8. Shareholders’ Equity

Common Stock

Exclusive Channel Collaboration Agreement with Intrexon-LBPs–Share Issuance

On September 30, 2013, in conjunction with the Company’s execution and delivery of the LBPs ECC with Intrexon, the Company also entered into a Stock Purchase and Issuance Agreement and a First Amendment to the Stock Purchase and Issuance Agreement (collectively the “SPIA”) with Intrexon. Pursuant to the SPIA, the Company (i) sold to Intrexon 1,300,000 shares of the Company’s common stock at a price per share of $3.00 for gross proceeds of $3,900,000, and (ii) paid Intrexon an up-front technology access fee of $6,000,000 (the “Technology Access Fee”) in consideration for the execution of the LBPs ECC. The Technology Access Fee was paid to Intrexon by the Company through the (i) issuance of 1,348,000 (at $3.00 per share) shares of the Company’s common stock (the “Technology Access Shares”), and (ii) a convertible promissory note in the amount of $1,956,000 which is payable, at the Company’s option, in cash or shares of Company common stock (the “Convertible Note”). The Convertible Note matured on December 31, 2013 and required the Company to obtain shareholder approval prior to any exercise by the Company of its right to convert the Convertible Note into common stock. The conversion price was equal to the closing price per share of the Company’s common stock on the last trading day immediately prior to the date of conversion. The payment of this Technology Access Fee resulted in the Company recording a non-cash expense of $6,000,000 during the quarter ended September 30, 2013. The Company obtained the requisite shareholder approval to have the additional shares of its common stock listed and, on December 18, 2013, the Company issued to Intrexon 698,241 shares of Company common stock in connection with the conversion of the Convertible Note and accrued interest based upon a conversion price of $2.82 per share. The Company intends to use the proceeds from the private placement sale of common stock to Intrexon towards development of the Company’s key initiatives relating to the LBPs ECC, and general corporate purposes. Under the terms of the SPIA and LBPs ECC, the Company agreed to issue to Intrexon additional shares of its common stock based upon the achievement of certain milestones. See Note 13 — Commitments and Contingencies.

2012 Incentive Plan Issuances

On October 18, 2013, both the Board of Directors and the Compensation Committee of the Board of Directors of the Company met and determined that one of the performance goals established in the Company’s Long-Term Incentive Program (“LTIP”), as amended, (See Note 9) had been achieved. The performance goal met was the goal related to the broadening of the Intrexon relationship to include a new area outside of lantibiotics. The aggregate shares awarded under the LTIPs of 422,359, consisted of a total of 165,925 shares to non-employee directors and 256,434 shares to executive officers. Of the aggregate 422,359 shares awarded under the LTIPs, 84,287 shares were retained by the Company for applicable tax withholding obligations.

 

On November 27, 2013, both the Board of Directors and the Compensation Committee of the Board of Directors of the Company met and determined that one of the performance goals established in the Company’s LTIPs had been achieved. The performance goal met was the goal related to the Capital raise by the Company of $12,000,000 or more in a single year. The aggregate shares awarded under the LTIPs of 502,654, consisted of a total of 191,985 shares to non-employee directors and 310,669 shares to executive officers. Of the aggregate 502,654 shares awarded under the LTIPs, 113,636 shares were retained by the Company for applicable tax withholding obligations.

The November 2013 Underwritten Public Offering

On November 20, 2013, the Company completed an underwritten public offering of 4,400,000 shares of common stock at a public offering price of $2.50 per share resulting in gross proceeds of $11,000,000. The net proceeds from this public offering after deducting underwriting discounts and direct offering expenses were $9,904,996 and are expected to be used for our ongoing clinical development of lantibiotics, probiotics sales and marketing and for general corporate purposes, including research and development activities for our other product candidates and any future product candidates that we may develop or acquire, as well as for general and administrative costs. In addition, we may use a portion of the net proceeds for licensing or acquiring intellectual property to incorporate into our products and product candidates or our research and development programs. We may also use a portion of the net proceeds to in-license, acquire or invest in complementary businesses or products; however, we have no current commitments or obligations to do so.

Award Of Shares to Non-employee Directors

On May 30, 2014, each continuing non-employee Director, Frederick Telling, Charles Pope, Alan Dunton, Christine Koski and Robert Koski were granted an award of 10,000 fully vested shares of the Company’s common stock under the Company’s 2012 Equity Incentive Plan as part of the Company’s non-employee Director compensation program. The Company recognized $102,500 in expense relating to this award.

Warrants

The Company’s outstanding and exercisable warrants as of December 31, 2014 are presented below:

 

Exercise Price				Warrants Outstanding				Expiration Dates
$	1.50				361,169				7/31/17
$	2.00				2,170,925				3/23/15
					2,532,094

On January 31, 2013 Griffin Securities Inc. exercised 200,000 of their previously issued warrants resulting in the net issuance of 106,250 shares of our common stock.

On May 30, 2013, warrants to acquire 127,888 and 161,000 shares of the Company’s common stock at prices of $26.00 and $15.00 per share, respectively expired.

On January 13, 2014, 210,000 previously issued warrants were exercised resulting in the net issuance of 135,000 shares of our common stock.

As of December 31, 2014 there are 2,532,094 warrants and 820,865 stock options outstanding. If all warrants and stock options were exercised, the total number of outstanding common shares would be 39,531,903 as of December 31, 2014.