Note 10 – Subsequent Events

 

Initial Public Offering

 

The registration statement for the Company’s IPO was declared effective on March 27, 2014. On April 2, 2014, the Company consummated the Public Offering of 4,600,000 shares of common stock (including 600,000 shares issued pursuant to the over-allotment option granted to the underwriter) at $6.00 per share and received from the underwriter net proceeds of $25,214,596 (net of underwriter’s discount of $2,208,000 and underwriter offering expenses of $177,404). The Company incurred additional underwriting expenses of approximately $400,000, yielding net proceeds from the IPO of approximately $24,800,000.

 

IPO Underwriter Warrant

 

Simultaneous with the funding of the IPO, the Company issued to the underwriter a warrant to purchase 460,000 shares of common stock (“IPO Underwriter Warrant”) at an exercise price of $7.50 per share with an expiration date of April 2, 2024. The shares underlying the IPO Underwriter Warrant are subject to a 180 day lock-up.

 

Conversion of Convertible Notes

 

In connection with the funding of the IPO, on April 2, 2014, the principal and interest due under the Convertible Notes of $5,500,009 and $290,219, were converted into 1,833,336 and 96,792 shares, respectively, of common stock. The purchasers of the Convertible Notes are subject to lock-up requirements for periods that expire October 2, 2014.

 

Sale of Common Stock

 

The Company entered into a stock purchase agreement dated March 7, 2014, under which a strategic investor (‘Strategic Investor”) agreed to purchase 210,527 shares of our common stock $0.0001 par value for gross proceeds of $1,000,000. As of March 31, 2014, the Company had received $300,000 toward the Strategic Investor’s purchase of the Company’s shares, which the Company has recorded on its condensed balance sheet as a deposit to purchase common stock. On April 4, 2014, the Company received an additional $700,000 and thereupon issued 210,527 shares of the Company’s common stock to the Strategic Investor. In connection with this sale, the Company paid a commission of $100,000 to MDB. The shares issued are subject to a one year lock-up and a one year voting control agreement.