| Convertible Preferred Stock, Common Stock and Warrants | MabVax Therapeutics Series B preferred stock and warrants
(Pre-Merger MabVax Therapeutics Issuances) Due to the anti-dilution
protection in our Series B Warrants (described below), the Series B warrants were recorded as a current liability in the amount
of $92,463 on the Companys consolidated balance sheet as of December 31, 2014. On March 25, 2015, the Series
B warrants were re-valued at $72,656 prior to being exchanged into shares of common stock and Series D convertible preferred stock
on a one for one basis and the warrant liability was eliminated and the Company recorded a gain of $19,807 for the three months
ended March 31, 2015. Dividends on Preferred Stock The Company immediately
recognizes the changes in the redemption value on preferred stock as they occur and the carrying value of the security is adjusted
to equal what the redemption amount would be as if redemption were to occur at the end of the reporting date based on the conditions
that exist as of that date. The value adjustment made to the redemption value and preferred stock dividends for the three months
ended March 31, 2015, was an increase of $93,234. No dividends were
ever declared by the MabVax Therapeutics Board of Directors since MabVax Therapeutics inception on either of the MabVax
Therapeutics Series A redeemable convertible preferred stock or the MabVax Therapeutics Series B redeemable convertible preferred
stock. Conversion of Preferred Stock into
Common Stock During the six months
ended June 30, 2015, holders of Series A-1, Series B, and Series C preferred stock converted 64,019, 106,437, and 96,571 shares
into 38,456, 276,883, and 120,714 shares of common stock, respectively. Exchange of Series A-1 and Series B Preferred Stock and
Warrants into Common Stock and Series D Preferred Stock On March 25,
2015, the Company entered into separate exchange agreements with certain holders of the Companys Series A-1 preferred stock
and Merger warrants (the Series A-1 Exchange Securities) and holders of the Companys Series B preferred stock
and Series B warrants (the Series B Exchange Securities and, collectively with the Series A-1 Exchange Securities,
the Exchange Securities), all previously issued by the Company. Pursuant to the exchange agreements, the holders
exchanged the Exchange Securities and relinquished any and all other rights they may have had pursuant to the Exchange Securities,
their respective governing agreements and certificates of designation, including any related registration rights, in exchange for
an aggregate of 2,537,502 shares of the Companys common stock and an aggregate of 238,156 shares of the Companys
newly designated Series D Convertible preferred stock (the Series D preferred stock), convertible into 23,815,600
shares of common stock. No cash was exchanged in the transaction. The Company recorded deemed dividends of
$9,017,512, $8,655,998 and $179,411 representing the excess fair value of the common stock issued over the original conversion
terms of the Series A-1 and Series B preferred stock as part of the consideration for elimination of the Series A-1, Series B preferred
stock and Series A-1 warrant, respectively. No commission or
other payment was received by the Company in connection with the exchange agreements. Series D Preferred Stock As of June 30, 2016,
there were 173,288 shares of Series D preferred stock issued and outstanding that are convertible into an aggregate of 17,328,800
shares of common stock, as compared to 191,490 that were convertible into 19,149,000 shares of common stock as of December 31,
2015. As contemplated by
the exchange agreements and as approved by the Companys Board of Directors, the Company filed with the Secretary of State
of the State of Delaware a Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred
Stock (the Series D Certificate of Designations), on March 25, 2015. Pursuant to the Series D Certificate of
Designations, the Company designated 1,000,000 shares of its blank check preferred stock as Series D preferred stock. Each share
of Series D preferred stock has a stated value of $0.01 per share. In the event of a liquidation, dissolution or winding up
of the Company, each share of Series D preferred stock will be entitled to a per share preferential payment equal to the stated
value. Each share of Series D preferred stock is convertible into 100 shares of common stock. The conversion ratio is subject
to adjustment in the event of stock splits, stock dividends, combination of shares and similar recapitalization transactions. The
Company is prohibited from effecting the conversion of the Series D preferred stock to the extent that, as a result of such conversion,
the holder beneficially would own more than 4.99% (provided that certain investors elected to block their beneficial ownership
initially at 2.49% in the Exchange Agreements), in the aggregate, of the issued and outstanding shares of the Companys common
stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series D
preferred stock. Each share of Series D preferred stock entitles the holder to vote on all matters voted on by holders of
common stock. With respect to any such vote, each share of Series D preferred stock entitles the holder to cast such number of
votes equal to the number of shares of common stock such shares of Series D preferred stock are convertible into at such time,
but not in excess of the beneficial ownership limitations. As of March 25,
2015, pursuant to the terms of the exchange agreements, the Series A-1 Purchase Agreement, dated February 12, 2014; Series A-1
Registration Rights Agreement, dated February 12, 2014; the Series B Purchase Agreement, dated May 12, 2014; and the Series B Registration
Rights Agreement, dated May 12, 2014; all of which have been described as part of the Companys annual report on Form 10-K,
were terminated, and all rights covenants, agreements and obligations contained therein, are of no further force or effect. Series E Preferred Stock As of June 30, 2016
and December 31, 2015, there were 33,333 shares of Series E preferred stock issued and outstanding, convertible into 3,333,300
shares of common stock. On March 30, 2015,
the Company filed with the Secretary of State of the State of Delaware a Certificate of Designation of Preferences, Rights and
Limitations of Series E Convertible preferred stock to designate 100,000 shares of its blank check preferred stock as Series E
preferred stock. The shares of Series
E preferred stock are convertible into shares of common stock based on a conversion calculation equal to the stated value of such
preferred share, plus all accrued and unpaid dividends, if any, on such share of Series E preferred stock, as of such date of determination,
divided by the conversion price. The stated value of each share of Series E preferred stock is $75 and the initial conversion price
is $0.75 per share, each subject to adjustment for stock splits, stock dividends, recapitalizations, combinations, subdivisions
or other similar events. In addition, during the period proscribed for in the Series E Preferred Stock Certificate of Designation,
in the event the Company issues or sells, or is deemed to issue or sell, shares of common stock at a per share price that is less
than the conversion price then in effect, the conversion price shall be reduced to such lower price, subject to certain exceptions.
The Company is prohibited from effecting a conversion of the share of Series E preferred stock to the extent that, as a result
of such conversion, such holder would beneficially own more than 4.99% of the number of shares of common stock outstanding immediately
after giving effect to the issuance of shares of common stock upon conversion of the Series E preferred stock, which beneficial
ownership limitation may be increased by the holder up to, but not exceeding, 9.99%. Each holder is entitled to vote on all matters
submitted to stockholders of the Company, and shall have the number of votes equal to the number of shares of common stock issuable
upon conversion of such holders share of Series E preferred stock, but not in excess of beneficial ownership limitations.
The shares of Series E preferred stock bear no interest. April 2015 Private Placement On March 31, 2015,
the Company consummated the first closing of the April 2015 Private Placement and sold $4,714,726 of Units, net of $281,023 in
issuance costs, consisting of 6,661,000 shares of common stock and warrants to purchase 3,330,500 shares of common stock with an
exercise price of $1.50 a share. The Units were sold at a price of $0.75 per Unit. On April 10, 2015,
the Company consummated the second and final closing of the April 2015 Private Placement and sold $3,831,622 of Units, net of $387,127
in issuance costs, of which $2,500,000 of the Units consisted of Series E preferred stock and the balance of it consisting of 5,624,998
shares of common stock, together with warrants to all investors to purchase 4,479,167 shares of common stock at $1.50 a share. Each
Unit was sold at a purchase price of $0.75 per Unit. The Company paid commissions
to broker-dealers in the aggregate amount of approximately $574,000 in the April 2015 Private Placement. OPKO was the lead
investor in the April 2015 Private Placement, purchasing $2,500,000 of Units consisting of Series E preferred stock. As a condition to
OPKOs and Frost Gama Investment Trusts, or FGITs, participation in the April 2015 Private Placement, each
of the other investors in the April 2015 Private Placement agreed to execute lockup agreements restricting the sale of 50% of the
securities underlying the Units purchased by them for a period of six months and the remaining 50% prior to the expiration of one
year following the final closing date of the April 2015 Private Placement. On April 10, 2015,
the Company agreed that $3.5 million of the net proceeds of such closing would be paid into and held under the terms of an escrow
agreement with Signature Bank, N.A. pending the approval of a representative of OPKO or 10 weeks thereafter, unless released sooner
or extended by the Company and OPKO. On June 22, 2015, the Company and OPKO extended the termination date of the escrow
to 16 weeks from the final closing of the April 2015 Private Placement. In connection with the OPKO investment, Steven Rubin, Esq.
was appointed advisor to the Company. The escrowed funds were to be returned to the applicable investors and the Company shall
have no further obligation to issue Units to such investors in the event certain release conditions are not met. On June 30, 2015,
the Company and OPKO entered into a letter agreement pursuant to which the Company granted the representative the right, but not
the obligation, until June 30, 2016, to nominate and appoint up to two additional members of the Companys Board, or to approve
the person(s) nominated by the Company pursuant to the agreement in consideration for the release of the escrowed funds. The nominees
will be subject to the satisfaction of standard corporate governance practices and any applicable national securities exchange
requirements. Upon signing the agreement, the escrowed funds were released to the Company. The warrants are exercisable
upon issuance and expire 30 months thereafter and may be exercised for cash or on a cashless basis. The warrants have a per share
exercise price of $1.50, subject to certain adjustments including stock splits, dividends and reverse-splits. The Company is prohibited
from effecting the exercise of the warrants to the extent that, as a result of such exercise, the holder beneficially would own
more than 4.99% in the aggregate, of the issued and outstanding shares of the Companys common stock calculated immediately
after giving effect to the issuance of shares of common stock upon the exercise of the warrants. In connection with
the April 2015 Private Placement, the Company also entered into a registration rights agreements (the Registration Rights
Agreements) with the investors in the April 2015 Private Placement pursuant to which the Company agreed to file a registration
statement with the SEC covering the resale of 25% of common stock issued pursuant to the Subscription Agreements including 25%
of the common stock issuable upon conversion of the Series E preferred stock, in the event the investors elect to receive Series
E preferred stock instead of common stock (together, the Registrable Securities), no later than 60 days following
the final closing date of the April 2015 Private Placement, and to use its commercially reasonable best efforts to have such registration
statement declared effective within 120 days after filing. Investors in the Private Placement also may be required under certain
circumstances to agree to refrain from selling securities underlying the Purchased Units. The liquidated damages for failure to
achieve effectiveness of the Registerable Securities is 1% a month 120 days after filing, and provided management has not used
commercially reasonable best efforts to have the registration statement declared effective within that time frame. On June 9, 2015, the
Company and investors holding over 60% of the outstanding Registrable Securities entered into an amendment agreement to the Registration
Rights Agreements in order to extend the filing date of the registration statement to waive any payments that may be due to the
investors as a result of the Company not filing a registration statement on or before the original filing date. On August
4, 2015, the Company and investors holding over 70% of the outstanding Registrable Securities entered into a second amendment agreement
to further extend the filing date to October 9, 2015. On October 12, 2015,
the Company and investors holding over 60% of the outstanding Registerable Securities entered into a third amendment agreement
to the Registration Rights Agreements to suspend the Companys registration obligations under the Registration Rights Agreements
and related subscription agreements during any period when the Standstill provision set forth in the subscription
agreements is in effect. On January 28, 2016,
the Company filed a Registration Statement on Form S-1, registering 3,904,830 shares of common stock for resale representing 3,071,500
shares of common stock and 833,333 shares of common stock, which are issuable upon conversion of the Companys Series E Convertible
Preferred Stock issued in the April 2015 Private Placement. Except for certain
issuances, for a period beginning on the closing date of the April 2015 Private Placement and ending on the date that is the earlier
of (i) 24 months from the final closing date of the April 2015 Private Placement, (ii) the date the Company consummates a financing
(excluding proceeds from the April 2015 Private Placement) in which the Company receives gross proceeds of at least $10,000,000
and (iii) the date the common stock is listed for trading on a national securities exchange (such period until the earlier date,
the Price Protection Period), in the event that the Company issues any shares of common stock or securities convertible
into common stock at a price per share or conversion price or exercise price per share that is less than $0.75, the Company shall
issue to the investors in the April 2015 Private Placement such additional number of shares of common stock such that the investor
shall own an aggregate total number of shares of common stock as if they had purchased the Units at the price of the lower price
issuance. No adjustment in the warrants is required in connection with a lower price issuance. The Company has also
granted each investor a right of participation in the Companys financings for a period of 24 months. In the event the Company
conducts certain private or public offerings of its securities, each investor has agreed, if requested by the underwriter or placement
agent so engaged by the Company in connection with such offering, to refrain from selling any securities of the Company for a period
of up to 60 days. Between April 13,
2015, and April 14, 2015, certain holders of warrants issued in the April 2015 Private Placement to purchase an aggregate of 1,849,999
shares of common stock exercised such warrants on a cashless basis for an aggregate issuance of 1,219,780 shares of common stock.
As of June 30, 2016, there were 5,959,668 warrants outstanding to purchase common stock at $1.50 a share. On October 5, 2015,
the Company closed a public offering of 2,500,000 shares of common stock and warrants to purchase 1,250,000 shares of common stock,
at an offering price of $1.10 per share. For every two shares of common stock sold, the Company issued one warrant to purchase
one share of common stock. The Company received $2,750,000 in gross proceeds, before underwriting discounts and commissions
and offering expenses totaling approximately $586,608, and without giving effect to any exercise of the underwriters over-allotment
option. The Company has been using the net proceeds from this offering to fund the HuMab-5B1 human antibody program through
Phase I clinical development and for working capital and general corporate purposes. The shares and
warrants were separately issued and sold in equal proportions. The warrants are immediately exercisable, expire September 30,
2018, and have an exercise price of $1.32 per share. The warrants are not listed on any securities exchange or
other trading market. As of June 30, 2016, there were warrants to purchase 1,250,000 shares of common stock
outstanding. The Company granted the underwriters a 30-day option to purchase up to an additional 375,000 shares of common
stock and up to an additional 187,500 warrants at the same price to cover over-allotments, if any. Under the terms of
the underwriting agreement entered into between the Company and the underwriter in the public offering, the Company, without the
prior written consent of the underwriter, was prohibited, for a period of 90 days after execution of the underwriting agreement,
from issuing any equity securities, subject to certain exceptions. Issuance of Common Stock under Common Stock Purchase Agreement In connection with
the Companys July 2014 financing, or the July 2014 Financing Transaction, the Company assumed certain obligations as per
the original agreement to issue additional shares to investors in the July 2014 Financing Transaction if a subsequent financing
was at a price per share lower than the price per share in the July 2014 Financing Transaction. The Company issued on March 31,
2015, an aggregate of 88,093 shares of common stock that were required to be issued in connection with the July 2014 Financing
Transaction as a result of the lower share price in the Private Placement. Grant of Restricted Shares Rubin Grant On April 3, 2015,
the Company entered into a consulting agreement with Steve Rubin pursuant to which he agreed to provide advisory services in connection
with corporate strategy, licensing and business development estimated to be for a period of 12 months. In exchange for
his services, the Company provided him with a one-time grant of 200,000 shares of the Companys restricted common stock,
valued at $2.30 a share. As the shares granted were fully vested upon grant and the Company has no legal recourse to
recover the shares in the event of nonperformance, the Company recognized the grant date fair value of the shares as consulting
expense upon grant during the second quarter of 2015. Ravetch Grant On April 4, 2015,
the Board approved the issuance of an additional restricted stock award of 131,500 shares to Jeffrey Ravetch. This award
is for future services covering at least a one-year period. The award was granted in addition to the prior award to Dr. Ravetch
on April 2, 2015 of: (i) 34,250 restricted shares and (ii) options to purchase 34,250 shares of common stock with an exercise price
of $2.30 per share, for a total grant of 200,000 restricted shares and options. As the 131,500 shares granted were fully vested
upon grant and the Company has no legal recourse to recover the shares in the event of nonperformance, the Company recognized the
grant date fair value of the shares as consulting expense upon grant during the second quarter of 2015. Livingston Grant On April 4, 2015,
the Board of Directors approved a restricted stock award by the Company of 1,000,000 shares of common stock, valued at $2.30 a
share, to be issued to Phil Livingston, Ph.D. for his continuing service to the Company. On May 13, 2015, the Compensation
Committee of the Board clarified that the award was being granted in consideration for at least one year of Dr. Livingstons
services. The committee further clarified that the vesting of the common stock shall be on the one-year anniversary
of the Board of Directors approval of the award, or April 4, 2016. The Company is expensing the grant date fair
value of the award over the vesting period of one year. Consulting Agreement On April 5, 2015,
the Company entered into a consulting agreement with The Del Mar Consulting Group, Inc. and Alex Partners, LLC, together, the Investor
Relations Consultants, pursuant to which such Investor Relations Consultants shall provide investor relations services to
the Company in consideration for an immediate grant of 300,000 shares of the Companys restricted common stock and a monthly
cash retainer of $12,000 a month for ongoing services for a period of one year. The consultants also received an additional 200,000
shares of the Companys restricted common stock upon the Companys achieving a milestone based on its fully-diluted
market capitalization. As the shares granted were fully vested upon grant and the Company has no legal recourse to recover the
shares in the event of nonperformance, the Company recognized the grant date fair value of the 300,000 shares or $690,000, as investor
relations expense upon grant during the second quarter of 2015. The performance condition for the 200,000 shares became probable
and the market capitalization metric was met during the second quarter; therefore, the Company recognized an additional $460,000
of expense during the quarter ended June 30, 2015. Consultant Grants During 2015, the Board
of Directors approved the issuance of restricted stock awards to two consultants totaling 120,000 shares with vesting terms ranging
from one to three years, valued from $1.77 to $2.13 per share. The Company is expensing each of the grant date fair
value of the awards over the performance period for the award, which will be re-measured at the end of each quarter until the performance
is complete. As of June 30, 2016, the Company expensed $26,812 related to these grants. As of June 30, 2016, the expected future
compensation expense related to these grants is $39,188 based upon the Companys stock price on June 30, 2016. On January 13, 2016,
the Board of Directors approved the issuance of 100,000 shares of restricted stock valued at $64,000 to a consultant for advisory
services to the Company. |
