our Phase I/II clinical trial of FCX-007 at the end of 2016, to have three-month data for the Phase I portion of the trial in the third quarter of 2017 and to initiate the Phase II portion of the trial in the fourth quarter of 2017;
|
•
|
our expectation to initiate a preclinical dose ranging study for FCX-013 in November 2016 to be followed by a toxicology/biodistribution study and submission of an Investigational New Drug application (IND) for FCX-013 to the United States Food and Drug Administration (FDA) in the fourth quarter of 2017;
|
•
|
our product development goals under our collaboration with Intrexon Corporation for arthritis and related conditions;
|
•
|
the potential benefits of orphan drug and pediatric rare disease designations;
|
•
|
our expectation that our existing cash resources will be sufficient to enable us to fund our operations into the fourth quarter of 2017;
|
•
|
expected costs associated with the wind-down of azficel-T (including LAVIV) operations at our Exton, PA facility including future cash expenditures to decommission our azficel-T manufacturing facility and to terminate and wind-down our contractual and other obligations relating to our azficel-T operations, as well as potential non-cash charges related to future impairments of the carrying values of equipment used in our azficel-T operations;
|
•
|
future expenses and capital expenditures;
|
•
|
our plans to address our future capital requirements and the consequences of failing to do so; and
|
•
|
our plans to resolve our noncompliance with the minimum bid price requirement of The Nasdaq Capital Market listing rules and the consequences of failing to do so;
|
|
September 30,
2016
|
|
December 31, 2015
|
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
21,283
|
|
|
$
|
29,268
|
|
Inventory, net
|
—
|
|
|
482
|
|
||
Prepaid expenses and other current assets
|
374
|
|
|
1,244
|
|
||
Total current assets
|
21,657
|
|
|
30,994
|
|
||
Property and equipment, net of accumulated depreciation of $1,486 and $1,242, respectively
|
1,492
|
|
|
1,582
|
|
||
Intangible assets, net of accumulated amortization of $0 and $2,204, respectively
|
—
|
|
|
4,136
|
|
||
Other assets
|
64
|
|
|
—
|
|
||
Total assets
|
$
|
23,213
|
|
|
$
|
36,712
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
361
|
|
|
$
|
499
|
|
Related party payable
|
341
|
|
|
10,720
|
|
||
Accrued expenses
|
1,715
|
|
|
1,779
|
|
||
Interest payable
|
46
|
|
|
—
|
|
||
Deferred revenue
|
—
|
|
|
457
|
|
||
Warrant liability, current
|
—
|
|
|
1,910
|
|
||
Total current liabilities
|
2,463
|
|
|
15,365
|
|
||
Convertible promissory notes, net of debt discount of $18,088 and $0, respectively (see Note 5)
|
—
|
|
|
—
|
|
||
Warrant liability, long term
|
7,400
|
|
|
6,365
|
|
||
Derivative liability
|
1,524
|
|
|
—
|
|
||
Deferred rent
|
788
|
|
|
779
|
|
||
Total liabilities
|
12,175
|
|
|
22,509
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares outstanding as of September 30, 2016 and December 31, 2015
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value; 150,000,000 shares authorized, 43,898,785 shares issued and outstanding as of September 30, 2016; 100,000,000 shares authorized, 43,898,785 shares issued and outstanding as of December 31, 2015
|
44
|
|
|
44
|
|
||
Additional paid-in capital
|
170,063
|
|
|
161,330
|
|
||
Accumulated deficit
|
(159,069
|
)
|
|
(147,171
|
)
|
||
Total stockholders’ equity
|
11,038
|
|
|
14,203
|
|
||
Total liabilities and stockholders’ equity
|
$
|
23,213
|
|
|
$
|
36,712
|
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue from product sales
|
$
|
215
|
|
|
$
|
49
|
|
|
$
|
300
|
|
|
$
|
217
|
|
Collaboration revenue
|
—
|
|
|
30
|
|
|
18
|
|
|
193
|
|
||||
Total revenue
|
215
|
|
|
79
|
|
|
318
|
|
|
410
|
|
||||
Cost of product sales
|
287
|
|
|
62
|
|
|
696
|
|
|
283
|
|
||||
Cost of collaboration revenue
|
—
|
|
|
142
|
|
|
1
|
|
|
230
|
|
||||
Total cost of revenue
|
287
|
|
|
204
|
|
|
697
|
|
|
513
|
|
||||
Gross loss
|
(72
|
)
|
|
(125
|
)
|
|
(379
|
)
|
|
(103
|
)
|
||||
Research and development expense
|
1,645
|
|
|
2,394
|
|
|
6,599
|
|
|
7,208
|
|
||||
Research and development expense - related party
|
534
|
|
|
1,827
|
|
|
2,783
|
|
|
4,694
|
|
||||
Selling, general and administrative expense
|
2,723
|
|
|
2,477
|
|
|
8,003
|
|
|
9,041
|
|
||||
Intangible asset impairment expense
|
—
|
|
|
—
|
|
|
3,905
|
|
|
—
|
|
||||
Restructuring costs
|
43
|
|
|
—
|
|
|
335
|
|
|
—
|
|
||||
Operating loss
|
(5,017
|
)
|
|
(6,823
|
)
|
|
(22,004
|
)
|
|
(21,046
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||||||
Warrant revaluation income
|
3,007
|
|
|
5,301
|
|
|
10,518
|
|
|
4,240
|
|
||||
Derivative revaluation expense
|
(251
|
)
|
|
—
|
|
|
(251
|
)
|
|
—
|
|
||||
Interest expense
|
(46
|
)
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
||||
Other income (expense), net
|
8
|
|
|
1
|
|
|
(15
|
)
|
|
4
|
|
||||
Loss before income taxes
|
(2,299
|
)
|
|
(1,521
|
)
|
|
(11,798
|
)
|
|
(16,802
|
)
|
||||
Income tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net loss
|
$
|
(2,299
|
)
|
|
$
|
(1,521
|
)
|
|
$
|
(11,798
|
)
|
|
$
|
(16,802
|
)
|
|
|
|
|
|
|
|
|
||||||||
Per Share Information:
|
|
|
|
|
|
|
|
||||||||
Net loss:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.40
|
)
|
Diluted
|
$
|
(0.05
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.44
|
)
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
43,898,785
|
|
|
43,021,121
|
|
|
43,898,785
|
|
|
41,598,632
|
|
||||
Diluted
|
43,898,785
|
|
|
43,712,918
|
|
|
43,922,808
|
|
|
41,829,231
|
|
|
Common Stock
|
|
Additional paid-in capital
|
|
Accumulated deficit
|
|
Total Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
|
|
||||||||||||
Balance, December 31, 2015
|
43,898,785
|
|
|
$
|
44
|
|
|
$
|
161,330
|
|
|
$
|
(147,171
|
)
|
|
$
|
14,203
|
|
Cumulative effect from adoption of new accounting standard (Note 3)
|
—
|
|
|
—
|
|
|
100
|
|
|
(100
|
)
|
|
—
|
|
||||
Intrinsic value of beneficial conversion feature, net of issuance costs
|
—
|
|
|
—
|
|
|
7,017
|
|
|
—
|
|
|
7,017
|
|
||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
1,616
|
|
|
—
|
|
|
1,616
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,798
|
)
|
|
(11,798
|
)
|
||||
Balance, September 30, 2016
|
43,898,785
|
|
|
$
|
44
|
|
|
$
|
170,063
|
|
|
$
|
(159,069
|
)
|
|
$
|
11,038
|
|
|
Nine Months Ended
September 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net loss
|
$
|
(11,798
|
)
|
|
$
|
(16,802
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
||
Stock-based compensation expense
|
1,616
|
|
|
1,550
|
|
||
Warrant liability revaluation income
|
(10,518
|
)
|
|
(4,240
|
)
|
||
Derivative liability revaluation expense
|
251
|
|
|
—
|
|
||
Depreciation and amortization of long-lived assets
|
476
|
|
|
554
|
|
||
Recovery of doubtful accounts
|
(12
|
)
|
|
(5
|
)
|
||
Intangible asset impairment
|
3,905
|
|
|
—
|
|
||
Loss on disposal or impairment of property and equipment
|
64
|
|
|
—
|
|
||
Decrease (increase) in operating assets:
|
|
|
|
|
|
||
Accounts receivable
|
12
|
|
|
9
|
|
||
Inventory
|
482
|
|
|
5
|
|
||
Prepaid expenses and other current assets
|
1,045
|
|
|
812
|
|
||
Other assets
|
(64
|
)
|
|
—
|
|
||
Increase (decrease) in operating liabilities:
|
|
|
|
||||
Accounts payable
|
(212
|
)
|
|
898
|
|
||
Related party payable
|
(10,379
|
)
|
|
434
|
|
||
Accrued expenses and deferred rent
|
(53
|
)
|
|
248
|
|
||
Interest payable
|
46
|
|
|
—
|
|
||
Deferred revenue
|
(457
|
)
|
|
57
|
|
||
Net cash used in operating activities
|
(25,596
|
)
|
|
(16,480
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchase of property and equipment
|
(187
|
)
|
|
(208
|
)
|
||
Proceeds from the sale of property and equipment
|
1
|
|
|
—
|
|
||
Net cash used in investing activities
|
(186
|
)
|
|
(208
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from private placement offering, net
|
17,933
|
|
|
—
|
|
||
Proceeds from common stock offering, net
|
—
|
|
|
15,872
|
|
||
Payment of deferred offering costs
|
(134
|
)
|
|
—
|
|
||
Proceeds from the exercise of stock options
|
—
|
|
|
255
|
|
||
Principle payments on capital lease obligations
|
(2
|
)
|
|
(3
|
)
|
||
Net cash provided by financing activities
|
17,797
|
|
|
16,124
|
|
||
Net decrease in cash and cash equivalents
|
(7,985
|
)
|
|
(564
|
)
|
||
Cash and cash equivalents, beginning of period
|
29,268
|
|
|
37,495
|
|
||
Cash and cash equivalents, end of period
|
$
|
21,283
|
|
|
$
|
36,931
|
|
|
|
|
|
||||
Supplemental Cash Flow Disclosures:
|
|
|
|
||||
Non Cash Investing and Financing Activities:
|
|
|
|
||||
Property and equipment in accounts payable
|
$
|
33
|
|
|
$
|
31
|
|
Deferred offering costs in accounts payable
|
$
|
41
|
|
|
$
|
—
|
|
Reduction of warrant liability upon issuance of shares
|
$
|
—
|
|
|
$
|
82
|
|
($ in thousands)
|
September 30, 2016
|
|
December 31, 2015
|
|||||
Raw materials (LAVIV and product candidates)
|
$
|
—
|
|
|
$
|
338
|
|
|
Work in process (LAVIV)
|
—
|
|
|
144
|
|
|||
Total inventory, gross
|
—
|
|
|
482
|
|
|||
Less: Reserve for work in process expiration
|
—
|
|
|
—
|
|
|||
Total inventory, net
|
$
|
—
|
|
|
$
|
482
|
|
($ in thousands)
|
September 30, 2016
|
|||
Convertible promissory notes
|
$
|
18,088
|
|
|
Debt discount - warrants
|
(9,643
|
)
|
||
Debt discount - compound bifurcated derivatives
|
(1,273
|
)
|
||
Debt discount - beneficial conversion feature
|
(7,172
|
)
|
||
Convertible promissory notes, net
|
$
|
—
|
|
($ in thousands except per share data)
|
September 30, 2016
|
||
Calculated aggregate value
|
$
|
1,524
|
|
Closing price per share of common stock
|
$
|
0.72
|
|
Contractual remaining term
|
9 years, 11 months
|
|
|
Contractual interest rate
|
4.0
|
%
|
|
Volume-weighted average conversion rate
|
$
|
1.13662
|
|
Risk-free interest rate (term structure)
|
0.20% - 1.60%
|
|
|
Dividend yield
|
—
|
|
|
Credit Rating
|
CC
|
|
|
Credit Spread
|
32.28
|
%
|
|
Volatility
|
99.9
|
%
|
|
Number of Warrants
|
|
|
|
|
||||||
Liability-classified warrants
|
September 30, 2016
|
|
December 31, 2015
|
|
Exercise
Price
|
|
Expiration
Dates
|
||||
Issued in March 2010 financing
|
—
|
|
|
319,789
|
|
|
$
|
6.25
|
|
|
Mar 2016
|
Issued in June 2011 financing
|
—
|
|
|
6,113
|
|
|
$
|
22.50
|
|
|
Jun 2016
|
Issued in August 2011 financing
|
—
|
|
|
565,759
|
|
|
$
|
18.75
|
|
|
Aug 2016
|
Issued to placement agents in August 2011 financing
|
—
|
|
|
50,123
|
|
|
$
|
13.635
|
|
|
Aug 2016
|
Issued in Series B and D Preferred Stock offerings
|
1,389,194
|
|
|
1,970,594
|
|
|
$
|
6.25
|
|
|
Jul 2016 - Dec 2016
|
Issued in Series E Preferred Stock offering
(1)
|
132,014
|
|
|
60,000
|
|
|
$
|
1.13625
|
|
|
Dec 2017
|
Issued with June 2012 Convertible Notes
|
1,125,578
|
|
|
1,125,578
|
|
|
$
|
2.50
|
|
|
Jun 2018
|
Issued in Series E Preferred Stock offering
|
1,568,823
|
|
|
1,568,823
|
|
|
$
|
7.50
|
|
|
Dec 2018
|
Issued with September 2016 Convertible Notes
|
18,087,500
|
|
|
—
|
|
|
$
|
1.50
|
|
|
Sep 2021
|
Total
|
22,303,109
|
|
|
5,666,779
|
|
|
|
|
|
|
(1)
|
As a result of the issuance of the September 2016 Convertible Notes, the exercise price for warrants issued in connection with the Company’s Series E Preferred Stock offering was decreased from
$2.50
per warrant share to
$1.13625
and the number of warrant shares was increased by
72,014
, due to anti-dilution provisions contained in the warrants for certain investors who did not agree to modifications the Company offered in October 2012.
|
(1)
|
See footnote 1 in table above.
|
($ in thousands except per share data)
|
September 30, 2016
|
|
December 31, 2015
|
||||
Calculated aggregate value
|
$
|
7,400
|
|
|
$
|
8,275
|
|
Weighted average exercise price per share
|
$
|
2.27
|
|
|
$
|
7.14
|
|
Closing price per share of common stock
|
$
|
0.72
|
|
|
$
|
4.55
|
|
Volatility
|
85.3
|
%
|
|
85.2
|
%
|
||
Weighted average remaining expected life
|
4 years, 3 months
|
|
|
1 year, 8 months
|
|
||
Risk-free interest rate
|
1.04
|
%
|
|
0.98
|
%
|
||
Dividend yield
|
—
|
|
|
—
|
|
•
|
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
•
|
Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
|
•
|
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
|
|
September 30, 2016
|
||||||||||||||
($ in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
21,283
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,283
|
|
Total Assets
|
$
|
21,283
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,283
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,400
|
|
|
$
|
7,400
|
|
Derivative liability
|
—
|
|
|
—
|
|
|
1,524
|
|
|
1,524
|
|
||||
Total Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,924
|
|
|
$
|
8,924
|
|
|
December 31, 2015
|
||||||||||||||
($ in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
29,268
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,268
|
|
Total Assets
|
$
|
29,268
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,268
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,275
|
|
|
$
|
8,275
|
|
Derivative liability
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,275
|
|
|
$
|
8,275
|
|
|
Warrant
|
||
($ in thousands)
|
Liability
|
||
Balance at December 31, 2015
|
$
|
8,275
|
|
Issuance of warrants
(1)
|
9,643
|
|
|
Expiration of warrants
(2)
|
(477
|
)
|
|
Change in fair value of warrant liability
|
(10,041
|
)
|
|
Balance at September 30, 2016
|
$
|
7,400
|
|
(1)
|
Represents fair value of warrants on the issuance date.
|
(2)
|
Represents the fair value as of the beginning of the year for warrants expiring during the year and has been recorded to warrant revaluation income or expense in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2016.
|
|
Derivative
|
||
($ in thousands)
|
Liability
|
||
Balance at December 31, 2015
|
$
|
—
|
|
Issuance of convertible notes
(1)
|
1,273
|
|
|
Change in fair value of derivative
|
251
|
|
|
Balance at September 30, 2016
|
$
|
1,524
|
|
(1)
|
Represents fair value of embedded derivatives on the issuance date.
|
|
September 30, 2016
|
|
September 30, 2015
|
||
Expected term
|
6 years, 2 months
|
|
|
6 years, 1 month
|
|
Interest rate
|
1.37
|
%
|
|
1.56
|
%
|
Dividend yield
|
—
|
|
|
—
|
|
Volatility
(1)
|
92.5
|
%
|
|
103.2
|
%
|
(1)
|
For the nine months ended September 30, 2016, the Company estimated expected volatility based on the historical volatility of its own common stock on a stand-alone basis. Prior to January 1, 2016, including the nine months ended September 30, 2015, the Company estimated expected volatility based on the historical volatility of a peer group.
|
($ in thousands except share and per share data)
|
Number of
shares
|
|
Weighted-
average
exercise
price
|
|
Weighted- average
remaining
contractual
term
|
|
Aggregate
intrinsic
value
|
|||||
Outstanding at December 31, 2015
|
3,134,094
|
|
|
$
|
6.23
|
|
|
8 years
|
|
$
|
1,630
|
|
Granted
|
1,316,000
|
|
|
1.79
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited
|
(36,334
|
)
|
|
4.39
|
|
|
|
|
|
|||
Expired
|
(32,534
|
)
|
|
8.18
|
|
|
|
|
|
|||
Outstanding at September 30, 2016
(1)
|
4,381,226
|
|
|
$
|
4.90
|
|
|
7 years, 11 months
|
|
$
|
—
|
|
Exercisable at September 30, 2016
|
2,078,808
|
|
|
$
|
7.26
|
|
|
6 years, 10 months
|
|
$
|
—
|
|
(1)
|
Includes both vested stock options as well as unvested stock options for which the requisite service period has not been rendered but that are expected to vest based on achievement of a service condition.
|
($ in thousands)
|
|
Employee Severance and Benefits
|
|
Asset Impairments
|
|
Total
|
||||||
Accrued restructuring balance as of December 31, 2015
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Additional accruals
|
|
301
|
|
|
34
|
|
|
335
|
|
|||
Cash payments
|
|
(282
|
)
|
|
—
|
|
|
(282
|
)
|
|||
Non-cash settlements
|
|
—
|
|
|
(34
|
)
|
|
(34
|
)
|
|||
Accrued restructuring balance as of September 30, 2016
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
($ in thousands, except share and per share data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Loss per share - basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator for basic loss per share
|
$
|
(2,299
|
)
|
|
$
|
(1,521
|
)
|
|
$
|
(11,798
|
)
|
|
$
|
(16,802
|
)
|
Denominator for basic loss per share
|
43,898,785
|
|
|
43,021,121
|
|
|
43,898,785
|
|
|
41,598,632
|
|
||||
Basic loss per common share
|
$
|
(0.05
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.40
|
)
|
Loss per share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Numerator for diluted loss per share
|
$
|
(2,299
|
)
|
|
$
|
(1,521
|
)
|
|
$
|
(11,798
|
)
|
|
$
|
(16,802
|
)
|
Adjust: Warrant revaluation income (expense) for dilutive warrants
|
—
|
|
|
1,529
|
|
|
1,958
|
|
|
1,529
|
|
||||
Net loss attributable to common share
|
$
|
(2,299
|
)
|
|
$
|
(3,050
|
)
|
|
$
|
(13,756
|
)
|
|
$
|
(18,331
|
)
|
Denominator for basic loss per share
|
43,898,785
|
|
|
43,021,121
|
|
|
43,898,785
|
|
|
41,598,632
|
|
||||
Plus: Incremental shares underlying dilutive warrants outstanding
|
—
|
|
|
691,797
|
|
|
24,023
|
|
|
230,599
|
|
||||
Denominator for diluted loss per share
|
43,898,785
|
|
|
43,712,918
|
|
|
43,922,808
|
|
|
41,829,231
|
|
||||
Diluted net loss per common share
|
$
|
(0.05
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
(0.44
|
)
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
“In the money” stock options
|
441,000
|
|
|
2,733,864
|
|
|
510,667
|
|
|
1,923,926
|
|
“Out of the money” stock options
|
3,940,226
|
|
|
457,480
|
|
|
3,684,407
|
|
|
1,113,960
|
|
“In the money” warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
801,132
|
|
“Out of the money” warrants
|
22,303,109
|
|
|
4,741,725
|
|
|
10,601,799
|
|
|
4,801,476
|
|
Shares underlying convertible notes
|
15,913,612
|
|
|
—
|
|
|
15,913,612
|
|
|
—
|
|
Shares underlying accrued interest on convertible notes
|
40,657
|
|
|
—
|
|
|
40,657
|
|
|
—
|
|
|
|
|
|
|
|
|
|
||||
Other securities excluded from the calculation of diluted loss per share:
|
|
|
|
|
|
|
|
||||
Stock options with performance condition
|
—
|
|
|
—
|
|
|
—
|
|
|
66,667
|
|
•
|
our unaudited Condensed Consolidated Financial Statements and accompanying Notes included in Part I, Item 1 of this Form 10-Q; and
|
•
|
our audited Consolidated Financial Statements and accompanying Notes included in our Annual Report on Form 10-K for 2015 (2015 Form 10-K), as well as the information contained under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2015 Form 10-K.
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
Change
|
||||||||
($ in thousands)
|
|
|
|
$
|
%
|
|||||||||
Cash and cash equivalents
|
|
$
|
21,283
|
|
|
$
|
29,268
|
|
|
$
|
(7,985
|
)
|
(27.3
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Working capital:
|
|
|
|
|
|
|
|
|||||||
Total current assets
|
|
$
|
21,657
|
|
|
$
|
30,994
|
|
|
$
|
(9,337
|
)
|
(30.1
|
)%
|
Total current liabilities
|
|
(2,463
|
)
|
|
(15,365
|
)
|
|
12,902
|
|
(84.0
|
)%
|
|||
Net working capital
|
|
$
|
19,194
|
|
|
$
|
15,629
|
|
|
$
|
3,565
|
|
22.8
|
%
|
|
|
|
|
|
|
|
|
|||||||
Convertible notes (principal)
|
|
$
|
18,088
|
|
|
$
|
—
|
|
|
$
|
18,088
|
|
100.0
|
%
|
•
|
the cost of clinical activities and outcomes related to our Phase I/II clinical trial for FCX-007;
|
•
|
the costs of pre-clinical activities and outcomes related to FCX-013, for which we expect to file an IND with the FDA in the fourth quarter of 2017;
|
•
|
the costs to complete the wind-down of our azficel-T (including LAVIV) operations including, without limitation, the costs to decommission our azficel-T manufacturing facility and to terminate and wind-down our contractual and other obligations relating to our azficel-T operations;
|
•
|
the cost of additional clinical trials in order to obtain regulatory approvals for our product candidates;
|
•
|
the cost of regulatory submissions, as well as the preparation, initiation and execution of clinical trials in potential new clinical indications; and
|
•
|
the cost of filing, surveillance around, prosecuting, defending and enforcing patent claims.
|
•
|
significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates or one or more of our other research and development initiatives;
|
•
|
seek collaborators for one or more of our current or future product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; or
|
•
|
sell or license on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves.
|
|
|
Nine months ended
September 30,
|
||||||
($ in thousands)
|
|
2016
|
|
2015
|
||||
Net cash flows (used in) provided by:
|
|
|
|
|
||||
Operating activities
|
|
$
|
(25,596
|
)
|
|
$
|
(16,480
|
)
|
Investing activities
|
|
$
|
(186
|
)
|
|
$
|
(208
|
)
|
Financing activities
|
|
$
|
17,797
|
|
|
$
|
16,124
|
|
|
For the Three Months
Ended September 30, |
|
For the Nine Months
Ended September 30, |
|
|
||||||||||||||||||
($ in thousands)
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
|
|
||||||||||
Revenue from product sales
|
$
|
215
|
|
|
$
|
49
|
|
|
338.8
|
%
|
|
$
|
300
|
|
|
$
|
217
|
|
|
38.2
|
%
|
|
(1)
|
Collaboration revenue
|
—
|
|
|
30
|
|
|
(100.0
|
)%
|
|
18
|
|
|
193
|
|
|
(90.7
|
)%
|
|
(2)
|
||||
Total revenue
|
215
|
|
|
79
|
|
|
172.2
|
%
|
|
318
|
|
|
410
|
|
|
(22.4
|
)%
|
|
|
||||
Cost of product sales
|
287
|
|
|
62
|
|
|
362.9
|
%
|
|
696
|
|
|
283
|
|
|
145.9
|
%
|
|
(3)
|
||||
Cost of collaboration revenue
|
—
|
|
|
142
|
|
|
(100.0
|
)%
|
|
1
|
|
|
230
|
|
|
(99.6
|
)%
|
|
(4)
|
||||
Total cost of revenue
|
287
|
|
|
204
|
|
|
40.7
|
%
|
|
697
|
|
|
513
|
|
|
35.9
|
%
|
|
|
||||
Gross loss
|
$
|
(72
|
)
|
|
$
|
(125
|
)
|
|
(42.4
|
)%
|
|
$
|
(379
|
)
|
|
$
|
(103
|
)
|
|
268.0
|
%
|
|
|
(1)
|
Revenue from product sales solely relates to, and is recognized based on, the shipment of LAVIV injections to patients. Although the number of injections can fluctuate from period to period, product revenues continue to be, and are expected to remain, insignificant to our operations. In connection with the wind-down of azficel-T operations, the Company is no longer accepting new prescriptions.
|
(2)
|
Collaboration revenue is related to a research and development agreement that we have with a third party to investigate potential new non-pharmaceutical applications for our conditioned fibroblast media technology. Revenue recognized to date relates to an upfront license fee of approximately less than $0.1 million that was being amortized over the estimated total contract period and $0.2 million for a proof-of-concept study that was completed during the fourth quarter of 2015. Collaboration revenue for the three and nine months ended September 30, 2016 solely relates
|
(3)
|
Cost of product sales includes direct and indirect costs related to the processing of cells for LAVIV. Cost of product sales increased approximately
$0.2 million
, or
362.9%
, for the
three months ended September 30, 2016
and
$0.4 million
, or
145.9%
, for the
nine months ended September 30, 2016
as compared to the same periods in 2015. The increases for both the three- and nine-month periods are primarily due to increases in sales volume during the 2016 periods as well as charges for inventory write-offs recorded as a result of the wind-down of our azficel-T operations.
|
(4)
|
Cost of collaboration revenue during the three and nine months ended September 30, 2015 relates to a proof-of-concept study which was completed during 2015. As such, no such expenses were incurred during the three and nine months ended September 30, 2016.
|
|
For the Three Months
Ended September 30, |
|
For the Nine Months
Ended September 30, |
|
|
||||||||||||||||||
($ in thousands)
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
|
|
||||||||||
Direct costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FCX-007
|
$
|
827
|
|
|
$
|
1,298
|
|
|
(36.3
|
)%
|
|
$
|
2,745
|
|
|
$
|
3,527
|
|
|
(22.2
|
)%
|
|
(1)
|
FCX-013
|
125
|
|
|
512
|
|
|
(75.6
|
)%
|
|
544
|
|
|
1,216
|
|
|
(55.3
|
)%
|
|
(2)
|
||||
azficel-T for vocal cord scarring
|
25
|
|
|
218
|
|
|
(88.5
|
)%
|
|
195
|
|
|
942
|
|
|
(79.3
|
)%
|
|
(3)
|
||||
Other
|
26
|
|
|
23
|
|
|
13.0
|
%
|
|
82
|
|
|
122
|
|
|
(32.8
|
)%
|
|
|
||||
Total direct costs
|
1,003
|
|
|
2,051
|
|
|
(51.1
|
)%
|
|
3,566
|
|
|
5,807
|
|
|
(38.6
|
)%
|
|
|
||||
Indirect costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Regulatory costs
|
247
|
|
|
236
|
|
|
4.7
|
%
|
|
697
|
|
|
716
|
|
|
(2.7
|
)%
|
|
|
||||
Intangible amortization
|
—
|
|
|
138
|
|
|
(100.0
|
)%
|
|
231
|
|
|
414
|
|
|
(44.2
|
)%
|
|
(4)
|
||||
Compensation and related expense
|
638
|
|
|
1,165
|
|
|
(45.2
|
)%
|
|
2,693
|
|
|
2,981
|
|
|
(9.7
|
)%
|
|
(5)
|
||||
Process development
|
8
|
|
|
481
|
|
|
(98.3
|
)%
|
|
1,007
|
|
|
552
|
|
|
82.4
|
%
|
|
(6)
|
||||
Other indirect R&D costs
|
283
|
|
|
150
|
|
|
88.7
|
%
|
|
1,188
|
|
|
1,432
|
|
|
(17.0
|
)%
|
|
(7)
|
||||
Total indirect costs
|
1,176
|
|
|
2,170
|
|
|
(45.8
|
)%
|
|
5,816
|
|
|
6,095
|
|
|
(4.6
|
)%
|
|
|
||||
Total research and development expense
|
$
|
2,179
|
|
|
$
|
4,221
|
|
|
(48.4
|
)%
|
|
$
|
9,382
|
|
|
$
|
11,902
|
|
|
(21.2
|
)%
|
|
|
(1)
|
Costs for our FCX-007 program decreased approximately $
0.5 million
, or
36.3%
, for the
three months ended September 30, 2016
and
$0.8 million
, or
22.2%
, for the
nine months ended September 30, 2016
as compared to the same periods in 2015. The decreases for both the three- and nine-month periods are primarily due to the completion of pre-clinical development activities in the first quarter of 2016 that were ongoing during the nine months ended September 30, 2015, offset partially by costs associated with the initiation of the Phase I portion of our Phase I/II clinical trial for FCX-007 in adults in the second quarter of 2016.
|
(2)
|
Costs for our FCX-013 program decreased approximately
$0.4 million
, or
75.6%
, for the
three months ended September 30, 2016
and
$0.7 million
, or
55.3%
, for the
nine months ended September 30, 2016
as compared to the same periods in 2015. The decreases for both the three- and nine-month periods are primarily due to the completion of our proof-of-concept study in the first quarter of 2016, as compared to early product development expenses incurred during the nine months ended September 30, 2015, which included gene screening and selection, construct build and optimization, vector optimization, assay development, RTS
®
switch and ligand optimization and some early animal model work.
|
(3)
|
Costs for our azficel-T for vocal cord scarring program decreased approximately
$0.2 million
, or
88.5%
, for the
three months ended September 30, 2016
and
$0.7 million
, or
79.3%
, for the
nine months ended September 30, 2016
as compared to the same periods in 2015 as dosing in the Phase II trial was complete as of December 31, 2015. No subject enrollment or clinical manufacturing costs were incurred in the 2016 periods.
|
(4)
|
Intangible asset amortization decreased approximately
$0.1 million
, or
100.0%
, for the
three months ended September 30, 2016
and
$0.2 million
, or
44.2%
, for the
nine months ended September 30, 2016
as compared to the same periods in 2015 due to the impairment of the Company’s intangible assets during the second quarter of 2016 which resulted in no amortization expense during the three months ended September 30, 2016. See Note 3 in the accompanying Notes to the Condensed Consolidated Financial Statements contained in this Form 10-Q for further details.
|
(5)
|
Compensation and related expense decreased approximately
$0.5 million
, or
45.2%
, for the
three months ended September 30, 2016
and
$0.3 million
, or
9.7%
, for the
nine months ended September 30, 2016
as compared to the same periods in 2015. The decreases for both the three- and nine-month periods are primarily due to decreases in salaries and bonus expense resulting from the reduction in workforce associated with the wind-down of azficel-T operations which occurred in June 2016.
|
(6)
|
Process development costs decreased approximately
$0.5 million
, or
98.3%
, for the
three months ended September 30, 2016
compared to the same period in 2015 as a result of internal process development work being halted in June 2016 in connection with the wind-down of azficel-T operations and related restructuring initiatives.
|
(7)
|
Other indirect R&D costs increased approximately
$0.1 million
, or
88.7%
, for the
three months ended September 30, 2016
as compared to the same period in 2015 primarily due to a greater allocation of fixed overhead costs for our manufacturing facility to indirect research and development expense. No process development for the azficel-T manufacturing process occurred in the third quarter of 2016 due to the wind-down of azficel-T.
|
|
For the Three Months
Ended September 30, |
|
For the Nine Months
Ended September 30, |
|
|
||||||||||||||||||
($ in thousands)
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
|
|
||||||||||
Compensation and related expense
|
$
|
1,194
|
|
|
$
|
1,304
|
|
|
(8.4
|
)%
|
|
$
|
3,944
|
|
|
$
|
3,829
|
|
|
3.0
|
%
|
|
|
Professional fees
|
744
|
|
|
461
|
|
|
61.4
|
%
|
|
1,762
|
|
|
3,030
|
|
|
(41.8
|
)%
|
|
(1)
|
||||
Facilities and related expense and other
|
785
|
|
|
712
|
|
|
10.3
|
%
|
|
2,297
|
|
|
2,182
|
|
|
5.3
|
%
|
|
|
||||
Total selling, general and administrative
expense
|
$
|
2,723
|
|
|
$
|
2,477
|
|
|
9.9
|
%
|
|
$
|
8,003
|
|
|
$
|
9,041
|
|
|
(11.5
|
)%
|
|
|
(1)
|
Professional fees increased approximately
$0.3 million
, or
61.4%
, for the
three months ended September 30, 2016
as compared to the same period in 2015 primarily due to financing-related costs incurred during the 2016 period that were not incurred during the 2015 period.
|
•
|
Our default in a payment obligation under the Notes;
|
•
|
Our default in a payment obligation under other Company debt in excess of $5 million;
|
•
|
Our breach of the restrictive covenants or other terms of the Notes;
|
•
|
Certain specified insolvency and bankruptcy-related events; and
|
•
|
Our common stock ceasing to be listed or quoted on NASDAQ or other national securities exchange.
|
•
|
pay dividends or make distributions on our capital stock or redeem or repurchase our capital stock;
|
•
|
create, assume or suffer to exist at any time any lien upon any of our properties or assets;
|
•
|
assign any accounts or other right to receive income;
|
•
|
incur any senior and
pari passu
debt;
|
•
|
enter into transactions with affiliates other than on terms and conditions approved by a majority of the disinterested members of our board of directors; and
|
•
|
use the proceeds of the 2016 Private Placement for any purpose other than solely for the continued pre-clinical and clinical development of our product candidates and for other general corporate purposes.
|
•
|
up to 15,913,612 shares of Company common stock could be issuable by us in connection with the conversion of principal under the Notes, plus
|
•
|
up to 7,779,584 shares of Company common stock could be issuable by us in satisfaction of our interest payment obligations under the Notes; plus
|
•
|
up to 18,087,500 shares of Company common stock could be issuable by us in connection with the exercise of the warrants.
|
•
|
a limited availability of market quotations for our securities;
|
•
|
a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
|
•
|
a limited amount of news and little or no analyst coverage for us;
|
•
|
we would no longer qualify for exemptions from state securities registration requirements, which may require us to comply with applicable state securities laws; and
|
•
|
a decreased ability to issue additional securities (including pursuant to short-form registration statements on Form S-3) or obtain additional financing in the future.
|
FIBROCELL SCIENCE, INC.
|
|
|
|
By:
|
/s/ Keith A. Goldan
|
|
Keith A. Goldan
|
|
Senior Vice President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
|
Date:
|
November 3, 2016
|
EXHIBIT NO.
|
|
IDENTIFICATION OF EXHIBIT
|
4.1
|
|
Form of Convertible Promissory Note (incorporated by reference to Exhibit 4.1 to Fibrocell’s Form 8-K filed on September 8, 2016)
|
4.2
|
|
Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to Fibrocell’s Form 8-K filed on September 8, 2016)
|
10.1*
|
|
Agreement for the Purchase and Sale of Convertible Debt and Common Stock Warrants dated August 9, 2016
|
10.2
|
|
Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.1 to Fibrocell’s Form 8-K filed on September 8, 2016)
|
31.1*
|
|
Certification pursuant to Rule 13a-14(a) and 15d-14(a), required under Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2*
|
|
Certification pursuant to Rule 13a-14(a) and 15d-14(a), required under Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1*
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2*
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
FINANCING TERMS
|
|
|
|
Borrower
|
The Company
|
|
|
Investors
|
The parties listed on Schedule A and such other parties that execute this Agreement from time to time after the date hereof (collectively, the “
Investors
”), subject to a maximum aggregate original principal amount of Notes equal to $25 million. It is agreed that this Agreement may be executed in one or more counterparts, each with independent legal significance. Notwithstanding anything to the contrary contained herein, the commitment of each Investor shall be several and not joint and limited to the amount set forth opposite such Investor’s name on Schedule A or, after the date hereof, such Investor’s counterpart signature page hereto.
|
|
|
Securities Offered
|
Convertible Debt as evidenced through a Note. Each dollar of investment will entitle the Investor to $1 of original principal amount of the Note and the Warrant Coverage specified below.
|
|
|
Convertible Debt
|
10-year, 4% interest, promissory note. Each Investor’s Note shall be convertible, at any time and from time to time, at the election of such Investor, into shares of Company Common Stock at the Applicable Note Conversion Price. Additionally, each Investor will have a Put Right to require the Company to repay the unpaid principal and accrued and unpaid interest of the Investor’s Note on or after the fifth anniversary of the Closing Date.
|
|
|
Warrants
|
Each Investor will receive a five-year warrant to purchase the number of shares of Company Common Stock specified below at a per share purchase price equal to the Applicable Warrant Exercise Price.
|
|
|
Amount to be Raised
|
Up to $25 million but not subject to any minimum individual or aggregate investment amount.
|
|
|
Closing Date
|
As soon as reasonably possible after the date hereof upon completion of definitive documentation customary for financing transactions of this nature.
|
|
|
Documents
|
The terms specified in this Agreement shall be further reflected in a: (1) Convertible Promissory Note, (2) Common Stock Warrant and (3) a Registration Rights Agreement. In addition, the definitive documentation governing the Convertible Debt and the Warrants will include customary limitations on conversion of the Convertible Debt, exercise of the Warrant and payment of any accrued interest using shares of Company Common Stock, in each case, intended to enable the Investor to avoid being deemed a beneficial owner of 5% or more of the Company Common Stock (the “
Applicable Cap
”).
|
TERMS OF CONVERTIBLE PROMISSORY NOTES
|
|
|
|
Interest Rate
|
4% per annum. Interest shall be earned daily and compounded quarterly and, at the election of the Company at the beginning of each quarter, shall accrue or be paid in cash. If the Company elects to have interest accrue, such interest will not be added to the principal amount of the Note but such interest shall be subject to additional interest at the rate of 4% per annum, compounded quarterly, and shall be due and payable, upon the earliest of the conversion, exercise of the Put Right, or Company payoff of the Note. Notwithstanding anything contained herein to the contrary, if the Company elects for interest to accrue, then (i) the Company may elect to repay any such accrued and unpaid interest (and any interest thereon) in cash at any time and from time to time and (ii) the Investor may elect to have the Company repay any such accrued and unpaid interest (and any interest thereon) by delivering such number of shares of Company Common Stock equal to the (x) the amount to accrued and unpaid interest (including accrued interest thereon) to be repaid, divided by (y) the last closing bid price of a share of Company Common Stock as reported on the NASDAQ Capital Market at the time of such election, provided, that, (i) such share price is above the Applicable Conversion Price; (ii) if any Investor is subject to the Applicable Cap, and payment will not require the Investor to exceed such Applicable Cap and (iii) such payment will not cause any Investor to violate applicable law.
Upon an event of default, the base interest rate (excluding additional interest as described in the foregoing paragraph) shall be 12% per annum.
|
|
|
Maturity Date
|
The earlier of (i) ten (10) years from the Closing Date or (ii) one-hundred and eighty (180) days after the date on which FCX-007 is approved by the U.S. FDA for the treatment of recessive dystrophic epidermolysis bullosa (“
FDA Approval
”).
|
|
|
Covenants
|
Covenants of the Company prohibiting restricted payments, the incurrence of senior and pari passu debt, affiliate transactions (other than transactions with Intrexon approved by a majority of the disinterested members of the Company’s board of directors), and the incurrence of liens. Any waiver of such covenants shall require the approval of the holders representing at least two-thirds of the then outstanding aggregate principal amount of the Notes.
|
|
|
Put Right
|
Each Investor will have a Put Right to require the Company to repay all or any portion of the unpaid principal and accrued and unpaid interest from time to time on or after the fifth anniversary of the Closing Date. Such Put Right must be exercised by such Investor by delivering written notice to the Company no later than 180 days prior to such exercise date.
|
|
|
Conversion
|
All unpaid principal of the Note shall be convertible, at any time and from time-to-time, at the option of each Investor into such number of shares of Company Common Stock equal to the unpaid principal amount of the Note being converted divided by the greater of (x) $1.01, plus $0.12625 or (y) the last closing bid price of a share of Company common stock as reported on the NASDAQ Capital Market at the time of the Investor’s execution of a counterpart to this term sheet, plus $0.12625 (the “
Applicable Conversion Price
”). The Applicable Conversion Price is intended to be calculated to satisfy NASDAQ rules and regulations for the Notes and Warrants to be deemed to be issued “at the market” (i.e.,
not
at a discount to market) on the date hereof. For purposes thereof, the Applicable Conversion Price is based on the last closing bid price of a share of Company Common Stock as reported on the NASDAQ Capital Market at the time of Investor’s execution of this Agreement or a counterpart hereto, plus $0.125 for every 100% of warrant coverage (or portion thereof).
|
|
|
Anti-Dilution
|
Structural anti-dilution (i.e., stock splits, stock dividends and distributions of cash or other assets to Company stockholders). For purposes of clarity there will not be anti-dilution protection for dilutive issuances of equity securities or securities convertible into equity.
|
|
|
Prepayment
|
The Company may not prepay the Note prior to the Maturity Date without the consent of the Investor. Upon and for a period of thirty (30) days after the consummation of a change of control, each Investor may elect to accelerate the repayment of all unpaid principal and accrued and unpaid interest under the Note.
|
|
|
Amendment
|
Each Note may only be amended by the written consent of the Company and the applicable Investor;
provided
that any such amendment must also be offered to the other holders of the Notes on the same terms and conditions.
|
|
|
TERMS OF WARRANTS
|
|
|
|
Warrant Coverage
|
Concurrently with the issuance of a Note, each Investor shall be entitled to receive a warrant that will entitle the Investor to purchase such number of shares of Company Common Stock equal to the original principal amount of the Note purchased by the Investor.
|
|
|
Warrant Exercise Price
|
Warrants shall be exercisable for shares of Company Common Stock at a per share purchase price equal to the greater of (x) $1.50 and (y) the last closing bid price of a share of Company common stock as reported on the NASDAQ Capital Market at the time of the Investor’s execution of a counterpart to this term sheet (the “
Applicable Warrant Exercise Price
”). The Warrants may be exercised on a cashless basis.
|
|
|
Warrant Term
|
Five (5) years. Exercisable commencing on the day after the six-month anniversary of the date of grant.
|
|
|
Anti-Dilution
|
Structural anti-dilution (i.e., stock splits, stock dividends and distributions of cash or other assets to Company stockholders). For purposes of clarity, there will not be anti-dilution adjustments for dilutive issuances of equity securities or securities convertible into equity.
|
|
|
Change of Control
|
Upon and for a period of thirty (30) days following consummation of a Change of Control, the Investors shall have a right to put the Warrants to the Company (or its successor) at the Black-Scholes value of the Warrants calculated based on the 30-day weighted average trading price and 30-day volatility obtained from the HVT function on Bloomberg, in each case, determined as of the trading day immediately preceding the announcement of the Change of Control.
|
|
|
Amendment
|
Each Warrant may only be amended by written consent of the Company and the applicable Investor; provided, that, any such amendment must also be offered to the other holders of the Warrants on the same terms and conditions.
|
Date:
|
November 3, 2016
|
By:
|
/s/ David Pernock
|
|
David Pernock
|
|
Chief Executive Officer
|
Date:
|
November 3, 2016
|
By:
|
/s/ Keith A. Goldan
|
|
Keith A. Goldan
|
|
SVP and Chief Financial Officer
|
Date:
|
November 3, 2016
|
By:
|
/s/ David Pernock
|
|
David Pernock
|
|
Chief Executive Officer
|
Date:
|
November 3, 2016
|
By:
|
/s/ Keith A. Goldan
|
|
Keith A. Goldan
|
|
SVP and Chief Financial Officer
|