| Capitalization | 7. Capitalization
Conversion to C-Corporation
On March 31, 2017, the Company converted from an LLC to
a C-Corporation. 1-to-1
Initial Public Offering
On September 22, 2017, the Company completed its initial
public offering of 4,554,000 shares of its common stock at a price
to the public of $10.00 per share, which includes the sale of
594,000 shares of the Company’s common stock pursuant to the
underwriters’ full exercise of their option to purchase
additional shares. The total proceeds from the offering to the
Company, net of underwriting discounts and commissions of
approximately $3.2 million, were approximately
$42.3 million. After deducting offering expenses payable by
the Company of approximately $1.5 million, net proceeds to the
Company were approximately $40.8 million. Immediately prior to
the closing of the IPO, all outstanding shares of the
Company’s preferred stock converted into 2,061,773 shares of
common stock on a 1-to-1
Shares Outstanding
As of September 30, 2017, 10,237,247 shares of common stock
were outstanding. As of September 30, 2017, no shares of
preferred stock were outstanding.
As of December 31, 2016, 3,490,884 common units and 179,613
preferred units were outstanding.
Issuance of Preferred Stock and Conversion of Convertible
Promissory Notes and Related Party Convertible Promissory
Notes
On August 4, 2017, the Company amended its articles of
incorporation to authorize 1,500,000 shares of common stock, par
value $0.00001 per share, and 1,500,000 shares of preferred stock,
par value $0.00001 per share, of which 179,613 shares were
designated as Series Seed preferred stock (the “Series Seed
Preferred Stock”), 210,000 shares were designated as Series A
preferred stock (the “Series A Preferred Stock”),
200,000 shares were designated as
Series A-1 A-1 A-2 A-2 A-1 A-2
On August 8, 2017, the Company issued 914,107 shares of
Series A Preferred Stock to a single investor (“Sun
Pharma”) at a purchase price of $7.66 per share for aggregate
proceeds of approximately $7.0 million (the “Sun Pharma
Offering”). Concurrently with the issuance of the
Series A Preferred Stock, and in accordance with the
conversion features of the Notes (Note 4), all outstanding Notes
plus accrued interest thereon were automatically converted into
shares of preferred stock.
The following table outlines the conversion on August 8, 2017
of the Notes into shares of preferred stock (in thousands except
share and per share amounts ):
Principal Accrued Total Conversion (1) Shares of Series A-1 Shares of Series A-2 Fair Value Fair Series A-1 Fair Series A-2 Loss on
Convertible promissory notes $ 2,444 $ 72 $ 2,516 $ 4.14 (1) 607,743
— $ 7.66 $ 4,654 $
— $ (2,138 )
Related party convertible promissory notes 948 32 980 $ 4.14 (1) 236,619
— $ 7.66 1,812
— (832 )
Related party convertible promissory notes—June Note 750 8 758 $ 6.13 (2)
— 123,691 $ 7.66
— 947 (189 )
Total related party promissory notes 1,698 40 1,738 236,619 123,691 1,812 947 (1,021 )
Total $ 4,142 $ 112 $ 4,254 844,362 123,691 $ 6,466 $ 947 $ (3,159 )
(1) The conversion price was determined
by dividing the target valuation of $16 million by the
outstanding shares of 3,863,547 immediately prior to the issuance
of the Series A on August 8, 2017 (Note 4).
(2) The conversion price was determined
to be 80% of the $7.66 sales price per share of the Series A shares
issued on August 8, 2017 (Note 5).
Issuance of Common Stock
On August 25, 2017, following the completion of the Sun Pharma
Offering, Daniel S. Janney, a member of our board of directors,
purchased 130,590 shares of our common stock at the same price per
share paid by Sun Pharma, $7.66 per share, through an investment
entity owned and controlled by a board member for a total
consideration of approximately $1.0 million.
Preferred Units and Preferred Stock
On April 15, 2016, the Company authorized 100 member units and
issued 450 member units for aggregate proceeds of
$100 thousand. On September 30, 2017, the Company
converted all of the member units into 12,771 preferred units at an
issue price of $7.83 (the “Original Issue Price”) per
share plus 3,490,884 common units, and issued an additional 96,345
preferred units at the Original Issue Price for aggregate proceeds
of $754 thousand. On December 27, 2016, the Company
issued an additional 70,497 preferred units at the Original Issue
Price for aggregate proceeds of $552 thousand. On
March 31, 2017, all of the preferred units were converted into
preferred stock on a 1-to-1
The rights, preferences and privileges of the preferred stock
consisted of the following:
Conversion. non-assessable 1-to-1,
Each share of preferred stock shall automatically be converted into
shares of common stock at the conversion price at the time in
effect for such series of preferred upon the earlier of: (i) a
qualified public offering, as defined in the Certificate of
Incorporation; or (ii) the majority vote of the holders of
preferred stock on a per share and as-converted
Voting Rights. as-converted
Dividends.
Liquidation Preference.
The preferred units have the same rights, preferences and
privileges as the preferred stock with the exception of conversion
rights or liquidation preferences in the event of a merger or
consolidation.
Common Units and Common Stock
On September 30, 2016, in connection with the conversion of
the member units into preferred units, the Company also issued
3,490,884 common units. On March 31, 2017, in connection with
the conversion of the LLC to a C-Corporation, 1-to-1
The voting, dividend and liquidation rights of the holders of the
common stock are subject to and qualified by the rights, powers and
privileges of the holders of the preferred stock and are as
follows:
Voting Rights. as-converted
Dividends.
Liquidation Preference. |
