On the Company completed a registered direct public offering (the “Second Registered Direct Offering”) to sell shares of its common stock at a price of per share to certain institutional investors. The Second Registered Direct Offering resulted in gross proceeds to the Company of approximately million. The Company is using the net proceeds from the Second Registered Direct Offering for working capital, repayment of indebtedness and general corporate purposes.

 

In addition, the Company granted each institutional investor who participated in the Second Registered Direct Offering the right, for a period of months following or until to participate in any public or private offering by the Company of equity securities, subject to certain exceptions, up to such investor’s pro rata portion of of the securities being offered.

 

On the Company completed a registered direct public offering (the “Third Registered Direct Offering”) to sell shares of its common stock and a concurrent private placement (the “Private Placement”) to sell warrants to purchase shares of our common stock ( the “Warrants”) to the same investors participating in the Third Registered Direct Offering. The Warrants and the shares of its common stock issuable upon the exercise of the Warrants were not registered under the Securities Act of as amended ( the “Securities Act”) and were sold pursuant to the exemption provided in Section under the Securities Act and Rule promulgated thereunder. The shares of common stock sold in the Third Registered Direct Offering and the Warrants issued in the concurrent Private Placement were issued separately but sold together at a combined purchase price of per share of common stock and accompanying Warrant. The Third Registered Direct Offering resulted in gross proceeds to the Company of approximately million. The Company is using the net proceeds from the Third Registered Direct Offering for working capital, repayment of indebtedness and general corporate purposes, and used approximately million to satisfy severance obligations due to former senior executives.

 

On the Company completed a confidentially marketed public offering (the “CMPO”) to sell shares of its common stock at per share with an overallotment option of to certain institutional and retail investors. The Company intends to use the proceeds from the CMPO for working capital, repayment of indebtedness and liabilities and for general corporate purposes.

On the Company entered into an exchange agreement (the “Exchange Agreement”), with an institutional investor (the “Investor”). Prior to the Company entering into the Exchange Agreement, the Investor acquired the RedPath Note. The RedPath Note, which was entered into in connection with the Company’s acquisition of RedPath in had an aggregate principal amount of million outstanding and was acquired by the Investor for million. The RedPath Equityholder Representative assigned all of its rights, title and interest in the RedPath Note to the Investor, including, but not limited to, its security interest in all of the assets of the Company and the assets of the Company’s subsidiaries.

 

Pursuant to the Exchange Agreement, the Company and the Investor agreed to exchange the RedPath Note for (i) a senior secured convertible note in the aggregate principal amount of million (the “Exchanged Convertible Note”), which is convertible into shares of the Company’s common stock,in accordance with its terms, and (ii) a senior secured non-convertible note with an aggregate principal amount of million (the “Exchanged Non-Convertible Note” and collectively, the “Exchanged Notes”), for a combined aggregate principal amount of million. The Exchanged Notes rank senior to all of the Company’s outstanding and future indebtedness, other than the indebtedness in favor of the Company’s credit line lender and are secured by a perfected security interest in all of the existing and future assets of the Company and those of the Company’s subsidiaries. Upon the reduction of of the aggregate principal amount of each of the Exchanged Notes, the Investor will release its security interest in its entirety.

 

The Exchanged Notes mature at of the face value on the month anniversary of the closing date, or and bear interest quarterly at and hundredth percent per annum (as be adjusted from time to time). Under the terms of the Exchanged Notes, the Company has the right to require a redemption of a portion (not less than or all of the applicable Exchanged Notes prior to their maturity at a price equal to of the principal amount of the Exchanged Notes within the days of issuance, of the principal amount of the Exchanged Notes between and days of issuance, and of the principal amount of the Exchanged Notes after days of issuance. A mandatory redemption be required by the Investor in connection with the occurrence of an event of default or change of control. In each event, the redemption price is subject to a premium on parity, and the Exchanged Convertible Note redemption be subject to a premium on parity if certain unfavorable conditions exist. 

The Exchanged Convertible Note is convertible into shares of the Company’s common stock. The Investor elect to convert all or a portion of the Exchanged Convertible Note and all accrued and unpaid interest with respect to such portion, if any, into shares of common stock at a fixed conversion price of In the event the Company seeks and obtains stockholder approval to issue shares of common stock in connection with the conversion of the Exchanged Convertible Note (which determination shall be at the Company’s sole discretion) from and after the date of the Exchange Agreement, the Exchanged Convertible Note alternatively be converted (“Alternative Conversion”) by the Investor at the greater of (i) and (ii) lowest of (x) the applicable conversion price as in effect on the applicable conversion date of the applicable Alternative Conversion, and (y) of the lowest volume-weighted average price of the common stock during the consecutive trading day period ending and including the date of delivery of the applicable conversion notice. If the volume-weighted average price of the common stock exceeds of the Fixed Conversion Price, or for consecutive trading days and no equity conditions failure then exists, the Company has the option to convert the Exchanged Convertible Note into shares of common stock at the Fixed Conversion Price. The Company shall not effect the conversion of any portion of the Exchanged Convertible Note, and the Investor shall not have the right to convert any portion of the Exchanged Convertible Note, to the extent that after giving effect to such conversion, the Investor together with any other persons whose beneficial ownership of the Company’s common stock could be aggregated with the Investor’s collectively would be in excess of of the shares of common stock outstanding immediately after giving effect to such conversion. Additionally, any such conversion will be null and void and treated as if never made. As of the Investor had converted approximately of the Exchanged Convertible Note to common stock, converting of the Exchanged Convertible Note into shares of common stock.

 

 

In the event the Company seeks and obtains stockholder approval to issue shares of common stock in connection with the conversion of the Exchanged Convertible Note (which determination shall be at the Company’s sole discretion) from and after the date of the Exchange Agreement, the Exchanged Convertible Note alternatively be converted (“Alternative Conversion”) by the Investor at the greater of (i) and (ii) lowest of (x) the applicable conversion price as in effect on the applicable conversion date of the applicable Alternative Conversion, and (y) of the lowest volume-weighted average price of the common stock during the consecutive trading day period ending and including the date of delivery of the applicable conversion notice. If the volume-weighted average price of the common stock exceeds of the Fixed Conversion Price, or for consecutive trading days and no equity conditions failure then exists, the Company has the option to convert the Exchanged Convertible Note into shares of common stock at the Fixed Conversion Price. The Company shall not effect the conversion of any portion of the Exchanged Convertible Note, and the Investor shall not have the right to convert any portion of the Exchanged Convertible Note, to the extent that after giving effect to such conversion, the Investor together with any other persons whose beneficial ownership of the Company’s common stock could be aggregated with the Investor’s collectively would be in excess of of the shares of common stock outstanding immediately after giving effect to such conversion. Additionally, any such conversion will be null and void and treated as if never made.

The Company entered into an engagement letter with Maxim Group LLC (“Maxim”). Maxim will be paid upon issuance of the Exchanged Notes as a deposit. In the event that the Exchanged Notes are converted on multiple tranches, Maxim will be paid a cash fee of of the New Notes converted on each occasion. However, Maxim will be paid a cash fee of the principal of the Exchanged Notes being cash redeemed on each occasion and, regardless of any remaining principal amount ,will be paid at least at the end of the Exchanged Note term in months.

 

Simultaneously with the consummation of the sale of the RedPath Note to the Investor, on the Company and its subsidiaries entered into a Termination Agreement with the RedPath Equityholder Representative. Under the terms of the Termination Agreement, RedPath Equityholder Representative agreed to terminate certain royalty and milestone rights (collectively, the “Royalties”) provided under that certain Contingent Consideration Agreement, dated entered into in connection with the Company’s acquisition of RedPath. In addition, the RedPath Equityholder Representative agreed to terminate its rights, granted under that certain Agreement and Plan of Merger, dated among RedPath, the Company and certain other parties, to designate an observer to be present in an observer capacity at meetings of the Company’s board of directors (the “Board Observer Rights”). As consideration for the termination of its Royalties and Board Observer Rights, the Company agreed to issue warrants (the “RedPath Warrants”) to purchase up to an aggregate of shares of the Company’s common stock to certain former equityholders of RedPath, as designated by the RedPath Equityholder Representative. The Company has days from the instruction of the RedPath Equityholder Representative to effect the issuance of any RedPath Warrants. The RedPath Warrants will have an exercise price of per share, which is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. The RedPath Warrants will be exercisable at any time on or after the -month anniversary of the issuance date, or (the “Initial Exercise Date”), and will survive until the anniversary of the Initial Exercise Date.

If at any time the Company grants, issues or sells any instruments that are convertible into or exercisable or exchangeable for common stock or rights to purchase stock, warrants, securities or other property pro rata to all of the stockholders (the “Purchase Rights”), then the holder of a RedPath Warrant will be entitled to acquire, on the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the holder could have acquired if the holder had held the number of shares of common stock acquirable upon complete exercise of the RedPath Warrant immediately before the date on which a record is taken or otherwise determined for the grant, issuance or sale of such Purchase Rights. In addition, during such time as the RedPath Warrants are outstanding, if the Company declares any dividend or other distribution of its assets (or rights to acquire its assets) to all of the stockholders, by way of return of capital or otherwise (a “Distribution”), then, in each such case, the holder will be entitled to participate in such Distribution to the same extent that the holder would have participated therein if the holder had held the number of shares of common stock acquirable upon complete exercise of the RedPath Warrant immediately before the date of which a record is taken or otherwise determined for participation in such Distribution.

 

Effective former senior executives of the Company each agreed to accept a payment of of the total severance obligations due to each of them pursuant to their respective separation agreements with the Company, or an aggregate of approximately million, in satisfaction and settlement of an aggregate of approximately million in severance payments. Their agreement was conditioned upon their receipt from the Company of such payments by The Company’s obligation to make such payments was conditioned upon the Company consummating a sufficiently large financing (with gross proceeds of approximately million) and the prior agreement of the Company’s investment banker and investors in such financing for the use of a portion of such proceeds for such payments. Each of the former senior executives agreed to enter into releases with the Company at the time of receipt of such payments, and in consideration therefor, releasing the Company and its directors, officers and agents from any and all claims, losses and damages they have or ever had against the Company and its directors, officers and agents. As described previously in this note, the financing was obtained and the severance was paid on As the severance payments were contingent on the Company receiving a minimum of million in financing in the full amount of the severance accrual was maintained at The reduction of the liability will be reflected in the financial statements in the quarter of

On the Company received a summons and verified complaint for nonpayment of its Parsippany, New Jersey office rent. The complaint alleges amounts owing of covering unpaid base rent of from through as well as late charges, attorneys fees, and the redeposit of a security deposit of The plaintiff landlord seeks judgement for possession of the premises. A hearing in the Superior Court of New Jersey, Morris County-Special Civil part, is scheduled for