This prospectus relates to the resale of 35,699,675 shares of our voting common stock, of which (i) 500,000 shares are outstanding shares of voting common stock, (ii) 4,167,172 shares are shares of voting common stock issuable upon conversion of shares of non-voting common stock, (iii) 1,224,875 shares are shares of voting common stock issuable upon exercise of the Warrants, (iv) 23,315,544 shares are shares of voting common stock issuable upon conversion of the Kingdon Notes (plus accrued interest), (v) 2,492,084 shares are shares of voting common stock issuable upon conversion of the MEF/Riverside Notes (plus accrued interest), and (vi) 4,000,000 shares are shares of voting common stock issuable upon conversion of the CVP Notes (plus accrued interest), in each case held by the selling shareholders identified in this prospectus, including its transferees, pledgees, donees or successors. See “Selling Shareholders.”
The selling shareholders may offer to sell the shares being offered in this prospectus at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices. Our common stock is listed on the NASDAQ Capital Market under the symbol “JAGX.”
We have agreed to register the offer and sale of the common stock to satisfy registration rights we have granted to the selling shareholders. We will not receive any proceeds from the sale of the securities by the selling shareholders. We will, however, receive the net proceeds of any warrants exercised for cash.
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RISK FACTORS
Please carefully consider the risk factors described in our periodic reports filed with the SEC, which are incorporated by reference in this prospectus. Before making an investment decision, you should carefully consider these risks as well as other information we include or incorporate by reference in this prospectus. Additional risks and uncertainties not presently known to us or that we deem currently immaterial may also impair our business operations or adversely affect our results of operations or financial condition.
This prospectus and the documents incorporated by reference into it contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have made these statements in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in or incorporated by reference into this prospectus, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, timing of receipt of clinical trial, field study and other study data, and likelihood of success, commercialization plans and timing, other plans and objectives of management for future operations, and future results of current and anticipated products are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “aim,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions including those listed in the “Risk Factors” incorporated by reference into this prospectus from our Annual Report on Form 10-K, as updated by subsequent reports. Forward-looking statements are subject to inherent risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in a dynamic industry and economy. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties that we may face. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Incorporated by reference herein is the unaudited pro forma consolidated financial information reflecting the consummation of the Merger and related transactions. This financial information is included in Exhibit 99.2 to our Current Report on Form 8-K, filed with the SEC on August 29, 2017 and consists of (i) the unaudited pro forma combined condensed statement of operations for the six months ended June 30, 2017, (ii) the unaudited pro forma consolidated balance sheet, as of June 30, 2017 and (iii) the unaudited pro forma combined condensed statement of operations, for the year ended December 31, 2016. The unaudited pro forma consolidated financial information should be read in conjunction with the historical consolidated financial statements and the related notes of the Company, included in the Company’s periodic reports filed with the SEC, and of Napo, included in Exhibit 99.2 to our Current Report on Form 8-K/A, filed with the SEC on August 4, 2017, and Exhibit 99.1 to our Current Report on Form 8-K, filed with the SEC on August 29, 2017, each of which are incorporated by reference herein. See “Incorporation of Information by Reference.”
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of our common stock in this offering. The selling shareholders will receive all of the proceeds from this offering.
A portion of the shares covered by this prospectus are issuable upon the exercise of warrants to purchase shares of our common stock. Pursuant to conditions set forth in the warrants, the warrants are exercisable under certain circumstances on a cashless basis, and should a selling shareholder elect to exercise on a cashless basis we will not receive any proceeds from the sale of common stock issued upon the cashless exercise of the warrant. Upon any exercise for cash of the warrants, the selling shareholders will pay us the exercise price of the warrants of $0.08 per share. If the selling shareholders exercise, on a cash basis, all of the warrants underlying the shares being registered, we would receive gross proceeds of approximately $98,000. We intend to use such proceeds, if any, for general corporate purposes, including working capital. The exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances, including subdivisions and stock splits, stock dividends, combinations, reorganizations, reclassifications, consolidations, mergers or sales of properties and assets and upon the issuance of certain assets or securities to holders of our common stock, as applicable.
The selling shareholders will pay any underwriting discounts and commissions and expenses incurred by the selling shareholders for brokerage, accounting, tax or legal services or any other expenses incurred by the selling shareholder in disposing of the shares. We will bear all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus, including, without limitation, all registration and filing fees, fees and expenses of our counsel, certain expenses of counsel to the selling shareholders and our independent registered public accountants.
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SELLING SHAREHOLDERS
The shares of voting common stock being offered by the selling shareholders are those previously issued to the selling shareholders, and those issuable to the selling shareholders, upon conversion of the non-voting common stock or convertible notes or exercise of warrants. For additional information regarding the issuances of those shares of voting common stock, non-voting common stock, convertible notes and warrants and the relationship between the selling shareholders and us, see “Prospectus Summary—Description of the Private Placement and Transfer of Shares in Connection with the Merger” above. We are registering the shares of voting common stock in order to permit the selling shareholders to offer the shares for resale from time to time.
The following table sets forth:
· the selling shareholders and other information regarding the beneficial ownership of the shares of common stock by the selling shareholders;
· the number of shares of common stock beneficially owned by the selling shareholders, based on their respective ownership of the shares of common stock and non-voting common stock and warrants, as of October 15, 2017, assuming the conversion of the non-voting common stock, the conversion of the convertible notes, and the exercise of the warrants held by the selling shareholders on that date, without regard to any limitations on conversions or exercises prior to the sale of the shares covered by this prospectus;
· the number of shares that may be offered by the selling shareholders pursuant to this prospectus;
· the number of shares to be beneficially owned by the selling shareholders and their respective affiliates following the sale of any shares covered by this prospectus; and
· the percentage of our issued and outstanding voting common stock to be beneficially owned by the selling shareholders and their respective affiliates following the sale of all shares covered by this prospectus.
This prospectus generally covers the resale of all shares received by the selling shareholders in connection with the transactions contemplated by the Securities Purchase Agreements, the Debt Settlement Agreements, MEF/Riverside NPA, Kingdon NPA, CVP SPA, including any shares of voting common stock issued or issuable upon the conversion of shares of non-voting common stock and promissory notes received by the selling shareholders.
The selling shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution.”
Name of Selling
Number of shares of Common Stock Owned Prior to
Maximum Number of shares of Common Stock to be Sold Pursuant to this
Number of shares of Common Stock Owned After Offering (3)(4)
Shareholders
Offering (1)
Prospectus (2)
Number
Percent
Entities affiliated with Kingdon Capital Management L.L.C (5)
25,457,532
23,315,544
2,141,988
2.29 % Chicago Venture Partners (6)
4,000,000
4,000,000
0
—
Riverside Merchant Partners LLC (7)
1,246,042
1,246,042
0
—
MEF I, LP (8)
1,246,042
1,246,042
0
—
Dorsar Investment Company (9)
975,686
975,686
0
—
Continental Properties (10)
333,289
333,289
0
—
Dorsar Partners, LP (11)
337,170
337,170
0
—
Stephen L. Feinberg (12)
18,207
18,207
0
—
Alco Investment Company (13)
1,589,410
1,589,410
0
—
Two Daughters LLC (14)
124,154
124,154
0
—
Boies, Schiller & Flexner LLP (15)
2,014,131
2,014,131
0
—
James J. Bochnowski (16)
1,015,942
100,000
915,942
*
Gregory Stock (17)
100,000
100,000
0
—
KCSA Strategic Communications (18)
300,000
300,000
0
—
* Represents less than 1% of the issued and outstanding shares of common stock as of October 15, 2017.
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(1) Excludes contingent rights to receive an indeterminate number of shares of voting common stock held by certain selling shareholders pursuant to the terms of the Merger Agreement.
(2) Assumes the conversion of all shares of non-voting common stock, the conversion of all convertible notes, the exchange of all exchangeable notes, and the exercise for cash of all warrants held by the selling shareholders into shares of voting common stock.
(3) Assumes that the selling shareholders sell all shares of voting common stock registered under this prospectus held by such selling shareholders.
(4) Based upon 89,050,655 shares of common stock outstanding as of October 15, 2017. For purposes of computing the percentage of outstanding shares of the common stock held by the selling shareholders named above, any shares which any selling shareholder has the right to acquire within 60 days of October 15, 2017 are deemed to be outstanding.
(5) Represents (i) 1,291,986 shares of voting common stock, (ii) 850,002 shares of voting common stock issuable upon exercise of warrants, and (iii) 10,946,312 shares of voting common stock issuable upon conversion of the Kingdon Notes owned by Kingdon Capital Management, L.L.C. and 12,369,232 shares of voting common stock issuable upon payment of interest on the Kingdon Notes in lieu of cash convertible at $0.20 per share.
(6) Represents the minimum number of shares of voting common stock that we are contractually obligated to register for the benefit of CVP pursuant to the CVP SPA, which shares would be issuable upon conversion of the CVP Note (including shares of voting common stock issuable upon payment of interest on the CVP Note in lieu of cash convertible at $1.00 per share).
(7) Represents 1,171,876 shares of voting common stock issuable upon conversion of the MEF/Riverside Notes owned by Riverside Merchant Partners LLC and 74,166 issuable upon payment of interest on the MEF/Riverside Notes in lieu of cash convertible at $0.20 per share.
(8) Represents 1,171,876 shares of voting common stock issuable upon conversion of the MEF/Riverside Notes owned by MEF I, LP and 74,166 issuable upon payment of interest on the MEF/Riverside Notes in lieu of cash convertible at $0.20 per share.
(9) Represents (i) 678,483 shares of voting common stock issuable upon conversion of non-voting common stock and (ii) 297,203 shares of voting common stock issuable upon exercise of warrants owned by Dorsar Investment Company. Prior to the Merger, Dorsar Investment Company held 56,128 shares of common stock of Napo. Pursuant to the terms of the Merger Agreement, upon consummation of the Merger, such shares of Napo common stock were exchanged for contingent rights to receive an indeterminate number of shares of our voting common stock, which contingent rights are excluded from the shares listed in the table above.
(10) Represents 333,289 shares of voting common stock issuable upon exercise of warrants owned by Continental Properties.
(11) Represents 337,170 shares of voting common stock issuable upon exercise of warrants owned by Dorsar Partners, L.P.
(12) Represents (i) 4,370 shares of voting common stock issuable upon exercise of warrants held by the Andrew Feinberg Lifetime Trust, (ii) 2,731 shares of voting common stock issuable upon exercise of warrants held by the Deborah Feinberg Rosen Lifetime Trust, and (iii) 11,106 shares of voting common stock issuable upon exercise of warrants held by the Stephen L. Feinberg Lifetime Trust. Stephen L. Feinberg is the trustee of the Andrew Feinberg Lifetime Trust, Deborah Feinberg Rosen Lifetime Trust and Stephen L. Feinberg Lifetime Trust and has voting and investment control over such shares.
(13) Represents (i) 1,367,903 shares of voting common stock issuable upon conversion of non-voting common stock and (ii) 221,507 shares of voting common stock issuable upon exercise of warrants owned by Alco Investment Company.
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(14) Represents (i) 106,655 shares of voting common stock issuable upon conversion of non-voting common stock and (ii) 17,499 shares of voting common stock issuable upon exercise of warrants owned by Two Daughters LLC. Prior to the Merger, Two Daughters LLC held 37,703 shares of common stock of Napo. Pursuant to the terms of the Merger Agreement, upon consummation of the Merger, such shares of Napo common stock were exchanged for contingent rights to receive an indeterminate number of shares of our voting common stock, which contingent rights are excluded from the shares listed in the table above.
(15) Represents 2,014,131 shares of voting common stock issuable upon conversion of non-voting common stock owned by Boies, Schiller & Flexner LLP.
(16) Represents (i) 801,028 shares of voting common stock, (ii) 92,243 shares of voting common stock issuable upon exercise of stock options, and (iii) 122,671 shares of voting common stock issuable upon exercise of warrants. All securities other than stock options are held by the Bochnowski Family Trust. Mr. Bochnowski, the chairman of our board of directors, is a co-trustee and beneficiary of such trust and shares voting and investment control over such shares with his spouse.
(17) Represents 100,000 shares of voting common stock held by Mr. Stock. Prior to the Merger, Mr. Stock was a member of Napo’s board of directors.
(18) Represents 300,000 shares of voting common stock issuable upon conversion of non-voting common stock owned by KCSA Strategic Communications.
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