Note 15. Subsequent Events

The Company and the holder of the November 2020 Note agreed to defer its February 2021 required Monthly Debt Reduction Amount of $7.5 million to March 12, 2021. On March 12, 2021, in satisfaction of the February 2021 Monthly Debt Reduction amount, the Company and the July 2020 Note holder entered into a separately negotiated exchange agreement, pursuant to which the July 2020 Note was partitioned into a new note (the “ February 2021 Partitioned Note”) with a principal amount equal to $7.5 million. The outstanding balance of the July 2020 Note was reduced by the February 2021 Partitioned Note, and the Company and the investor exchanged the February 2021 Partitioned Note for approximately 3.6 million shares of the Company’s common stock $0.001 par value. Following this payment, the outstanding balance on the July 2020 Note, including accrued interest, was approximately $15.2 million.

On March 3, 2021, the Company filed a “universal shelf” registration statement on Form S-3 with the U.S. Securities and Exchange Commission to replace its previous shelf registration originally filed with the SEC on February 23, 2018 and which was set to expire on March 7, 2021. The new registration statement includes a base prospectus that covers the offering, issuance and sale of such indeterminate number of shares of the registrant’s common stock, preferred stock, warrants, overallotment purchase rights, debt securities, rights and units, which together shall have an aggregate initial offering price not to exceed $200.0 million and includes the registration of approximately 13.6 million shares of common stock underlying previously issued and unexercised warrants. The new registration statement is not yet effective.

On March 11, 2021, the Company appointed Dr. Christopher P. Recknor, M.D. as COO. See Note 14 above for a description of related party transactions involving Dr. Recknor.

On March 18, 2021, the Company entered into a private warrant exchange in which an accredited investor purchased unregistered common stock at a range of $0.60 to $0.90 per share as compared to the stated exercise price on their warrant, which ranged from $0.30 to $0.45 per share of common stock. The Company issued approximately 0.9 million shares of common stock, as well as approximately 0.4 million additional shares as an inducement to exercise their warrants, for a total of approximately 1.3 million shares of common stock, $0.001 par value. Aggregate gross proceeds from the private warrant exchange were approximately $0.8 million.

During March 2021, the Company issued approximately 0.1 million shares of common stock, $0.001 par value, in connection with the exercise of outstanding warrants and stock options covering approximately 0.1 million shares. The stated exercise prices ranged from $0.75 to $1.35 per share, which resulted in aggregate gross proceeds to the Company of approximately $0.1 million.

On April 2, 2021, the Company entered into a private warrant exchange in which an accredited investor purchased unregistered common stock at $0.90 per share as compared to the stated exercise price on the warrants of $0.45 per share of common stock. The Company issued approximately 0.8 million shares of common stock, as well as approximately 0.3 million additional shares as an inducement to exercise their warrants, for a total of approximately 1.1 million shares of common stock, $0.001 par value. Aggregate gross proceeds from the private warrant exchange were approximately $0.7 million.

On April 2, 2021, the Company entered into a securities purchase agreement pursuant to which the Company issued a secured convertible promissory note with a two-year term to an institutional accredited investor and the lender under the November 2020 Note in the initial principal amount of $28.5 million (the “April 2021 Note”). The April 2021 Note is secured by all of the assets of the Company, excluding the Company’s intellectual property, bears interest at 10% per annum, with a conversion rate of $10.00 per share. The investor agreed to give consideration of $25.0 million, reflecting original issue discount of $3.4 million and $0.1 million of debt issuance costs. The Company anticipates using the proceeds to accelerate manufacturing of leronlimab inventory and for general corporate purposes.

The last day of employment of Chief Scientific Officer, Mahboob U. Rahman, M.D., Ph.D., was April 5, 2021.

On April 6, 2021, the Company entered into an Exclusive Supply and Distribution Agreement (the “Agreement”) with Biomm S.A., a Brazilian pharmaceutical company engaged in the business of manufacturing and distributing pharmaceutical products in Brazil (“Biomm”), pursuant to which Biomm would hold the exclusive right to distribute and sell the Company’s product, Vyrologix™ (leronlimab), in Brazil, once regulatory approval has been received. The Agreement provides for the sale of Vyrologix™ upon approval by the Brazilian National Health Surveillance Agency or Agência Nacional de Vigilância Sanitária.

The Company and the holder of the November 2020 Note agreed to defer its March 2021 required Monthly Debt Reduction Amount of $7.5 million to April 8, 2021. On April 8, 2021, in satisfaction of the March 2021 Monthly Debt Reduction Amount, the Company and the July 2020 Note holder entered into a separately negotiated exchange agreement, pursuant to which the July 2020 Note and was partitioned into a new note (the “March 2021 Partitioned Note”) with a principal amount equal to $7.5 million. The outstanding balance on the July 2020 Note was reduced by the March 2021 Partitioned Note, and the Company and the investor exchanged the March 2021 Partitioned Note for approximately 2.5 million shares of the Company’s common stock $0.001 par value. Following this payment, the outstanding balance on the July 2020 Note, including accrued interest, was approximately $7.9 million.