| Shareholders' Equity | 9.
Shareholders’ Equity Common
Stock Closing
of Underwritten Public Offering On
March 25, 2019, the Company announced the closing of an underwritten public offering for gross proceeds of approximately $12.5
million, which included the partial exercise of the underwriter’s over-allotment option to purchase additional shares and
warrants, prior to deducting underwriting discounts and commissions and offering expenses payable by the Company. The
offering was comprised of 16,666,668 shares of common stock, together with short-term warrants to purchase up to 8,333,334 shares
of common stock, and long-term warrants to purchase up to 8,333,334 shares of common stock, at a price to the public of $0.75.
The Company granted the underwriter a 30-day option to purchase up to 2,500,000 additional shares of common stock and/or short-term
warrants to purchase 1,250,000 shares of common stock and long-term warrants to purchase 1,250,000 shares of common stock of the
Company at the public offering price, less underwriting discounts and commissions. The underwriter
did not exercise its option to purchase additional shares of common stock, however the underwriter Each
short-term warrant has an exercise price of $0.75 per share of common stock, is immediately exercisable, and will expire on the
earlier of (1) the eighteen-month anniversary of the date of issuance and (2) twenty-one trading days following the Company’s
release of top-line data related to its Phase 2 double blind, placebo controlled clinical trial of AG013. Each long-term warrant
has an exercise price of $0.90 per share of common stock, is immediately exercisable and will expire five years following the
date of issuance. The
Company intends to use the net proceeds of the offering to fund its AG013 research, clinical trials, pre-clinical development
of the lantibiotics program, and for working capital and general corporate purposes. Other
Share Issuance On
February 1, 2019, and May 1, 2019, respectively, the Company issued 12,500 shares of its common stock as partial consideration
for the acquisition of certain services. Preferred
Stock The
Series A Non-Voting, Convertible Preferred Stock Financing On
May 10, 2017 we entered into a securities purchase agreement with three accredited investors, to purchase up to $3,000,000 of
Series A Convertible Preferred Stock (the “Series A Preferred Stock Financing”). The full $3,000,000 of Preferred
Stock, and after giving effect to the reverse stock split and the conversion of 2,583,000 shares of the Series A Preferred Stock
into 258,300 shares of the Company’s common stock, is convertible into nine hundred and forty one thousand seven hundred
and one shares of our Common Stock, based on a fixed conversion price of $2.50 per share on an as-converted basis.. Except
as otherwise required by law, the Series A Preferred Stock shall have no voting rights. However, as long as any shares of Series
A Preferred Stock are outstanding, we shall not, without the affirmative vote of the holders of a majority of the then outstanding
shares of the Series A Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series A
Preferred Stock or alter or amend the Certificate of Designation, (b) amend its articles of incorporation or other charter documents
in any manner that adversely affects any rights of the holders of Series A Preferred Stock, (c) increase the number of authorized
shares of Series A Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing. Upon any liquidation,
dissolution or winding-up by us, whether voluntary or involuntary that is not a Fundamental Transaction (as defined in the Certificate
of Designation), the holders of Series A Preferred Stock shall be entitled to receive out of the assets, the greater of (i) the
product of the number of shares of Series A Preferred Stock then held by such holder, multiplied by the Original Issue Price;
and (ii) the amount that would be payable to such holder in the Liquidation in respect of Common Stock issuable upon conversion
of such shares of Series A Preferred Stock if all outstanding shares of Series A Preferred Stock were converted into Common Stock
immediately prior to the Liquidation. The Series A Preferred Stock is classified as permanent equity. The
Series B Non-Voting, Convertible Preferred Stock Financing On
November 8, 2017, we completed a private placement of $3,300,000 of Series B Non-Voting, Convertible Preferred Stock (the “Series
B Convertible Preferred Stock”) pursuant to a Securities Purchase Agreement with four existing shareholders who are accredited
investors including an entity affiliated with a director of the Company (the “Series B Preferred Stock Financing”). The
full $3,300,000 of Series B Convertible Preferred Stock is convertible, after giving effect to the reverse stock split into one
million three hundred and twenty thousand shares of our Common Stock, based on a conversion of one share of Series B Preferred
Stock into two shares of Common Stock. Except
as otherwise required by law, the Series B Preferred Stock shall have no voting rights. However, as long as any shares of Series
B Preferred Stock are outstanding, we shall not, without the affirmative vote of the holders of a majority of the then outstanding
shares of the Series B Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series B
Preferred Stock or alter or amend the Certificate of Designation, (b) amend its articles of incorporation or other charter documents
in any manner that adversely affects any rights of the holders of Series B Preferred Stock, (c) increase the number of authorized
shares of Series B Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing. The
Series B Preferred Stock shall rank (i) on par with the Common Stock and Series A Preferred Stock and junior to Series C Preferred
Stock as to dividend rights and (ii) junior to Series C Preferred Stock, on par with Series A Preferred Stock and senior to the
Common Stock as to distribution of assets upon liquidation, dissolution or winding-up by us, whether voluntary or involuntary. Upon
any liquidation, dissolution or winding-up by us, whether voluntary or involuntary, the holders of Series B Preferred Stock shall
be entitled to receive out of the assets, after payment to the holders of Series C Preferred Stock but on par with the holders
of Series A Preferred Stock and in preference to the holders of the Common Stock, an amount of cash equal to the greater of (i)
the product of the number of shares of Series B Preferred Stock then held by such holder, multiplied by the Original Issue Price;
and (ii) the amount that would be payable to such holder in the Liquidation in respect of Common Stock issuable upon conversion
of such shares of Series B Preferred Stock if all outstanding shares of Series B Preferred Stock were converted into Common Stock
immediately prior to the Liquidation. The Series B Preferred Stock is classified as permanent equity. Series
C Non-Voting, Non- Convertible Preferred Stock Financing Intrexon Debt Conversion Each
issued and outstanding share of Series C Preferred Stock entitled the holder of record, Intrexon, to receive dividends at the
annual rate of twelve percent (12%) (the “Initial Rate”) of its Stated Value, payable by issuing additional shares
of Series C Preferred Stock within thirty days after the end of each calendar year pro-rata for partial years. The Initial Rate
was automatically increased to twenty percent (20%) after May 10, 2019. In January of 2019 we issued 12.208 shares of the Company’s
Series C Preferred Stock as a dividend to Intrexon, as the holder of the Series C Preferred Stock. Changes
In Shareholders’ Equity A
summary of the changes in shareholders’ equity for the three and nine months ended September 30, 2019 and 2018 is as follows:
Additional Total
Common
Stock Preferred
Stock Paid
In Accumulated Shareholders’
Shares Amount Shares Amount Capital Deficit Equity
Balances at December
31, 2018 29,433,135 $ 29,433 16,017,101.733 $ 6,100,182 $ 126,125,976 $ (111,373,608 ) $ 20,881,983
Compensation expense
relating to option issuances — — — — 145,829 — 145,829
Issuance of common
stock - shelf takedown, net of expenses 16,666,668 16,667 — — 11,399,009 — 11,415,676
Issuance of common
stock in exchange for services 12,500 12 — — 5,988 — 6,000
Series C dividend — — 12.208 413,214 — (413,214 ) —
Net
loss — — — — — (3,325,717 ) (3,325,717 )
Balances at March 31, 2019 46,112,303 $ 46,112 16,017,113.941 $ 6,513,396 $ 137,676,802 $ (115,112,539 ) $ 29,123,771
Compensation expense
relating to option issuances — — — — 164,588 — 164,588
Issuance of common
stock - shelf takedown, net of expenses — — — — (65,000 ) — (65,000 )
Issuance of common
stock in exchange for services 12,500 13 — — 5,988 — 6,001
Net
loss — — — — — (4,806,460 ) (4,806,460 )
Balances at June 30, 2019 46,124,803 $ 46,125 16,017,113.941 $ 6,513,396 $ 137,782,378 $ (119,918,999 ) $ 24,422,900
Compensation expense
relating to option issuances — — — — 232,175 — 232,175
Net
loss — — — — — (3,836,549 ) (3,836,549 )
Balances at September 30, 2019 46,124,803 $ 46,125 16,017,113.941 $ 6,513,396 $ 138,014,553 $ (123,755,548 ) $ 20,818,526
Additional Total
Common
Stock Preferred
Stock Paid
In Accumulated Shareholders’
Shares Amount Shares Amount Capital Deficit Equity
Balances
at December 31, 2017 4,928,335 $ 4,928 18,600,100.000 $ 6,309,608 $ 101,402,570 $ (101,400,797 ) $ 6,316,309
Compensation expense
relating to option issuances — — — — 118,324 — 118,324
Conversion of Series
A preferred stock to common stock 258,300 259 (2,583,000 ) (268,096 ) 267,837 — —
Series C dividend — — 1.733 58,670 — (58,670 ) —
Net
loss — — — — — (2,119,397 ) (2,119,397 )
Balances at March 31, 2018 5,186,635 $ 5,187 16,017,101.7330 $ 6,100,182 $ 101,788,731 $ (103,578,864 ) $ 4,315,236
Compensation expense
relating to option issuances — — — — 81,986 — 81,986
Issuance of common
stock - shelf takedown, net of expenses 900,000 900 — — 1,509,427 — 1,510,327
Issuance of restricted
common stock 16,000 16 — — 24,304 — 24,320
Net
loss — — — — — (2,281,289 ) (2,281,289 )
Balances at June 30, 2018 6,102,635 $ 6,103 16,017,101.733 $ 6,100,182 $ 103,404,448 $ (105,860,153 ) $ 3,650,580
Compensation expense
relating to option issuances — — — — 648,302 — 648,302
Issuance of common
stock, Series D preferred stock, and warrants, net of expenses 4,436,000 4,436 9,364,000 4,464,107 7,963,085 — 12,431,628
Conversion of Series
D preferred stock to common stock 7,868,000 7,868 (7,868,000 ) (3,750,920 ) 3,743,052 — —
Issuance of common
stock in exchange for services 12,500 12 — — 5,988 — 6,000
Net
loss — — — — — (2,757,835 ) (2,757,835 )
Balances at September 30, 2018 18,419,135 $ 18,419 17,513,101.733 $ 6,813,369 $ 115,764,875 $ (108,617,988 ) $ 13,978,675 |
