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Subsequent Events
3 Months Ended
Mar. 31, 2018
Subsequent Events [Abstract]  
Subsequent Events

Note 9 - Subsequent Events

 

Except for the event(s) discussed in this Note 9, there were no subsequent events that required recognition or disclosure. The Company evaluated subsequent events through the date the financial statements were issued and filed with the Securities and Exchange Commission.

 

Series E Convertible Preferred Share Private Placement Offering

 

In April and May 2018, we entered into Subscription Agreements with certain accredited investors and conducted a closing pursuant to which we sold 2,812  shares of our Series E convertible preferred stock (the “Preferred Stock”), at a purchase price of $5,000 per share of Preferred Stock. Each share of Preferred Stock is initially convertible into shares of our common stock at a conversion price of $0.50 per share of common stock. In addition, each investor received a 5-year warrant (the “Warrants”, and collectively with the Preferred Stock, the “Securities”) to purchase 0.75 shares of common stock for each share of common stock issuable upon the conversion of the Preferred Stock purchased by such investor at an exercise price equal to $0.55 per share of common stock, subject to adjustment thereunder. The Preferred Stock has voting rights, dividend rights, liquidation preferences, conversion rights and anti-dilution rights as described in the Certificate of Designation of Preferences, Rights and Limitations of the Preferred Stock, which we filed with the Secretary of State of Delaware in April 2018. The Warrants have full-ratchet anti-dilution protection, are exercisable for a period of five years and contain customary exercise limitations.

 

We received proceeds of approximately $12 million from the sale of the Securities, after deducting placement agent fees and estimated expenses payable by us of approximately $2 million associated with such closing. We intend to use the proceeds of the offering for funding our commercial operations to the sale and promotion of our Prestalia product, working capital needs, capital expenditures, the repayment of certain liabilities and other general corporate purposes. In connection with the private placement described above, we also issued to the placement agent for such private placement a Warrant to purchase 2,958,460 shares of our common stock.

 

Stipulation of Settlement

 

As discussed in Note 8, in April 2018, we entered into a Stipulation of Settlement requiring us to issue Vaya Pharma shares of our common stock with a fair value of $250,000, which shares were issued in the second fiscal quarter of 2018. We accrued $250,000, as of March 31, 2018 and December 31, 2017, respectively, and such amount is included in accrued expenses on the accompanying consolidated balance sheets.

 

Resignation of Officer and Directors

 

In May 2018, the Board accepted the resignation of Joseph W. Ramelli, our Chief Executive Officer, whereby Mr. Ramelli resigned as an officer of our company, and as a director and/or officer of any and all subsidiaries of our company, effective immediately, to pursue other opportunities. In connection with his resignation, Mr. Ramelli released us from all claims arising prior to the date of his resignation and affirmed his obligations to be bound by the restrictive covenants contained in the employment agreement between Mr. Ramelli and our company dated February 2, 2017, and we: (i) agreed to make severance payments to Mr. Ramelli in the amount of $60,000 to be paid over a six (6) month period; and (ii) granted to Mr. Ramelli fully-vested options, exercisable for a period of five years from the grant date, to purchase up to 100,000 shares of our common stock at an exercise price equal to $0.98 per share of common stock. In May 2018, the Board appointed Vuong Trieu, our Executive Chairman, to serve as our Interim Chief Executive Officer, to replace Mr. Ramelli, effective immediately. In his capacity as Interim Chief Executive Officer, Dr. Trieu shall receive a salary in the amount of $20,000 per month.

 

In May 2018, each of Philip C. Ranker and Philippe P. Calais, Ph.D. resigned as members of the Board, and all committees thereof, effective immediately. In connection with their resignations: (i) each of Mr. Ranker and Dr. Calais released us from all claims arising prior to the date of his resignation; (ii) we granted to Mr. Ranker fully-vested options to purchase up to 200,000 shares of our common stock at an exercise price equal to $0.98 per share of common stock; and (iii) we granted to Dr. Calais fully-vested options to purchase up to 80,000 shares of our common stock at an exercise price equal to $0.98 per share of common stock. The foregoing options are exercisable for a period of five years from the grant date.

 

Issuance of Preferred Stock and Warrants to Directors

 

In April 2018, and in connection with the closing of our private placement on that date, we entered into Compromise and Settlement Agreements with four of the current members of our Board of Directors and one former member of our Board of Directors pursuant to which we agreed to issue to such directors an aggregate of 58.25 shares of Preferred Stock and Warrants to purchase up to 436,875 shares of common stock to satisfy accrued and unpaid fees owed to such directors for service as members of the Board of Directors during the period ending on December 31, 2017 in the aggregate amount of approximately $291,250. The Securities that were issued to the directors, which were issued upon the closing of our private placement described above, have the same terms and conditions as the Securities that were issued to investors in the offering.

 

Issuance of Securities to June 2016 Noteholders

 

In April 2018, and in connection with the closing of our private placement on that date, we issued to the holders (such holders, the “June 2016 Noteholders”) of those certain promissory notes in the original principal amount of $300,000 that we issued pursuant to that certain Note Purchase Agreement dated June 20, 2016 by and among our company and the June 2016 Noteholders (the “2016 Notes”) an aggregate of 71.46 shares of Preferred Stock and Warrants to purchase up to 535,950 shares of common stock as a result of the conversion of the 2016 Notes. As a result of the conversion of the 2016 Notes and the issuance of the Securities to the June 2016 Noteholders, the entire unpaid principal balance of the 2016 Notes, and the accrued and unpaid interest thereon, has been satisfied in full, and such notes are no longer outstanding.

 In addition, in April 2018, and in connection with the closing of our private placement on that date, we issued to the June 2016 Noteholders an aggregate of 75 shares of Preferred Stock and Warrants to purchase up to 562,500 shares of common stock in full and complete satisfaction of our obligations to issue $375,000 worth of “Consideration Securities” to the 2016 Noteholders pursuant to that certain amendment agreement dated July 3, 2017 by and among our company and the June 2016 Noteholders.

 

Issuance of Securities to June 2017 Noteholders

 

In April 2018, and in connection with the closing of our private placement on that date, we issued to the holders of those certain promissory notes in the original principal amount of $400,000 (the “2017 Notes”) that we issued to select accredited investors (the “June 2017 Noteholders”) pursuant to Note Purchase Agreements that we entered into with the June 2017 Noteholders during June 2017 an aggregate of 83.44 shares of Preferred Stock and Warrants to purchase up to 625,800 shares of common stock as full and complete satisfaction of the unpaid principal balance (and accrued but unpaid interest thereon) owed by us to the June 2017 Noteholders under the 2017 Notes. As a result of the conversion of the 2016 Notes and the issuance of the Securities to the June 2016 Noteholders, the entire unpaid principal balance of the 2016 Notes, and the accrued and unpaid interest thereon, has been satisfied in full, and such notes are no longer outstanding. The Securities that were issued to the June 2017 Noteholders have the same terms and conditions as the Securities that were issued to investors in the offering.

 

Issuance of Securities to Blech Trust

 

In April 2018, and in connection with the closing of our private placement on that date, we issued to a trust affiliated with Isaac Blech, a member of our Board of Directors, an aggregate of 103.18 shares of Preferred Stock and Warrants to purchase up to 777,750 shares of common stock as a result of the conversion of that certain secured convertible promissory note in the original principal amount of $500,000 that we issued to such investor on November 22, 2017 (the “Blech Note”). As a result of the conversion of the Blech Note and the issuance of the Securities to the holder thereof, the entire unpaid principal balance of the Blech Notes, and the accrued and unpaid interest thereon, has been satisfied in full, and the Blech Note is no longer outstanding. The Securities that were issued to the holder of the Blech Note have the same terms and conditions as the Securities that were issued to investors in the offering.

 

Issuance of Securities to Satisfy Lines of Credit

 

In April 2018, and in connection with the closing of our private placement on that date, we issued to Vuong Trieu, Ph.D., our Executive Chairman, 114.63 shares of Preferred Stock and Warrants to purchase up to 859,725 shares of common stock as full and complete satisfaction of the unpaid principal balance (and accrued but unpaid interest thereon) owed by us to Dr. Trieu under that certain line of credit in the amount of up to $540,000 that was provided by Dr. Trieu to us, all of which had been drawn down as of the date of the closing of our private placement. The line of credit was extended pursuant to a Line Letter dated November 15, 2016 by and between us and Dr. Trieu. The Securities that were issued to Dr. Trieu have the same terms and conditions as the Securities that were issued to investors in the offering.

 

In April 2018, and in connection with the closing of our private placement on that date, we issued to Autotelic Inc. 19 shares of Preferred Stock and Warrants to purchase up to 142,500 shares of common stock as full and complete satisfaction of the unpaid principal balance (and accrued but unpaid interest thereon) owed by us to Autotelic Inc. under that certain line of credit in the amount of up to $500,000 that was provided by Autotelic Inc. to us, of which $90,816 had been drawn down as of the date of the closing described above. The line of credit was extended pursuant to a Line Letter dated April 4, 2017 by and between us and Autotelic Inc. Vuong Trieu, our Executive Chairman and Interim CEO, serves as Chairman of the Board of Autotelic Inc. The Securities that were issued to Autotelic Inc. have the same terms and conditions as the Securities that were issued to investors in the offering.

 

Issuance of Securities for Payables

 

In April 2018, and in connection with the closing of our private placement on that date, we entered into a Compromise and Settlement Agreement with Autotelic Inc. pursuant to which we agreed to issue to Autotelic Inc. an aggregate of 162.59 shares of Preferred Stock and Warrants to purchase up to 2,564,465 shares of common stock to satisfy accrued and unpaid fees in the aggregate amount of approximately $812,967, and other liabilities, owed to Autotelic Inc. as of March 31, 2018 pursuant to that certain Master Services Agreement dated as of November 15, 2016 by and between our company and Autotelic Inc. Vuong Trieu, our Executive Chairman and Interim CEO, serves as Chairman of the Board of Autotelic Inc. The Securities that were issued to Autotelic Inc., which were issued upon the closing described above, have the same terms and conditions as the Securities that were issued to investors in the offering.

 

Stock Issuance to Novosom

 

In May 2018, we issued to Novosom Verwaltungs GmbH (“Novosom”) 51,988 shares of our common stock as additional consideration pursuant to the Asset Purchase Agreement, dated as of July 27, 2010, between our company and Novosom. Such shares were due to Novosom as a result of the receipt by our company of a license fee under the License Agreement that we entered into with Lipomedics Inc. in February 2017.