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Subsequent Events
12 Months Ended
Dec. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events

10. Subsequent Events

 

Common Stock and Warrant Financing

 

On January 6, 2016, the Company entered into a Common Stock and Warrant Purchase Agreement (the “Purchase Agreement”) with an investor, pursuant to which, in a closing on January 8, 2016, the Company sold units for aggregate cash consideration of $100,000, with each unit consisting of (i) one share of common stock, representing an aggregate of 4,508,567 shares of common stock, and (ii) one warrant to purchase two additional shares of common stock, representing an aggregate of 9,017,133 warrants. This financing represented the initial closing of a private placement of up to $2,500,000 (the “Private Placement”).

 

The price per unit in the initial closing of the Private Placement was $0.02218. The warrants are exercisable at $0.0244, for each share of common stock to be acquired, and expire on February 28, 2021. The warrants have a cashless exercise provision and contain certain “blocker” provisions limiting the percentage of shares of the Company’s common stock that the purchaser can beneficially own upon conversion to not more than 4.99% of the issued and outstanding shares immediately after giving effect to the warrant exercise. The purchaser was an accredited, non-affiliated investor.

 

In addition, from January 29, 2016 through March 3, 2016, the Company received subscriptions totaling $94,635 for the purchase of units, representing an aggregate of 4,266,683 shares of common stock and warrants to purchase an additional 8,533,366 shares of common stock. The purchasers were accredited, non-affiliated investors.

 

In the case of an acquisition, as defined in the Purchase Agreement, in which the Company is not the surviving entity, the holder of the warrant would receive from any surviving entity or successor to the Company, in exchange for the warrant, a new warrant from the surviving entity or successor to the Company, substantially in the form of the existing warrant and with an exercise price adjusted to reflect the nearest equivalent exercise price of common stock (or other applicable equity interest) of the surviving entity that would reflect the economic value of the warrant, but in the surviving entity.

 

No registration rights were granted to the purchaser in the Private Placement with respect to (i) the shares of common stock issued as part of the units, (ii) the warrants, or (ii) the shares of common stock issuable upon exercise of the warrants.

 

No placement agent fees, brokerage commissions, finder’s fees or similar payments were made in the form of cash and warrants to qualified referral sources in connection with the sale of the shares of common stock and warrants.

 

Short-Term Loans from Related Parties

 

On January 29, 2016, the Company issued a demand promissory note in the principal amount of $52,600 to the Company’s Executive Chairman and Chief Scientific Officer, Dr. Arnold S. Lippa, Ph.D., who is a director and significant stockholder of the Company, in exchange for $52,600 that was loaned by Dr. Lippa to the Company on January 28, 2016. The proceeds of the loan were used to pay a vendor of the Company.

 

On February 2, 2016, the Company’s President and Chief Executive Officer, Dr. James Manuso, agreed to loan the Company an additional $52,600 at a future date for working capital and other general corporate purposes, in exchange for a demand promissory note in the same amount. Dr. Manuso made his loan to the Company on February 4, 2016.

 

Each note shall be payable on demand and bear interest at a rate equal to 10% per annum, with any accrued but unpaid interest added to principal at the end of each year that the balance is outstanding. Each note grants a security interest in the assets of the Company, subject to certain conditions as set forth therein. The Company intends to repay the loans within six months from the proceeds of a separate financing transaction.

 

Under the notes, the terms of which have been reviewed and approved by the Company’s independent directors, each lender is to receive three-year warrants covering an aggregate number of shares of the Company’s common stock equal to the principal amount of the loan funded by the applicable lender divided by the closing price of the Company’s common stock on the date the loan was made. As such, in connection with Dr. Lippa’s note, Dr. Lippa received a warrant to purchase 3,350,319 shares of the Company’s common stock at an exercise price of $0.0157 per share. Based on the date of Dr. Manuso’s loan of February 4, 2016, Dr. Manuso received a warrant to purchase 2,630,000 shares of the Company’s common stock at an exercise price of $0.02 per share.

  

The Company performed an evaluation of subsequent events through the date of filing of these financial statements with the SEC. Other than the above, there were no material subsequent events which affected the amounts or disclosures in the consolidated financial statements.