−Removed: Other than as set forth below, there have been no material changes to the risk factors previously reported in our 2021 Form 10-K.
+Added: There have been no material changes to the risk factors previously reported in our 2021 Form 10-K, in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2022 and June 30, 2022 and in Exhibit 99.2 to our Amendment No.
+Added: 1 to Current Report on Form 8-K/A filed on October 4, 2022.
See the risk factors set forth in our 2021 Annual Report on Form 10-K under the caption “Item 1 A - Risk Factors.”
−Removed: We currently do not meet the continued listing standards of the Nasdaq Capital Market, which require a minimum closing bid price of $1.00 per share.
−Removed: Our failure to meet Nasdaq’s continued listing standards could result in the delisting of our common stock, negatively impact the price of our common stock and negatively impact our ability to raise additional capital.
−Removed: Our common stock is listed on the Nasdaq Capital Market.
−Removed: Nasdaq provides various continued listing requirements that a company must meet in order for its stock to continue trading on the Nasdaq Capital Market.
−Removed: Among these requirements is the requirement that the Company’s stock trades at a minimum closing bid price of $1.00 per share.
−Removed: Our stock has recently and consistently traded below $1.00 per share, including closing bid prices below $1.00 per share.
−Removed: On February 18, 2022, we received a deficiency letter from The Nasdaq Stock Market which provided us a grace period of 180 calendar days, or until August 17, 2022, to regain compliance with the minimum bid price requirement.
−Removed: We may achieve compliance during this 180-day period if the closing bid price of our common stock is at least $1.00 per share for a minimum of 10 consecutive business days before August 17, 2022.
−Removed: If we fail to regain compliance on or prior to August 17, 2022, we may be eligible for an additional 180 day compliance period.
−Removed: Additionally, if we fail to comply with any other continued listing standards of Nasdaq, our common stock will also be subject to delisting.
−Removed: If that were to occur, our common stock would be subject to rules that impose additional sales practice requirements on broker-dealers who sell our securities.
−Removed: The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from effecting transactions in our common stock.
−Removed: This would significantly and negatively affect the ability of investors to trade our securities and would significantly and negatively affect the value and liquidity of our common stock.
−Removed: These factors could contribute to lower prices and larger spreads in the bid and ask prices for our common stock.
−Removed: If we seek to implement a reverse stock split in order to remain listed on The Nasdaq Capital Market, the announcement and/or implementation of a reverse stock split could significantly negatively affect the price of our common stock.
−Removed: Our merger with Cend may not be consummated or may not deliver the anticipated benefits we expect.
−Removed: There can be no assurance that the Merger will be completed in a timely manner or at all.
−Removed: In addition, even if the Merger is completed, there can be no assurance that the Merger will enhance stockholder value.
−Removed: The Merger Agreement is subject to many closing conditions and termination rights, as set forth in the Merger Agreement.
−Removed: If we do not close the Merger, our board of directors may elect to attempt to complete another strategic transaction similar to the Merger.
−Removed: Attempting to complete another strategic transaction similar to the Merger would be costly and time consuming, and we cannot make any assurances that a future strategic transaction will occur on commercially reasonable terms or at all.
−Removed: We are devoting a significant amount of our time and resources to consummating this transaction, however, there can be no assurance that such activities will result in the consummation of this transaction or that such transaction will deliver the anticipated benefits or enhance stockholder value.
−Removed: Our net cash may be less than the required amount at the closing of the Merger, which would result in our stockholders owning a smaller percentage of the combined organization and could even result in the termination of the Merger Agreement.
−Removed: The Merger Agreement includes a net cash requirement as a condition precedent for closing of the Merger.
−Removed: For purposes of the Merger Agreement, net cash is subject to certain reductions, including, without limitation, accounts payable, accrued liabilities (except those related to the Merger), current liabilities payable in cash, unpaid expenses related to the Merger and certain other unpaid obligations, including declared but unpaid cash dividends.
−Removed: In the event the amount of our net cash is smaller or such reductions are greater than anticipated, our stockholders could hold a significantly smaller portion of the combined organization.
−Removed: Failure to complete the Merger may result in us paying a termination fee or expenses to Cend and could harm the price of our common stock and our future business and operations.
−Removed: If the Merger is not completed, we are subject to the following risks:
−Removed: ◦ if the Merger Agreement is terminated under certain circumstances, we will be required to pay certain transaction expenses of Cend, up to a maximum of $1.0 million;
−Removed: ◦ if the Merger Agreement is terminated under certain circumstances, we will be required to pay Cend a termination fee of $4.0 million, or in some circumstances reimburse the other party’s expenses up to a maximum of $1.0 million;
−Removed: ◦ the price of our common stock may decline and remain volatile;
−Removed: ◦ certain of the costs related to the Merger, such as legal and accounting fees, must be paid even if the Merger is not completed.
−Removed: In addition, if the Merger Agreement is terminated and our Board of Directors or the Cend Board of Directors determines to seek another business combination, there can be no assurance that we will be able to diversify and enhance our product candidate portfolio on terms equivalent or more attractive than the Merger.
−Removed: The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.
−Removed: In general, either we or Cend can refuse to complete the Merger if there is a material adverse change affecting the other party between the date of the Merger Agreement, and the Closing.
−Removed: However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on us or Cend, including:
−Removed: ◦ any rejection or non-acceptance by a governmental body of a registration or filing relating to certain of our intellectual property rights;
−Removed: ◦ the taking of any action, or the failure to take any action, by either us or Cend required to comply with the terms of the Merger Agreement;
−Removed: ◦ any effect resulting from the announcement or pendency of the Merger or any related transactions;
−Removed: ◦ any natural disaster or any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation or armed hostilities or terrorist activities anywhere in the world or any governmental or other response or reaction to any of the foregoing;
−Removed: ◦ any change in accounting requirements or principles of any change in applicable laws, rules or regulations or the interpretation thereof;
−Removed: ◦ any general economic or political conditions or conditions generally affecting the industries in which we and Cend operate;
−Removed: ◦ any changes in research in development, clinical trials or other drug development activities conducted on our behalf;
−Removed: ◦ continued losses from our operations or decreases in our cash balance;
−Removed: ◦ any epidemics, pandemics, disease outbreaks, or other public health emergencies or the escalation or worsening thereof, including COVID-19;
−Removed: ◦ with respect to us, any change in the stock price or trading volume of our common stock excluding any underlying effect that may have caused such change;
−Removed: ◦ with respect to Cend, any change in the cash position of Cend that results from operations in the ordinary course of business.
−Removed: If adverse changes occur and we and Cend still complete the Merger, the price of our common stock may suffer.
−Removed: This in turn may reduce the value of the Merger to our stockholders.
−Removed: The market price of our common stock following the Merger may decline as a result of the Merger.
−Removed: The market price of our common stock may decline as a result of the Merger for a number of reasons if:
−Removed: ◦ investors react negatively to the prospects of the combined organization’s business and prospects from the Merger;
−Removed: ◦ the effect of the Merger on the combined organization’s business and prospects is not consistent with the expectations of financial or industry analysts;
−Removed: ◦ the combined organization does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts.
−Removed: Our stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.
−Removed: If the combined organization is unable to realize the full strategic and financial benefits currently anticipated from the Merger, our stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined organization is able to realize only part of the strategic and financial benefits currently anticipated from the Merger.
−Removed: Our stockholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined organization following the completion of the Merger as compared to their current ownership and voting interests.
−Removed: After the completion of the Merger, our current stockholders will own a smaller percentage of the combined organization than their ownership prior to the Merger.
−Removed: Immediately after the Merger, our stockholders, whose shares of common stock will remain outstanding after the Merger, will own approximately 50% of the fully-diluted common stock of the combined organization, excluding out-of-the-money securities.
−Removed: These estimates are based on the anticipated exchange ratio and are subject to adjustment.
−Removed: During the pendency of the Merger, we may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect our respective businesses.
−Removed: Covenants in the Merger Agreement impede our ability to make acquisitions, subject to certain exceptions relating to fiduciary duties, or to complete other transactions that are not in the ordinary course of business pending completion of the Merger.
−Removed: As a result, if the Merger is not completed, we may be at a disadvantage to our competitors during such period.
−Removed: In addition, while the Merger Agreement is in effect, we are generally prohibited from soliciting, initiating, encouraging or entering into certain extraordinary transactions, such as merger, sale of assets or other business combination outside the ordinary course of business with any third party, subject to certain exceptions relating to fiduciary duties.
−Removed: Any such transactions could be favorable to our stockholders.
−Removed: Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.
−Removed: The terms of the Merger Agreement prohibit us from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when our board of directors determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to be inconsistent with the board’s fiduciary duties.
−Removed: Moreover, even if we receive what our board of directors determines is a superior proposal, the Merger Agreement does not permit us to terminate the Merger Agreement to enter into a superior proposal.
−Removed: If the conditions of the Merger are not met, the Merger will not occur.
−Removed: Even if the Merger is approved by our stockholders and Cend Stockholders, specified conditions must be satisfied or waived to complete the Merger.
−Removed: These conditions are set forth in the Merger Agreement, which is attached to this Quarterly Report as Exhibit 2.1.
−Removed: We cannot assure you that all of the conditions will be satisfied or waived.
−Removed: If the conditions are not satisfied or waived, the Merger will not occur or will be delayed, and we may lose some or all of the intended benefits of the Merger.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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