Subsequent Events

12 Months Ended

Dec. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

Note 21 – Subsequent Events 

Nasdaq Deficiency Notice

On November 26, 2021, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company was not in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market, under Listing Rule 5550(b)(1), because its stockholders’ equity of $(6,969,988) as reported in its Quarterly Report on Form 10-Q for the period ended September 30, 2021 was below the required minimum of $2.5 million, and because, as of November 24, 2021, it did not meet the alternative compliance standards, relating to the market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years.

On January 10, 2022, the Company submitted to Nasdaq a plan to regain compliance with Listing Rule 5550(b)(1). On February 15, 2022, Nasdaq notified the Company that they have granted the Company an extension of up to 180 calendar days from November 26, 2021, or through May 25, 2022, to regain compliance. If the Company fails to evidence compliance upon filing its periodic report for the quarter ending June 30, 2022, the Company may be subject to delisting. If Nasdaq determines to delist the Company’s common stock, the Company will have the right to appeal to a Nasdaq hearings panel.

Waiver Agreements with Certain Holders of Series B Convertible Preferred Stock

In February 2022, the Company entered into waiver agreements (the “Waiver”) with certain holders of the Company’s Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), pursuant to which the Company agreed to pay a cash waiver fee equal to ten percent of the stated value of the shares of Series B Preferred Stock held by such holder (other than holders who are insiders of the Company who did not receive a cash waiver fee) and such holder agreed to irrevocably waive its Series B Exchange Right (as defined below) with respect to any Subsequent Financing (as defined below) that occurs from and after the date of the Waiver until December 31, 2022.

Pursuant to the Series B Preferred Stock Certificate of Designations (the “Certificate of Designations”), in the event of any issuance by the Company or any of its subsidiaries of its Common Stock, or Common Stock equivalents for cash consideration or a combination of units thereof (a “Subsequent Financing”), each holder of the Company’s Series B Preferred Stock has the right, subject to certain exceptions set forth in the Certificate of Designations, at its option, to exchange (in lieu of cash subscription payments) all or some of the Series B Preferred Stock then held (with a value per share of Series B Preferred Stock equal to the stated value of each share of Series B Preferred Stock, or $7,700.00, plus accrued and unpaid dividends thereon, of the Series B Preferred Stock) for any securities or units issued in a Subsequent Financing on a dollar-for-dollar basis (the “Series B Exchange Right”).

The Company entered into Waivers with holders of approximately $2.88 million of stated value of Series B Preferred Stock. The Company also entered into Waivers with Company insiders of approximately $474,000 of stated value of our Series B Preferred Stock for which the Company did not pay a waiver fee.

March 2022 Registered Direct Offering

On February 27, 2022, the Company entered into a securities purchase agreement with a single institutional investor (the “March 2022 Purchase Agreement”) pursuant to which the Company agreed to sell, in a registered direct offering (the “March 2022 Registered Direct Offering”) priced at the market under Nasdaq rules, an aggregate of (i) 1,650,000 shares of Common Stock, (ii) pre-funded warrants (the “March 2022 Pre-Funded Warrants”) exercisable for an aggregate of up to 4,848,195 shares of Common Stock, and (iii) Series C warrants (the “Series C Warrants”) exercisable for an aggregate of up to 6,498,195 shares of Common Stock. The public offering price for each share of Common Stock and accompanying Series C Warrant to purchase one share of Common Stock was $1.385, and the public offering price for each March 2022 Pre-Funded Warrant and accompanying Series C Warrant to purchase one share of Common Stock was $1.375. The March 2022 Registered Direct Offering closed on March 2, 2022.

The net proceeds of the March 2022 Registered Direct Offering, after deducting the placement agent’s fees and expenses and other estimated offering expenses payable by the Company and excluding the net proceeds, if any, from the exercise of the Series C Warrants, were approximately $8.1 million. The Company intends to use the net proceeds from the March 2022 Registered Direct Offering to pay a portion of the cash purchase price for its acquisition of First Wave Bio, Inc. and for other general corporate purposes, which may include product manufacturing, clinical development and/or increases in working capital.

In the March 2022 Purchase Agreement, the Company has agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock or file any registration statement or prospectus, or any amendment or supplement thereto for 60 days after the closing date of the March 2022 Registered Direct Offering. In addition, the Company has agreed not to effect or enter into an agreement to effect any issuance of Common Stock or any securities convertible into or exercisable or exchangeable for shares of Common Stock involving a variable rate transaction (as defined in the March 2022 Purchase Agreement) until the one-year anniversary of the date of the March 2022 Purchase Agreement, subject to certain exceptions.

The March 2022 Purchase Agreement contain customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the purchasers, including for liabilities arising under the Securities Act, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the March 2022 Purchase Agreement were made only for the purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.

Series B Most Favored Nations (MFN) Exchanges

Under the Certificate of Designations for the Series B Certificate of Designations, in the event the Company effects any issuance of Common Stock or Common Stock equivalents for cash consideration, or a combination of units thereof (a “Subsequent Financing”), each holder of Series B Preferred Stock, has the right to exchange the Exchange Amount of the Series B Preferred Stock for any securities issued in the Subsequent Financing, in lieu of any cash subscription payments therefor (the “Series B Exchange Right”).

The Company entered into the March 2022 Purchase Agreement as part of the March 2022 Registered Direct Offering, and the holders of the Series B Preferred Stock became entitled to exercise their Series B Exchange Right to exchange into shares of Common Stock and related Series C Warrants. As of March 28, 2022, holders of approximately 17.05 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $145,000 had previously elected to exercise their Series B Exchange Rights into 104,735 shares of Common Stock, and additional Series C Warrants exercisable for up to an aggregate of 104,735 shares of Common Stock.

Issuance of Stock Options

On January 3, 2022, the Company issued employees ten-year stock options to purchase 161,000 shares of Common Stock with a strike price of $1.45 per share, subject to service-based milestone vesting over three years under the 2020 Plan as payment for services rendered. Such issuance was exempt from registration under 4(a)(2) of the Securities Act.