4. Related Party Transactions

On July 17, 2018, the Company announced the closing of an underwritten public offering (the “Public Offering”) (see Note 7 – Shareholders’ Equity) of Class A Units, priced at a public offering price of $1.00 per unit, with each unit consisting of one share of common stock and a seven-year warrant to purchase one share of common stock with an exercise price of $1.00 per share, and Class B Units, priced at a public offering price of $1.00 per unit, with each unit comprised of one share of series D preferred stock (the “Series D Preferred Stock”), which is convertible into one share of common stock, and a warrant. The Company’s non-employee directors, Frederick Telling and Alan Dunton participated in the Public Offering through the purchase of units consisting of 100,000 shares and 20,000 shares of common stock, respectively, and warrants to purchase 100,000 shares and 20,000 shares of common stock.

On November 8, 2017, we completed a private placement of $3,300,000 of Series B Non-Voting, Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) pursuant to a Securities Purchase Agreement with four existing shareholders who are accredited investors (the “Series B Preferred Stock Financing”). The investors in the private placement included a current and longstanding Company shareholder, the Koski Family Limited Partnership, or KFLP who purchased 1,500,000 shares of the Series B Convertible Preferred Stock and warrants to purchase, after giving effect to the reverse stock split, 241,936 shares of our common stock.  Our director, Mr. Robert Koski is a general partner of the KFLP.

The full $3,300,000 of Series B Convertible Preferred Stock is convertible, into one million three hundred and twenty thousand shares of our Common Stock, based on a conversion of one share of Series B Preferred Stock into two shares of Common Stock. The purchase price per share of the Series B Preferred Stock is represented by $2.50 per share of the Common Stock on an as converted basis. In addition, we issued to the investors in the private placement accompanying common stock purchase warrants to purchase an aggregate, after giving effect to the reverse stock split, of 1,064,518 shares of Common Stock (the “Fall 17 Warrants”). The Fall 17 Warrants have a term of seven years from the date of issuance, and are non-exercisable until six (6) months after issuance, and have an exercise price, of $3.10 per share.

On May 10, 2017 the Company entered into a Note Purchase Agreement with Intrexon pursuant to which the Company issued a $2.4 million unsecured non-convertible promissory note to Intrexon and amended the first milestone in its Oral Mucositis ECC with Intrexon. The note matures in two (2) years and has a simple interest rate of 12% per annum. Proceeds from the note will be used to fund the Company’s AG013 research and clinical trials.

Concurrently with the Series B Preferred Stock Financing, we also entered into a Debt Conversion Agreement (the “Intrexon Debt Conversion Agreement”) with Intrexon Corporation (“Intrexon”) pursuant to which Intrexon exchanged the $2,400,000 unsecured non-convertible promissory note previously issued by us to Intrexon (the “Intrexon Note”), the accrued interest on the Intrexon Note and trade payables owed by us (collectively the “Debt”) in the aggregate amount of approximately $3,400,000 for equity in the form of 100 shares of Series C, Non-Voting, Non-Convertible Preferred Stock (the “Series C Preferred Stock”) issued by us to Intrexon pursuant to the Debt Conversion Agreement which 100 shares have a stated value equal to the amount of the Debt.

During the year ended December 31, 2018 we paid cash of $-0-, and during the year ended December 31, 2017, we paid cash of $594 and issued Series C Preferred Stock with a value of $1,188, to Intrexon under our exclusive channel collaborative (“ECC”) agreement with Intrexon (See Note 9 – Licenses and Exclusive Channel Collaboration Agreements) to develop and commercialize lantibiotics (the “Lantibiotic ECC”).

During the year ended December 31, 2018 we paid cash of $460,056, and during the year ended December 31, 2017, we paid cash of $524,026 and issued Series C Preferred Stock with a value of $763,189, to Intrexon under the ECC (See Note 9 – Licenses and Exclusive Channel Collaboration Agreements) agreement to develop and commercialize AG013 (the “Oral Mucositis ECC”).

Included in accounts payable and accrued expenses at December 31, 2018 and 2017 are $39,607 and $39,457, respectively, related to unpaid invoices received from Intrexon relating to work performed under the ECC agreements. As of December 31, 2018, and 2017 Intrexon owned approximately 5% and 32%, respectively, of our outstanding common stock.