| Stockholders' Equity | 5. STOCKHOLDERS’ EQUITY Series A through E
Convertible Preferred Stock and Warrant Financings Between 2012 and 2015,
we executed several financing transactions whereby we issued convertible preferred stock and warrants to purchase common stock
to investors. As of December 31, 2016, none of the Series A through E convertible preferred stock remained outstanding. For as
long as the Series A warrants remain unexercised through their expiration date, except under certain permitted circumstances, we
may not issue, or enter into any agreement to issue, common stock or common stock equivalents at a price per share below the $73.65
exercise price of the Series A warrants, unless waivers from the Series A investors are obtained. Until the time that less than
7.5% of the Series B, C and E warrants remain unexercised through their expiration date, except under certain permitted circumstances,
we may not issue, or enter into any agreement to issue, common stock or common stock equivalents at prices per share below the
$29.55, $29.55 and $32.51 exercise prices of the Series B, C and E warrants, respectively, unless waivers from the Series B, C
and E investors are obtained. In addition, until there are no longer Series A, C and E warrants outstanding, we may not sell any
variable rate securities except for certain exempt issuances. Series E Modifications On February 4, 2016, we
entered into a Series E 6% Convertible Preferred Stock Repurchase Agreement (the “Repurchase Agreement”) with the Series
E Investors. Pursuant to the terms of the Repurchase Agreement, we agreed to pay each Series E Investor $300 per share of Series
E Preferred Stock, or approximately $656,000, in consideration for the right to repurchase the Series E Investor’s Series
E Preferred Stock at a price per share of $1,000 (the “Repurchase Price”), which was the original price per share paid
by the Series E Investors for their Series E Preferred Stock in February 2015. We recognized the $656,000 payment as a deemed dividend
paid to the Series E investors. Immediately following
the closing of our Series F public offering discussed below, we paid $2.2 million to the Series E Investors to repurchase all of
the outstanding Series E Preferred Stock, in accordance with the terms of the Repurchase Agreement. Since almost none of the Series
E Preferred Stock had converted by the time we repurchased the Series E Preferred Stock, the original $890,000 beneficial conversion
feature that we recognized as a deemed dividend in 2015 was reversed as a return of capital from the Series E Preferred stockholders
to the common stockholders. Series F Convertible
Preferred Stock and Warrants Financing On March 24, 2016 (the
“Series F Closing”), we closed an underwritten public offering (the “Series F Offering”) and issued 8,000
immediately separable units of securities to investors, with each unit consisting of: (i) one share of Series F convertible preferred
stock (“Series F Preferred Stock”) convertible into shares of our common stock equal to 1,000 divided by the conversion
price of $3.87, which was 75% of the consolidated closing bid price of our common stock on The NASDAQ Capital Market on March 18,
2016, the date we executed the underwriting agreement (“UA date”); and (ii) 258.397875 warrants, each to purchase one
share of our common stock at an exercise price per share equal to $5.17 (“Series F Warrants”), which was 100% of the
consolidated closing bid price of our common stock on The NASDAQ Capital Market on the UA date. The Series F Preferred Stock, the
Series F Warrants, and the shares of common stock underlying the Series F Preferred Stock and Series F Warrants were registered
on Form S-1, which was declared effective by the SEC on March 18, 2016. The Series F Preferred Stock was immediately convertible
and the Series F Warrants were immediately exercisable for shares of common stock and have a term of five years. The Series F Warrants
are exercisable for cash or, solely in the absence of an effective registration statement or prospectus, by cashless exercise.
In total, there were 2,067,183 shares of common stock issuable upon conversion of the Series F Preferred Stock and up to 2,067,183
shares of common stock issuable upon exercise of the Series F Warrants. The units were sold for a purchase price equal to $1,000
per unit, resulting in gross proceeds received by us of $8.0 million. Total offering-related costs paid through December 31, 2016
were $1.1 million, resulting in net proceeds recognized of $6.9 million. Given that the effective conversion price of the Series
F Preferred Stock was below the closing market price of our common stock at the time of the Series F Closing, we recognized a beneficial
conversion feature in the amount of $1.9 million. Since the Series F Preferred Stock was immediately convertible into common stock,
the beneficial conversion feature was treated as a deemed dividend charged to retained earnings at closing. Also, from the time
of the Series F Closing through June 30, 2017, 7,908 shares of the Series F Preferred Stock have converted into 2,043,445 shares
of common stock, leaving 92 shares of Series F Preferred Stock (representing 23,738 shares of common stock) unconverted. The Series F Preferred
Stock is non-voting (except to the extent required by law and except for certain consent rights relating to amending the certificate
of incorporation or bylaws, and the like), but ranks senior to our common stock with respect to distributions upon our dissolution,
liquidation or winding-up. Until the volume weighted average price of our common stock on NASDAQ exceeds 200% of the conversion
price of the Series F Preferred Stock for any 20 of 30 consecutive trading days, and the daily dollar trading volume during such
period exceeds $200,000 per trading day, the Series F Preferred Stock is subject to full ratchet price based anti-dilution protection,
subject to certain limitations. Also, the Company can force holders of Series F Preferred Stock to convert into our common stock
if the volume-weighted average price of our common stock exceeds 200% of the Series F Preferred Stock conversion price for any
20 of 30 consecutive trading days, and the daily dollar trading volume during such period exceeds $200,000 per trading day, subject
to certain other conditions. The Series F investors have agreed to be subject to a blocker that would prevent each of their respective
common stock ownership at any given time from exceeding 4.99% of our outstanding common stock (which may be increased on 61 days’
notice, but not above 9.99%). The Series F Warrants
have a 5-year term and have a cashless exercise provision in the event there is no effective registration statement covering the
common stock issuable upon exercise of the Series F Warrants. The Series F Warrants are not subject to price based anti-dilution
protection. The Series F Warrants are listed on The NASDAQ Capital Market under the trading symbol “CBMXW.” Depending on the circumstances,
upon a change in control constituting a “Fundamental Transaction” (as defined in the Series F Warrants), the holders
of Series F Preferred Stock may be entitled to a 30% premium and the holders of Series F Warrants may have the right to require
either that the Company purchase the Series F Warrants for an amount in cash that is determined in accordance with a formula set
forth in the Series F Warrants or that the successor assumes and replaces the Series F Warrants with substantially equivalent warrants
of the successor. Common Stock Purchase
Warrants Repurchase Agreement On July 11, 2016, we entered
into a Common Stock Purchase Warrants Repurchase Agreement (the “Warrants Repurchase Agreement”) with the holders (the
“Holders”) of our outstanding common stock purchase warrants issued in October 2012, March 2013, May 2013, June 2013,
June 2014, February 2015 and April 2015 (collectively, the “Warrants”) in connection with our Series A, Series B, Series
C and Series E financings. Pursuant to the terms of the Warrants Repurchase Agreement, we have agreed to repurchase such Warrants
from each Holder upon execution of a “Fundamental Transaction” (as defined in such Warrants) at various negotiated
prices per Warrant share as set forth in the Warrants Repurchase Agreement. The Warrants Repurchase Agreement obligates us to repurchase
half of such Warrants upon the announcement of a Fundamental Transaction. On July 31, 2017, we announced that we entered into an
Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Invitae Corporation (“Invitae”)
and Coronado Merger Sub, Inc., a wholly owned subsidiary of Invitae (“Merger Sub”), pursuant to which Invitae plans
to acquire us in an all-stock transaction in which Merger Sub will merge with and into us (the “Merger”). The Merger
is considered a Fundamental Transaction under the Warrants Repurchase Agreement and, as a result of entering into and announcing
the Merger Agreement, and pursuant to the terms of the Warrants Repurchase Agreement, we repurchased one half of such outstanding
Warrants on August 3, 2017, for approximately $230,000 of cash consideration. Under the terms of the Warrants Repurchase Agreement,
we will be obligated to repurchase the remaining half of such Warrants within three business days of any closing of the Merger.
In addition, upon any closing of the Merger, all Securities Purchase Agreements and Registration Rights Agreements associated with
the original issuances of such Warrants will be terminated and the various restrictions set forth therein will no longer be of
any force or effect. In connection with entering into the Warrants Repurchase Agreement, we were granted certain consents and waivers
relating to the Merger. If the Merger is consummated, we will be obligated to repurchase the remaining outstanding Warrants for
approximately $230,000 which will be due within three business days of closing the Merger. In the event that we do not close the
Merger or any other Fundamental Transaction, for whatever reason, then the remaining half of such Warrants will remain issued and
outstanding. See Note 7 below. Warrants Outstanding warrants to
purchase common stock are as follows:
Shares of Common Stock Issuable from Warrants Outstanding as of
June 30, December 31, Exercise
2017 2016 Price Expiration
Equity-classified warrants:
March 2016 2,067,076 2,067,176 $ 5.17 March 2021
April 2015 100,847 100,847 $ 16.50 August 2020
April 2015 1,831 1,831 $ 32.51 August 2020
February 2015 46,676 46,676 $ 16.50 August 2020
June 2014 1,690 1,690 $ 30.90 April 2018
December 2013 388,365 388,365 $ 46.80 December 2018
June 2013 32,788 32,788 $ 29.55 June 2019
May 2013 32,788 32,788 $ 29.55 May 2019
March 2013 18,334 18,334 $ 29.55 March 2019
October 2012 11,252 11,252 $ 29.55 September 2018
Total 2,701,647 2,701,747 The number of warrants set forth in the table
above are as of June 30, 2017 and December 31, 2016 and do not reflect the repurchase of half of the Warrants we completed on
August 3, 2017. |
