Tuesday, January 10, 2017 12:28:31 PM
From recent filing...highlight all of the warrants...They are out to letters I in the alphabet, indicating all the warrants that are present in the market place....they issue warrants like candy here....and all have adjustment clauses, so it is almost advantageous to insiders to dive the price, until they convert of course! :)
RISK FACTORS
You should carefully consider the risks described below and discussed under the section entitled “Risk Factors” in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, which are incorporated by reference in this prospectus supplement and the accompanying prospectus in their entirety, together with other information in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference before deciding to invest in our securities. These risks should be considered in conjunction with any other information included or incorporated by reference herein, including in conjunction with forward-looking statements made herein. See the section of this prospectus supplement entitled “Where You Can Find More Information.” If any of the following risks actually occur, they could materially adversely affect our business, financial condition, operating results or prospects.
Risks Related to this Offering
Substantial future sales of our shares of common stock in the public market, or the perception that these sales could occur, could cause the price of our common stock to decline.
Additional sales of our common stock in the public market after this offering, or the perception that these sales could occur, could cause the market price of our common stock to decline. Upon completion of this offering, we will have 80,049,536 shares of our common stock outstanding. All shares of common stock sold in this offering will be freely transferable without restriction or additional registration under the U.S. Securities Act of 1933, as amended, or the Securities Act. The shares of common stock held by our executive officers will be available for sale upon expiration of a lock-up period, which we expect will expire 30 days after the date of this prospectus. The remaining shares of common stock will be available for sale after this offering since they are not subject to contractual and legal restrictions on resale. Any or all of these shares may be released prior to expiration of the lock-up period at the discretion of the underwriters for this offering. To the extent shares are released before the expiration of the lock-up period and these shares are sold into the market, the market price of our common stock could decline.
As a new investor, you will experience immediate and substantial dilution as a result of this offering.
As of March 31, 2016, we had a negative net book value (deficit) of approximately ($4.7) million, or ($0.07) per share of common stock, assuming the conversion of all then convertible preferred stock (but excluding the exercise of any outstanding warrants or options, including warrants exercisable at $0.01 per share). The public offering price of the Series A Units and Series B Units offered pursuant to this prospectus supplement is substantially higher than the net book value per share of our common stock. Therefore, you will incur immediate and substantial dilution in the pro forma net book value per share. See the section of this prospectus supplement entitled “Dilution” for a more detailed discussion of the dilution you will incur in this offering. Furthermore, we expect that we will seek to raise additional capital from time to time in the future. Such financings may involve the issuance of equity and/or securities convertible into or exercisable or exchangeable for our equity securities. We also expect to continue to utilize equity-based compensation. To the extent the warrants and options are exercised or we issue common stock, preferred stock, or securities such as warrants that are convertible into, exercisable or exchangeable for, our common stock or preferred stock in the future, you may experience further dilution.
We will have broad discretion over the use of the proceeds of this offering and may not realize a return.
Our management will have broad discretion over the use of our net proceeds from this offering, and you will be relying on the judgment of our management regarding the application of these proceeds. Our management might not apply our net proceeds in ways that ultimately increase the value of your investment and we might not be able to yield a significant return, if any, on any investment of these net proceeds. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development of our products and cause the price of our common stock to decline.
There is no public market for the Warrants being offered by us in this offering.
There is no established public trading market for the Warrants being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the Warrants on any national securities exchange or automated quotation system, including the NYSE MKT. Without an active market, the liquidity of the Warrants will be limited.
Holders of our Warrants will have no rights as a common stockholder until such holders exercise their Warrants and acquire our common stock.
Until holders of Warrants acquire shares of our common stock upon exercise of the Warrants, holders of Warrants will have no rights with respect to the shares of our common stock underlying such Warrants. Upon exercise of the Warrants, the holders thereof will be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.
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