PROXY STATEMENT
The
enclosed proxy is solicited on behalf of the Board of Directors
(the “Board”) of AzurRx BioPharma, Inc. (the
“Company,” “we,” “us,” or
“our”), for use at the upcoming Special Meeting of
Stockholders including any adjournment or postponement thereof (the
“Special Meeting”) to be held on February 24, 2021 at
9:00 A.M. Eastern Time, and at any adjournment or postponement
thereof, virtually via the Internet at https://www.virtualshareholdermeeting.com/AZRX2021SM.
This
proxy statement and the enclosed proxy card are first being mailed
on or about January , 2021 to stockholders entitled to vote as of
the close of business on January 4, 2021 (the “Record
Date”). These proxy materials contain instructions on how to
access this proxy statement online at: proxyvote.com, and how to
submit your vote via the internet, telephone and/or
e-mail.
Voting
The
specific proposals to be considered and acted upon at the Special
Meeting are each described in this proxy statement. Only
holders of shares of our common stock, par value $0.0001 per share
(the “Common Stock”) as of the close of business on
the Record Date are entitled to
notice of and to vote at the Special Meeting. As of January 7,
2021, there were 34,900,382 shares of Common Stock issued and outstanding. Each
holder of Common Stock is entitled to one vote for each share held
as of the Record Date.
Quorum
In
order for any business to be conducted at the Special Meeting, the
holders of a majority in voting power of the shares of the capital
stock of the Company issued and outstanding and entitled to vote at
the meeting, present in person, present by means of remote
communication in a manner, if any, authorized by the Board in its
sole discretion, or represented by proxy, shall constitute a quorum
for the transaction of business. If a quorum is not present at the
scheduled time of the Special Meeting, the Board, the chairman of
the meeting or, if directed to be voted on by the chairman of the
meeting, by the stockholders present or represented at the meeting
and entitled to vote thereon, although less than a quorum, may
adjourn the Special Meeting until a quorum is present. The time and
place of the adjourned Special Meeting will be announced at the
time the adjournment is taken, and no other notice will be given
unless the adjournment is for more than 30 days, in which case a
notice of the adjourned meeting will be given to each stockholder
of record entitled to vote at the Special Meeting. An adjournment
will have no effect on the business that may be conducted at the
Special Meeting.
Required Vote for Approval
No.
|
|
Proposal
|
|
|
|
1.
|
|
Approval,
pursuant to Nasdaq listing rule 5635, of the issuance of shares of
our Common Stock upon
conversion of our Series C 9.00% Convertible Junior Preferred
Stock, par value
$0.0001 per share (the “Series C Preferred
Stock”), and other
securities in excess of 20% of our Common Stock outstanding. To approve the
sale and issuance of the shares of Common Stock underlying the
securities sold and issued in the Offerings. This proposal requires
the affirmative (“FOR”) vote of a majority of votes
cast by shares present or represented by proxy and entitled to vote
at the Special Meeting.
|
|
|
|
2.
|
|
Approval to Amend Our Charter
to Increase the Number of Authorized Shares of Common Stock.
To approve an amendment to our Charter
to increase the number of authorized shares of Common Stock by
100,000,000 shares to 250,000,000 shares. This proposal must be
approved by the affirmative vote of a majority of the outstanding
shares of Common Stock of the Company entitled to vote on the
proposal. Shares that are not represented at the Special Meeting
and abstentions and, if this proposal is deemed to be
“non-routine” as described below,
broker non-votes with respect to this proposal will have
the same practical effect as a vote against this
proposal.
|
|
|
|
3.
|
|
Approval to Amend Our Charter
to Effect a Reverse Split. To
approve an amendment to our Charter to authorize the Board to
effect a reverse stock split of both our issued and outstanding and
authorized shares of Common Stock, at a specific ratio, ranging
from one-for-five (1:5) to one-for-ten (1:10), any time prior to
the one-year anniversary date of the Special Meeting, with the
exact ratio to be determined by the Board of Directors (the
“Reverse Split”). This proposal must be approved by the
affirmative vote of a majority of the outstanding shares of Common
Stock of the Company entitled to vote on the proposal. Shares that
are not represented at the Special Meeting and abstentions and, if
this proposal is deemed to
be “non-routine” as described below,
broker non-votes with respect to this proposal will have
the same practical effect as a vote against this
proposal.
|
|
|
|
4.
|
|
Approval of the Adjournment of
the Special Meeting to the Extent There Are Insufficient Proxies at
the Special Meeting to Approve Any One or More of the Foregoing
Proposals. To approve the
adjournment of the Special Meeting in the event that the number of
shares of Common Stock present or represented by proxy at the
Special Meeting and voting “FOR” the adoption of any
one or more of the foregoing proposals are insufficient to approve
any proposal. This proposal requires the affirmative
(“FOR”) vote of a majority of votes cast by the shares
present or represented by proxy and entitled to vote at the Special
Meeting.
|
Abstentions and Broker Non-Votes
All votes will be tabulated by the inspector of election appointed
for the Special Meeting, who will separately tabulate affirmative
and negative votes, abstentions and broker non-votes. An abstention
is the voluntary act of not voting by a stockholder who is present
at the Special Meeting and entitled to vote. A broker
“non-vote” occurs when a broker nominee holding shares
for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary power for that
particular item and has not received instructions from the
beneficial owner. If you hold your shares in “street
name” through a broker or other nominee, your broker or
nominee may not be permitted to exercise voting discretion with
respect to some of the matters to be acted upon at the Special
Meeting. If you do not give your broker or nominee specific
instructions regarding such matters, your proxy will be deemed a
“broker non-vote.”
The question of whether your broker or nominee may be permitted to
exercise voting discretion with respect to a particular matter
depends on whether the New York Stock Exchange (the
“NYSE”) deems the particular proposal to be a
“routine” matter and how your broker or nominee
exercises any discretion they may have in the voting of the shares
that you beneficially own. Brokers and nominees can use their
discretion to vote “uninstructed” shares with respect
to matters that are considered to be “routine,” but not
with respect to “non-routine” matters. Under the rules
and interpretations of the NYSE, “non-routine” matters
are matters that may substantially affect the rights or privileges
of stockholder, such as mergers, stockholder proposals, elections
of directors (even if not contested), executive compensation
(including any advisory stockholder votes on executive compensation
and on the frequency of stockholder votes on executive
compensation), and certain corporate governance proposals, even if
management-supported.
For any proposal that is considered a “routine” matter,
your broker or nominee may vote your shares in its discretion
either for or against the proposal even in the absence of your
instruction. For proposal that is considered a
“non-routine” matter for which you do not give your
broker instructions, the shares will be treated as broker
non-votes. “Broker non-votes” occur when a beneficial
owner of shares held in street name does not give instructions to
the broker or nominee holding the shares as to how to vote on
matters deemed “non-routine.” Broker non-votes will not
be considered to be shares “entitled to vote” on any
“non-routine” matter and therefore will not be counted
as having been voted on the applicable proposal. Therefore, if you
are a beneficial owner and want to ensure that shares you
beneficially own are voted in favor or against any or all of the
proposals in this proxy statement, the only way you can do so is to
give your broker or nominee specific instructions as to how the
shares are to be voted.
Under Delaware law and our Amended and Restated Bylaws (our
“Bylaws”), abstentions and broker non-votes are not
counted as votes cast on an item and therefore will not affect the
outcome of any proposal presented in this proxy statement.
Abstention and broker non-votes, if any, will be counted for
purposes of determining whether there is a quorum present at the
Special Meeting.
Voting, Revocation and Solicitation of Proxies
The
enclosed proxy is solicited by and on behalf of the Board, with the
cost of solicitation borne by us. Solicitation may also be made by
our directors and officers without additional compensation for such
services. In addition to mailing proxy materials, the directors,
officers and employees may solicit proxies in person, by telephone
or otherwise.
We have
also retained Alliance Advisors LLC to assist it in the
solicitation of proxies. Alliance Advisors LLC will solicit proxies
on our behalf from individuals, brokers, bank nominees and other
institutional holders in the same manner described above. Alliance
Advisors LLC will receive a base fee of $7,500, plus approved and
reasonable out-of-pocket expenses and additional processing fees
for any call campaigns, for its services to us for the solicitation
of the proxies. We have also agreed to indemnify Alliance Advisors
LLC against certain claims.
If your
proxy is properly returned to us, the shares represented thereby
will be voted at the Special Meeting in accordance with the
instructions specified thereon. If you return your proxy without
specifying how the shares represented thereby are to be voted, the
proxy will be voted (i) FOR the approval of the
issuance of more than 20% of our Common Stock upon conversion of our Series C Preferred Stock
and other securities in excess of 20% of our Common Stock
outstanding for purposes of Nasdaq Listing Rule 5635; (ii)
FOR the increase in
the number of authorized shares of our Common Stock; (iii)
FOR the
approval of the Reverse Split; and (iv) FOR the approval of the
adjournment of the Special Meeting to the extent there are
insufficient proxies at the Special Meeting to approve any one or
more of the foregoing proposals.
If you
have additional questions, need assistance in submitting your proxy
or voting your shares of Common Stock, or need additional copies of
the proxy statement or the enclosed proxy card, please contact
Alliance Advisors LLC.
Alliance Advisors LLC
200
Broadacres Drive, 3rd Floor, Bloomfield, NJ 07003
(833)
550-0994
If you
are a stockholder of record, you may revoke or change your proxy at
any time before the Special Meeting by filing, with our Chief
Financial Officer at 1615 South
Congress Avenue, Suite 103, Delray Beach, Florida 33445, a
notice of revocation or another signed proxy with a later date. If
you are a stockholder of record, you may also revoke your proxy by
attending the Special Meeting and voting. Attendance at the
Special Meeting alone will not revoke your proxy. If you are a
beneficial owner whose shares are not registered in your own name,
you will need additional documentation from your broker or record
holder to vote personally at the Special Meeting.
No Appraisal Rights
Our stockholders have no dissenter’s or appraisal rights in
connection with any of the proposals described herein.
Solicitation
We will
bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this proxy statement and the
annual report, as well as the preparation and posting of this proxy
statement, the annual report and any additional solicitation
materials furnished to the stockholders. Copies of any solicitation
materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially
owned by others so that they may forward this solicitation material
to such beneficial owners. In addition, we may reimburse such
persons for their costs in forwarding the solicitation materials to
such beneficial owners. The original solicitation of proxies may be
supplemented by a solicitation by telephone, e-mail or other means
by our directors, officers or employees. No additional compensation
will be paid to these individuals for any such services. Except as
described above, we do not presently intend to solicit proxies
other than by e-mail, telephone and mail.
PROPOSAL NO. 1:
|
APPROVAL OF THE ISSUANCE OF SHARES OF OUR COMMON STOCK UPON
CONVERSION OF OUR SERIES C 9.00% CONVERTIBLE JUNIOR PREFERRED STOCK
(THE “SERIES C PREFERRED STOCK”) AND OTHER SECURITIES
IN EXCESS OF 20% OF OUR COMMON STOCK OUTSTANDING PURSUANT TO NASDAQ
LISTING RULE 5635
|
Background and Overview
On
December 31, 2020, in conjunction with entering into an exclusive
worldwide licensing agreement (the “License Agreement”)
with First Wave Bio, Inc. (“First Wave”), we entered
into a securities purchase agreement (the “Investor Purchase
Agreement”) with a single healthcare-focused institutional
investor, pursuant to which we sold approximately $8.0 million of
Series C 9.00% Convertible Junior Preferred Stock (the
“Series C Preferred Stock”) and related warrants (the
“Investor Warrants”) in a registered direct offering
(the “Registered Direct Offering”) and concurrent
private placement (the “Private Placement,” and
together with the Registered Direct Offering, the
“Offerings”). In connection with the Offerings, we
issued to our placement agent certain additional warrants (the
“Placement Agent Warrants” and, collectively with the
Investor Warrants, the “Warrants”) as compensation for
its services as placement agent in the Offerings. The net proceeds
of the Offerings were used to fund in part the $10.25 million
payment of cash consideration to First Wave under the License
Agreement, and for other general corporate purposes.
In
addition, pursuant to the terms of the License Agreement with First
Wave, we were obligated to issue preferred stock convertible into
$3.0 million of Common Stock, based upon the volume weighted
average price of the Common Stock for the five-day period
immediately preceding the date of the License Agreement, or $0.9118
per share. On January 8, 2021, we entered into a securities
purchase agreement (the “First Wave Purchase
Agreement”) pursuant to which we sold additional shares of
Series C Preferred Stock to First Wave in satisfaction of such
equity payment obligation.
Finally,
under the Certificate of Designations (the “Series B
Certificate of Designations”) for our Series B Convertible
Preferred Stock, par value $0.0001 per share (the “Series B
Preferred Stock”), holders of our Series B Preferred Stock
have the right to exchange the stated value, plus accrued and
unpaid dividends, of the Series B Preferred Stock for Series C
Preferred Stock and Warrants on a dollar-for-dollar basis with
the investor in the Offerings, in lieu of any cash subscription
payments therefor (the “Exchange Rights”).
We
refer herein to the issuance of the Placement Agent Warrants to the
placement agent in the Offerings, the issuance of shares of Series
C Preferred Stock to First Wave as consideration for the License
Agreement, and the issuance of any Series C Preferred Stock and
Warrants issuable to holders of the Exchange Rights as a result of
the Offerings, collectively, as the “Related
Transactions” to the Offerings.
This
Proposal No. 1 relates to the approval of the issuance of shares of
our Common Stock upon conversion, exercise or exchange of Series C
Preferred Stock or Warrants issued or issuable in the Offerings or
any of the Related Transactions pursuant to Nasdaq Listing Rules
5635(a) and (5635(d), as described below.
Registered Direct Offering and Private Placement
Pursuant to the Investor Purchase Agreement, we sold in the
Offerings an aggregate of 10,666.6666 shares of Series C Preferred
Stock, initially convertible into up to 10,666,668 shares of Common
Stock at a conversion price of $0.75 per share, together with
related warrants to purchase up to 10,666,668 shares of Common
Stock, at an exercise price $0.80 per share, which we refer to as
the Investor Warrants. The combined purchase price in the Offerings
for one share of Series C Preferred Stock and related Investor
Warrants was $750.00. The terms of the Offerings were previously
reported in a Form 8-K filed on January 4, 2020.
The
aggregate gross proceeds from the Offerings, excluding the net
proceeds, if any, from the exercise of the Investor Warrants, were
$8.0 million, and the Offerings closed on January 5, 2021 (the
“Closing Date”). The net proceeds from the Offerings,
after deducting the placement agent’s fees and expenses and
estimated offering expenses, are expected to be approximately $6.8
million. We intend to use the net proceeds to fund the payment of
cash consideration to First Wave under the License Agreement, and
for other general corporate purposes.
Pursuant
to the Investor Purchase Agreement, we must hold a meeting of our
stockholders not later than March 31, 2021 (the “Meeting
Deadline”) to seek such approval as may be required from the
stockholders of the Company (the “Stockholder
Approval”), in accordance with applicable law, the applicable
rules and regulations of the Nasdaq Stock Market, our certificate
of incorporation and bylaws and the General Corporate Law of the
State of Delaware with respect to the issuance of shares of Common
Stock upon conversion or exercise of the Series C Preferred Stock
and the Warrants sold in the Private Placement and the related
transactions described herein, including (x) an increase in the
number of authorized shares of Common Stock above 150,000,000 and
(y) the potential issuance of shares of Common Stock in excess of
the 6,186,966 shares in the aggregate (the “Issuable
Maximum”), which amount equals 19.99% of the shares of Common
Stock outstanding as of December 30, 2020, the date prior to
entering into the Investor Purchase Agreement. This Proposal No. 1
and Proposal No. 2 below are for the purposes of obtaining such
Stockholder Approval.
The
certificate of designations for the Series C Preferred Stock (the
“Series C Certificate of Designations”) provides that,
until we have obtained effective stockholder approval, we may not
issue, upon conversion of the Series C Preferred Stock issued in
the Offerings and certain other transactions, a number of shares of
Common Stock which would exceed 6,186,966 shares of Common Stock in
the aggregate, which amount is equal to 19.99% of the shares of
Common Stock issued and outstanding on December 30, 2020, subject
to adjustment for forward and reverse stock splits,
recapitalizations and the like (the “Issuable
Maximum”). The Issuable Maximum shall be applied
collectively, when any conversions of Series C Preferred Stock are
aggregated together with all shares of Common Stock issuable upon
conversion, exercise or exchange of any securities issued in
certain related transactions to the Offerings, including (i) the
shares of Series C Preferred Stock issued to First Wave as
consideration for the License Agreement, (ii) any Placement Agent
Warrants (as defined below) and (iii) any Series C Preferred Stock
and Warrants issuable to holders of the Exchange Rights (as defined
and further described below) as a result of the Offerings
(collectively, the “Related Transactions”). In
addition, any conversions of Series C Preferred Stock will be
processed in the order in which we receive such conversion request
from the holders of Series C Preferred Stock, and not on a pro rata
basis.
The Series C Certificate of
Designations contains limitations that prevent the holder thereof
from acquiring shares of Common Stock upon conversion that would
result in the number of shares beneficially owned by such holder
and its affiliates exceeding 9.99% of the total number of shares of
Common Stock outstanding immediately after giving effect to the
conversion (the “Beneficial Ownership Limitation”). As
a result, the Series C Certificate of Designation provides for the
issuance of pre-funded warrants (the “Pre-Funded
Warrants”) to purchase shares of our Common Stock, with an
exercise price of $0.001 per share and with no expiration date, if
necessary to comply with the Beneficial Ownership
Limitation.
On
January 6, 2021, the Offerings closed and the investor converted
all of its Series C Preferred Stock issued in the Registered Direct
Offering, effective immediately upon the closing. Upon such
conversion, the investor received an aggregate of 3,400,000 shares
of Common Stock and Pre-funded Warrants to purchase up to 1,933,334
shares of Common Stock. Accordingly, following the closings,
853,632 shares of Common Stock currently remain available for
issuance below the Issuable Maximum, prior to obtaining the
Stockholder Approval.
Except
to the extent of effective stockholder approval, the Series C
Preferred Stock will not be convertible into shares of Common Stock
(or any Pre-Funded Warrants exercisable into shares of Common
Stock, as applicable) in excess of the Issuable
Maximum.
If we
obtain the Stockholder Approval, we anticipate to convert
immediately all shares of Series C Preferred Stock into shares of
Common Stock (or Pre-Funded Warrants, as applicable).
Placement Agent Warrants
In
connection with the Offerings, we issued to H.C. Wainwright &
Co. LLC and its designees certain Placement Agent Warrants
exercisable for up to 746,667 shares of Common Stock, which is
equal to 7.0% of the amount determined by dividing the gross
proceeds of the Offerings by the offering price per share of Common
Stock, or $0.75. The Placement Agent Warrants have substantially
the same terms as the Investor Warrants, except an exercise price
of $0.9375, or 125% of the per share price of the Series C
Preferred Stock issued in the Offerings.
The
Placement Agent Warrants are not exercisable until the Stockholder
Approval is obtained.
Exchange Right
Under
the Series B Certificate of Designations, in the event we effect
any issuance of Common Stock or common stock equivalents for cash
consideration, or a combination of units thereof (a
“Subsequent Financing”), each holder of the Series B
Preferred Stock has the right to exchange the stated value, plus
accrued and unpaid dividends, of the Series B Preferred Stock for
any securities issued in the Subsequent Financing, on a
dollar-for-dollar basis with the investor in the Offerings, in lieu
of any cash subscription payments therefor, which we refer to as
the Exchange Right.. As a result, we may be required to issue
additional shares of Series C Preferred Stock and Investor Warrants
to any holders of Series B Preferred Stock who elect to exercise
their Exchange Rights.
In
connection with any exercise of any Exchange Right, under Nasdaq
Listing Rule 5635 and related guidance, prior to obtaining the
Stockholder Approval, conversions of any Series C Preferred Stock
received upon exercise of an Exchange Right into Common Stock at
the reduced conversion price of $0.75 per share applicable to the
Series C Preferred Stock will be counted against the Issuable
Maximum, with any conversions of Series C Preferred Stock to be
processed in the order in which we receive such conversion request
from the holders of Series C Preferred Stock, and not on a pro rata
basis.
The
Issuable Maximum is required by the Series C Certificate of
Designations, and under Nasdaq Listing Rule 5635 and related
guidance, to be applied collectively, aggregating together any
conversions of Series C Preferred Stock with all shares of Common
Stock issuable in respect of the Related Transactions (as defined
above), except to the extent such conversions do not exceed the
amount previously issuable upon conversion of the Series B
Preferred Stock at the prior conversion price of $0.77 per share,
which was the applicable conversion price at the time of our
stockholder approval for the Series B Preferred Stock obtained on
September 11, 2020.
License Agreement
On
December 31, 2020, we entered into the License Agreement with First
Wave. Pursuant to the License Agreement, First Wave granted us a
worldwide, exclusive right to develop, manufacture, and
commercialize First Wave’s proprietary immediate release and
enema formulations of niclosamide for the fields of treating Immune
Checkpoint Inhibitor-Associated Colitis (“ICI-AC”) and
Severe Acute Respiratory Syndrome Coronavirus 2
(“COVID”) in humans (the “Product”). The
Product uses First Wave’s proprietary formulations of
niclosamide, a pro-inflammatory pathway inhibitor. We plan to
commence in 2021 both a Phase II trial of the Product for COVID in
GI and a Phase 1b/2a trial for ICI-AC.
In
consideration of the license and other rights granted by First
Wave, we paid First Wave a $9.0 million upfront cash payment and
are obligated to make an additional payment of $1.25 million due on
June 30, 2021. In addition, we are obligated to pay potential
milestone payments to First Wave totaling up to $37.0 million for
each indication, based upon the achievement of specified
development and regulatory milestones. Under the License Agreement
we are obligated to pay First Wave royalties as a mid-single digit
percentage of net sales of the Product, subject to specified
reductions.
On
January 8, 2021, pursuant to the License Agreement we entered into
a securities purchase agreement with First Wave (the “First
Wave Purchase Agreement”) pursuant to which we issued to
First Wave, on that same day, 3,290.1960 shares of Series
CPreferred Stock, initially convertible into an aggregate of
3,290,196 shares of Common Stock, at an initial stated value of
$750.00 per share and a conversion price of $0.75 per share. The
First Wave Purchase Agreement contains demand and piggyback
registration rights with respect to the Common Stock issuable upon
conversion.
Pursuant
to the First Wave Purchase Agreement, the shares of Series C
Preferred Stock issued to First Wave are not convertible prior to
the Stockholder Approval.
Terms of Series C Preferred Stock
Under
the Series C Certificate of Designations, each share of Series C
Preferred Stock will be convertible, subject to the Beneficial
Ownership Limitation and the Issuable Maximum, at either the
holder’s option or at our option at any time, into Common
Stock at a conversion rate equal to the quotient of (i) the $750
stated value (the “Series C Stated Value”) plus all
accrued and accumulated and unpaid dividends on such share of
Series C Preferred Stock divided by (ii) the initial conversion
price of $0.75, subject to specified adjustments for stock splits,
cash or stock dividends, reorganizations, reclassifications other
similar events as set forth in the Series C Certificate of
Designations.
The
Series C Preferred Stock contains limitations that prevent the
holder thereof from acquiring shares of Common Stock upon
conversion that would result in the number of shares beneficially
owned by such holder and its affiliates exceeding 9.99% of the
total number of shares of Common Stock outstanding immediately
after giving effect to the conversion (the “Beneficial
Ownership Limitation”). The Series C Certificate of
Designations provides for the issuance of Pre-funded Warrants to
the extent necessary to comply with the Beneficial Ownership
Limitation.
Until we have obtained effective stockholder approval, we may not
issue, upon conversion of the Series C Preferred Stock issued in
the Offerings and certain other transactions, a number of shares of
Common Stock which would exceed 6,186,966 shares of Common Stock in the aggregate,
which amount is equal to 19.99% of the shares of Common Stock
issued and outstanding on December 30, 2020, subject to adjustment
for forward and reverse stock splits, recapitalizations and the
like which we refer to as the Issuable Maximum. The Issuable Maximum shall be applied
collectively, when any conversions of Series C Preferred Stock are
aggregated together with all shares of Common Stock issuable upon
conversion or exchange of any securities issued in certain related
transactions to the Offerings, including (i) any shares of
preferred stock issuable to First Wave as consideration for the
License Agreement, (ii) any Placement Agent Warrants and (iii) any
securities issuable to holders of the Exchange Rights (as defined
and further described below) as a result of the Offerings,
which we refer to collectively as the Related
Transactions.
Each holder of shares of Series C Preferred Stock, subject to the
preference and priority to the holders of our Series B Preferred
Stock, is entitled to receive dividends, commencing from the date
of issuance of the Series C Preferred Stock. Such dividends may be
paid only when, as and if declared by the Board, out of assets
legally available therefore, quarterly in arrears on the last day
of March, June, September and December in each year, commencing on
the date of issuance, at the dividend rate of 9.0% per year. Such
dividends are cumulative and continue to accrue on a daily basis
whether or not declared and whether or not the Company has assets
legally available therefore.
Under the Series C Certificate of Designations, each share of
Series C Preferred Stock carries a liquidation preference equal to
the Series C Stated Value plus accrued and unpaid dividends thereon
and any other fees or liquidated damages then due and owing
thereon.
The holders of the Series C Preferred Stock have no voting rights.
We may not take the following actions without the prior consent of
the holders of at least a majority of the Series C Preferred Stock
then outstanding: (a) alter or change adversely the powers,
preferences or rights given to the Series C Preferred Stock or
alter or amend the Series C Certificate of Designations, (b)
authorize or create any class of stock ranking as to dividends,
redemption or distribution of assets upon a Liquidation (as defined
in the Series C Certificate of Designations) senior to, or
otherwise pari passu with, the Series C Preferred Stock, (c) amend its
certificate of incorporation or other charter documents in any
manner that adversely affects any rights of the holders of the
Series C Preferred Stock, (d) increase the number of authorized
shares of Series C Preferred Stock, or (e) enter into any agreement
with respect to any of the foregoing.
Terms of the Investor Warrants
The Investor Warrants are exercisable at a price of $0.80 per
share, for that number of shares of Common Stock (the
“Warrant Shares”) equal to 100% of the total number of
shares of Common Stock issuable upon conversion of the shares of
Series C Preferred Stock purchased in the Offerings, or 10,666,668
shares in the aggregate. The Investor Warrants expire on July 5,
2026. The holders of the Investor Warrants may exercise the
Investor Warrants on a cashless basis, solely to the extent no
resale registration statement is available at the time of exercise.
The Company is prohibited from effecting an exercise of any
Investor Warrants to the extent that such exercise would result in
the number of shares of Common Stock beneficially owned by such
holder and its affiliates exceeding 4.99% of the total number of
shares of Common Stock outstanding immediately after giving effect
to the exercise, which percentage may be increased or decreased at
the holder’s election not to exceed 9.99%. The Investor
Warrants provide for a Black-Scholes payout upon certain
fundamental change transactions relating to the Company, as
specified therein.
Until the Stockholder Approval is obtained, we may not issue any
shares of Common Stock upon exercise of the Investor
Warrants.
Registration Rights Agreement
In connection with the Offerings, we entered into a registration
rights agreement, dated as of December 31, 2020 (the
“Registration Rights Agreement”), with the investor,
pursuant to which we will undertake to file, within 30 days
following the Closing Date, a registration statement to register
the shares of Common Stock issuable upon (i) the conversion of the
Series C Preferred Stock issued in the Private Placement, (ii) the
exercise of the Investor Warrants and (iii) the exercise of any
Pre-funded Warrants issued upon the conversion of the Series C
Preferred Stock sold in the Private Placement (the
“Registrable Securities”); and to cause such and to
cause such registration statement to be declared effective under
the Securities Act as promptly as possible after the filing
thereof, but in any event no later than 120 days following the
Closing Date, and shall use our best efforts to keep such
registration statement continuously effective under the Securities
Act until the date that all Registrable Securities covered by such
registration statement have been sold or are otherwise able to be
sold pursuant to Rule 144.
The
forms of the Investor Purchase Agreement, the Registration Rights
Agreement, the Pre-funded Warrants and the Investor Warrants are
attached as Exhibits 10.1, 10.2, 4.1 and 4.2, respectively, to our
Current Report on Form 8-K filed with the SEC on January 4, 2020.
The Series C Certificate of Designations, the First Wave Purchase
Agreement and the form of the Placement Agent Warrants are attached
as Exhibits 3.1, 10.1 and 4.1, respectively, to our Current Report
on Form 8-K filed with the SEC on January 8, 2020. The foregoing
summaries of the terms of these documents are subject to, and
qualified in their entirety by, such documents, which are
incorporated herein by reference.
Why We Need Stockholder Approval
We are
seeking stockholder approval in order to comply with Nasdaq Listing
Rules 5635(a) and 5635(d).
Under
Nasdaq Listing Rule 5635(a), stockholder approval is required prior
to the issuance of securities in connection with the acquisition of
the stock or assets of another company, including for example our entry
into the License Agreement, if such securities are not issued in a
public offering and (A) such securities have, or will have upon
issuance, voting power equal to or in excess of 20% of the voting
power outstanding before the issuance of common stock (or
securities convertible into or exercisable for common stock); or
(B) the number of shares of common stock to be issued is or will be
equal to or in excess of 20% of the number of shares of common
stock outstanding before the issuance of the stock or
securities.
Prior
to the entry into the License Agreement and the Investor Purchase
Agreement, on December 30, 2020, we had 30,950,309 shares of Common
Stock outstanding. As a result, pursuant to the Series C
Certificate of Designations, the Issuable Maximum (as described
above) is an aggregate of 6,186,966 shares, which equals 19.99% of
such amount of Common Stock previously outstanding. Moreover, as
described in greater detail above, under the applicable guidance of
the Nasdaq Stock Market, the shares of Common Stock issued or
issuable in the Offerings are potentially aggregable with the
shares of Common Stock issued or issuable in the other Related
Transactions, for purposes of evaluating compliance with Nasdaq
Listing Rule 5635(a).
The
Investor Purchase Agreement provides for the issuance of up to
10,666,668 shares of Common Stock upon the conversion of the Series
C Preferred Stock and up to 10,666,668 shares of Common Stock upon
the exercise of the Warrants, or an aggregate approximately 69% of
the shares of Common Stock outstanding prior to giving effect to
the Offerings. In addition, an aggregate of up to 29,314,917
additional shares of Common Stock (or up to 95%) have or may
potentially become issuable in the Related Transactions, which are
potentially aggregable with the Offerings, as described herein.
Consequently, all such transactions are subject to stockholder
approval pursuant to the Nasdaq Stock Market Rule
5635(a).
In
addition to Nasdaq Listing Rule 5635(a), under Nasdaq Listing Rule
5635(d), stockholder approval is required for a transaction other
than a public offering involving the sale, issuance or potential
issuance by an issuer of common stock (or securities convertible
into or exercisable for common stock) at a price that is less than
the greater of book or market value of the stock if the number of
shares of common stock to be issued is or may be equal to 20% or
more of the common stock, or 20% or more of the voting power,
outstanding before the issuance.
The
conversion price of the Series C Preferred Stock will be $0.75 per
share and the exercise price of the Investor Warrants and the
Placement Agent Warrants is $0.80 per share. Given that market
price of our Common Stock as of the time of entry into the License
Agreement and the Investor Purchase Agreement is lower than such
prices, as calculated pursuant to the requirements of Nasdaq Rule
5635(d) and related guidance, we are also seeking stockholder
approval under Nasdaq Listing Rule 5635(d).
We are
therefore seeking stockholder approval, in connection with the
Offerings and the Related Transactions, for the sale and issuance
of the shares of Common Stock underlying the Series C Preferred
Stock and the Warrants, in excess of the Issuable Maximum, to
satisfy the requirements of Nasdaq Listing Rules 5635(a) and
5635(d).
Effect of this Proposal on Current Stockholders
If the
Nasdaq Proposal is adopted by our stockholders at the Special
Meeting, we would no longer be bound by the Issuable Maximum,
and we will have the right to issue shares of Common Stock in
excess of 19.9% of our issued and outstanding Common Stock upon
conversion or exercise, as applicable, of the Series C Preferred
Stock and the Warrants issued in the Offerings and the Related
Transactions.
The
issuance of Common Stock upon the conversion and/or exercise, as
applicable, of the Series C Preferred Stock and the Warrants will
result in certain dilution to our stockholders, and would afford
our stockholders a smaller percentage interest in our voting power,
liquidation value and aggregate book value. The sale or any resale
of the Common Stock issued upon conversion of the Series C
Preferred Stock could cause the market price of our Common Stock to
decline. In addition, the issuance of Common Stock upon the
exercise of the Warrants will result in similar dilution to our
stockholders, in particular to the extent of any cashless
exercise.
If our
stockholders do not approve the Nasdaq Proposal
at the Special Meeting, we may not issue, upon conversion of shares
of Series C Preferred Stock (whether issued in the Offerings or the
Related Transactions), a number of shares of Common Stock which
would exceed the Issuable Maximum. The
Issuable Maximum shall be applied collectively, when any
conversions of Series C Preferred Stock are aggregated together
with all shares of Common Stock issuable upon conversion or
exchange of any securities issued in certain related transactions
to the Offerings, including the Related Transactions. Any
conversions of Series C Preferred Stock will be processed in the
order in which we receive such conversion request from the holders
of Series C Preferred Stock, and not on a pro rata basis. In
processing conversion requests, we will give no preference or
priority to the transaction in which shares of Series C Preferred
Stock were obtained. If a holder of Series C Preferred Stock does
not convert its securities prior to us issuing shares of Common
Stock equal to the Issuable Maximum, it will have no ability to
convert shares of Series C Preferred Stock prior to Stockholder
Approval.
We are
not seeking shareholder approval to authorize the Offerings, the
entry into or the closing of the transactions related thereto, or
the execution of the related transaction documents, as we have
already entered into and closed the transactions and executed the
related transaction documents, which are binding obligations on us.
The failure of our stockholders to approve this Proposal No. 1 will
not negate the existing terms of such transaction documents or any
other documents relating to the Offerings. The Series C
Preferred Stock and the Warrants issued at the closing of the
Offerings or the Related Transactions will remain outstanding and
the terms of the Series C Preferred Stock and the Warrants
will remain binding obligations of ours. In the event that
Stockholder Approval is not obtained at the Special Meeting,
we are required to hold an additional
meeting of our stockholders every three months thereafter until the
Stockholder Approval is obtained.
Required Vote and Recommendation
This
proposal requires the affirmative (“FOR”) vote of a
majority of votes cast by shares present or represented by proxy
and entitled to vote at the Special Meeting and voting
affirmatively or negatively on such matter. Unless otherwise
instructed on the proxy or unless authority to vote is withheld,
shares represented by executed proxies will be voted
“FOR” this proposal. Any abstentions or broker
non-votes are not counted as votes cast and will not affect the
outcome of this proposal, although they will be counted for
purposes of determining whether there is a quorum
present.
OUR BOARD RECOMMENDS A VOTE
“FOR” PROPOSAL ONE.
PROPOSAL NO. 2:
|
AMENDMENT TO OUR CHARTER TO INCREASE THE NUMBER OF SHARES
OF AUTHORIZED COMMON STOCK
|
Overview
Our Board is proposing to amend our Charter
to increase the number of shares of Common
Stock authorized for issuance thereunder by 100,000,000
shares from 150,000,000 to 250,000,000 shares. If approved by our
stockholders, the amendment will become effective upon the filing
of a certificate of amendment with the Delaware Secretary of State,
which filing is expected to occur promptly after stockholder
approval of this Proposal.
The form of amendment to our Charter relating to this Proposal is
attached to this Proxy Statement as Appendix A.
Purpose and Effect of the Amendment
We do not have a sufficient number of authorized shares of Common
Stock to issue the shares issuable upon conversion or exercise, as
applicable, of all of the shares of Series C Preferred Stock and
Warrants issued or issuable in connection with the Offerings and
all of the Related Transactions, as defined and described in
greater detail in the disclosures accompanying Proposal No. 1
above, which are incorporated herein by reference.
Under our Charter, as of December 30, 2020, the date prior to
entering into the Investor Purchase Agreement, we had 150,000,000
shares of Common Stock authorized for issuance, 30,950,309 shares
of Common Stock issued and outstanding, and 80,466,134 shares of
Common Stock authorized and reserved for issuance,
including:
●
4,082,506
shares of Common Stock issuable upon exercise of stock options,
with a weighted average exercise price of $1.24 per share, under
our Amended and Restated 2014 Omnibus Equity Incentive Plan (the
“2014 Plan”);
●
387,000
shares of awarded but unissued restricted stock and restricted
stock units under our 2014 Plan;
●
10,000,000
shares of Common Stock available for future issuance under our 2020
Omnibus Equity Incentive Plan (the “2020
Plan”);
●
25,179,192
shares of Common Stock issuable upon exercise of outstanding
warrants, with a weighted average exercise price of $1.22 per
share; and
●
40,817,436
shares of Common Stock available for issuance upon conversion of
our Series B Preferred Stock, which includes 27,830,424 shares of
Common Stock issuable upon conversion of outstanding Series B
Preferred Stock, including in respect of accrued and unpaid
dividends of approximately $851,821, and 12,987,012 shares of
Common Stock issuable upon conversion of unissued shares of Series
B Preferred Stock.
As of December 30, 2020, we also had 38,583,557 shares of Common
Stock authorized and unreserved for issuance. In the Offerings and
the Related Transactions, we issued securities convertible or
exercisable into an aggregate of 54,685,308 shares of Common Stock,
without application of the Beneficial Ownership Limitation or the
Issuable Maximum (each as defined and described in greater detail
in the disclosures accompanying Proposal No. 1 above),
including:
●
742,343
shares of Common Stock issuable upon conversion of Series C
Preferred Stock that may be issued pursuant to the Exchange Right,
in excess of amounts currently underlying the Series B Preferred
Stock, the issuance of which is subject to the Stockholder Approval
to the extent in excess of the Issuable Maximum;
●
28,572,767
shares of Common Stock issuable upon exercise of Investor Warrants
that may be issued pursuant to the Exchange Right, the issuance of
which is subject to the Stockholder Approval;
●
3,290,196
shares of Common Stock issuable upon conversion of Series C
Preferred Stock issued to First Wave pursuant to the First Wave
Purchase Agreement;
●
5,333,334
shares of Common Stock issuable upon conversion of the Series C
Preferred Stock sold in the Registered Direct
Offering;
●
5,333,334
shares of Common Stock issuable upon conversion of Series C
Preferred Stock sold in the Private Placement, the issuance of
which is subject to the Stockholder Approval to the extent in
excess of the Issuable Maximum;
●
10,666,668
shares of Common Stock issuable upon exercise of Investor Warrants,
the issuance of which is subject to the Stockholder Approval;
and
●
746,667
shares of Common Stock issuable upon exercise of warrants being
issued to the placement agent or its designees as compensation for
its services in the Offering, the issuance of which is subject to
the Stockholder Approval.
As a result, as of January 8, 2021, without application of the
Beneficial Ownership Limitation or the Issuable Maximum, we would
have issued securities convertible and exercisable into a number of
shares of Common Stock greater than the number of shares of Common
Stock currently authorized by our Charter. As a result, we are
unable to reserve for issuance any shares of Common Stock for
issuance upon exercise of the Warrants issued or issuable in the
Offerings or the Related Transactions. Consequently, none of the
Warrants are by their terms permitted to be exercised until we have
obtained the Stockholder Approval, as defined and described in
greater detail in the disclosures accompanying Proposal No. 1
above.
Until we have obtained approval of this Proposal No. 2, we will be
unable to issue the 39,569,901 shares of Common Stock issuable upon
exercise of all of the Warrants issued or issuable in the Offerings
or the Related Transactions. The increase in the amount of
authorized common stock pursuant to this proposal would allow us to
issue and reserve for issuance the requisite amount of shares of
Common Stock for issuance upon exercise of such
Warrants.
The
limited number of remaining available shares of Common Stock may
make it difficult for us to raise necessary capital needed to
accomplish our goals, and be responsive to potential investors. We
will require substantial addition capital resources in order to
conduct our operation, complete our product development programs,
complete our clinical trials needed to market our product
candidates, and potentially commercialize these product candidates,
including niclosamide following our entry into the License
Agreement with First Wave. If adequate funds are not available in
the future, we may be required to delay or terminate research and
development programs, curtail capital expenditures, and reduce
business development and other operating activities. Should the
financing we require to sustain our working capital needs be
unavailable or prohibitively expensive when we require it, the
consequences could have a material adverse effect on our business,
operating results, financial condition and prospects. Because of
our funding requirements, we will try to raise additional capital
through additional public or private financings, as well as
collaborative relationships, incurring debt and other available
sources. The availability of additional authorized shares of Common
Stock is particularly important in the event that the Board of
Directors needs to undertake any of the foregoing actions on an
expedited basis and thus to avoid the time and expense of seeking
stockholder approval in connection with the contemplated issuance
of Common Stock. If the amendment is approved by our stockholders,
the Board does not intend to solicit further stockholder approval
prior to any particular issuance of any additional shares of Common
Stock, except as may be required by the rules of Nasdaq or
applicable law.
The increase in authorized Common Stock will
not have any immediate effect on the rights of existing
stockholders. To the extent that
additional authorized shares are issued in the future,
such additional issuances may decrease the existing stockholders'
percentage equity ownership and, depending on the price at which
they are issued, could be dilutive to the existing stockholders.
Holders of Common Stock have no preemptive rights and the Board has
no plans to grant such rights with respect to any such
shares.
The increase in the authorized number of shares
of Common Stock and the subsequent issuance of such shares could
have the effect of delaying or preventing a change in control of
the Company without further action by the stockholders. Shares
of authorized and unissued Common Stock could, within the
limits imposed by applicable law, be issued in one or more
transactions that would make a change in control of the Company
more difficult, and therefore less likely. Any such issuance of
additional shares of Common Stock could have the effect of diluting
the earnings per share and book value per share of outstanding
shares of Common Stock and such additional shares could be used to
dilute the stock ownership or voting rights of a person seeking to
obtain control of us.
The Board is not currently aware of any attempt to take over or
acquire the Company. While it may be deemed to have potential
anti-takeover effects, the proposed amendment
to increase the number of shares of Common
Stock authorized for issuance under the Charter is not
prompted by any specific effort or takeover threat currently
perceived by management.
The additional shares of Common Stock to
be authorized pursuant to the proposed amendment will be
of the same class of Common Stock as is
currently authorized under our Charter. These additional
shares will be used to issue shares of our Common Stock in
connection with our existing stock option and award plans. In
addition, we anticipate raising additional capital through future
issuances and sales of shares of our Common Stock, or securities
convertible or exercisable for shares of our Common Stock, and we
intend to use the additional shares of Common Stock that will be
available to undertake any such issuances and sales.
Other than in connection with the exercise of certain warrants, as
described above, we do not have any specific plan, commitment,
arrangement, understanding or agreement, either oral or written,
regarding the issuance of any additional shares of Common Stock
that may be authorized if this Proposal No. 2
to increase the number of authorized shares of
Common Stock is approved by stockholders.
Required Vote and Recommendation
In accordance with our Charter and Delaware law, approval and
adoption of this Proposal No. 2 requires the affirmative vote of at
least a majority of our issued and outstanding voting securities.
Abstentions and broker non-votes will have the same effect as a
vote “AGAINST” this Proposal.
Bifurcation of Proposal No. 2 and Proposal No. 3
While
this Proposal No. 2 reflects the proposed amendment to our Charter
to increase the number of authorized shares of Common Stock by
100,000,000 shares from 150,000,000 to 250,000,000 shares, the
approval of this Proposal is not conditioned on the approval of
Proposal
No. 3 to amend our Charter to authorize our Board
to effect a Reverse Split. To the extent that only one of either of
these Proposals is approved by stockholders, only the amendment to
our Charter to affect the Proposal that was approved by
stockholders will be filed with the Secretary of State of the State
of Delaware. To the extent that both Proposal No. 2 and Proposal
No. 3 are approved by stockholders, the amendment to our Charter to
(i) increase the number of authorized shares of Common Stock will
be promptly filed following approval at the Special Meeting, and
(ii) effect the Reverse Split, subject to implementation by the
Board, as more particularly set forth in Proposal No. 3
below.
OUR BOARD RECOMMENDS A VOTE “FOR”
PROPOSAL TWO.
PROPOSAL NO. 3:
|
AMENDMENT TO OUR CHARTER TO AUTHORIZE OUR BOARD TO EFFECT A REVERSE
SPLIT
|
Overview
The
Board has determined that it is advisable and in the best interests
of the Company and its stockholders, for the us to amend our
Charter (the “Charter
Amendment”), to authorize our Board to effect a
reverse stock split of both our issued and outstanding and
authorized shares of Common Stock at a specific ratio, ranging from
one-for-five (1:5) to one-for-ten (1:10) (the “Approved Split Ratios”), to be
determined by the Board (the “Reverse Split”). A vote for this Proposal No.
3 will constitute approval
of the Reverse Split that, once authorized by the Board and
affected by filing the Charter Amendment with the Delaware Division
of Corporations, will combine between two and five shares of our
Common Stock into one share of our Common Stock. If implemented,
the Reverse Split will have the effect of decreasing the number of
shares of our Common Stock issued and
outstanding.
Accordingly,
stockholders are asked to approve the Charter Amendment set forth
in Appendix B to effect the Reverse Split consistent with those
terms set forth in this Proposal No. 3, and to grant authorization
to the Board to determine, in its sole discretion, whether or not
to implement the Reverse Split, as well as its specific ratio
within the range of the Approved Split Ratios, and on or prior to
the one-year anniversary date of the Special Meeting. The text of
Appendix B remains
subject to modification to include such changes as may be required
by the Secretary of State of the State of Delaware and as our Board
deems necessary or advisable to implement the Reverse
Split.
If approved by the holders of our outstanding voting securities,
the Reverse Split would provide for the reverse split of our issued
and outstanding and authorized Common Stock at the same ratio as
the Approved Split Ratio approved by the Board prior to the
one-year anniversary date of the Special Meeting. The Board
reserves the right to elect to abandon the Reverse Split if it
determines, in its sole discretion, that the Reverse Split is no
longer in the best interests of the Company and its
stockholders.
Purpose and Rationale for the Reverse Split
Avoid Delisting from the Nasdaq. On March 23, 2020, we
received a letter from the Listing Qualifications Department (the
“Staff”)
of The Nasdaq Stock Market LLC (“Nasdaq”)
indicating that, based upon the closing bid price of our Common
Stock for the prior 30 consecutive business days, we were not in
compliance with the requirement to maintain a minimum bid price of
$1.00 per share for continued listing on Nasdaq, as set forth in
Nasdaq Listing Rule 5550(a)(2) (the “Minimum
Bid Price Requirement”). The 180-day
time period for us to regain compliance was subsequently extended
to December 3, 2020, pursuant to certain COVID-19 related relief
from price-based continued listing requirements issued by Nasdaq on
April 16, 2020. On November 23, 2020, we submitted a request to
Nasdaq for a 180-day extension to regain compliance with the
Minimum Bid Price Requirement. On December 4, 2020, we received a
letter from Nasdaq advising that we had been granted a 180-day
extension to June 1, 2021 to regain compliance with the Minimum Bid
Price Requirement, in accordance with Nasdaq Listing Rule
5810(c)(3)(A). If we do not regain compliance within the allotted
compliance periods, including any extensions that may be granted by
Nasdaq, Nasdaq will provide notice that our Common Stock will be
subject to delisting. We would then be entitled to appeal that
determination to a Nasdaq hearings panel.
Failure to approve the Reverse Split may potentially have serious,
adverse effects on the Company and our stockholders. Our Common
Stock could be delisted from Nasdaq because shares of our Common
Stock may continue to trade below the requisite $1.00 per share
price needed to maintain our listing in accordance with the Minimum
Bid Price Requirement. Our shares may then trade on the OTC
Bulletin Board or other small trading markets, such as the pink
sheets. In that event, our Common Stock could trade thinly as a
microcap or penny stock, adversely decrease to nominal levels of
trading and may be avoided by retail and institutional investors,
resulting in the impaired liquidity of our Common
Stock.
As of the Record Date, our Common Stock closed at $0.90 per share
on Nasdaq. The Reverse Split, if effected, will have the immediate
effect of increasing the price of our Common Stock as reported on
Nasdaq, therefore reducing the risk that our Common Stock could be
delisted from Nasdaq.
Our Board strongly believes that the Reverse Split is necessary to
maintain our listing on Nasdaq. Accordingly, the Board has approved
resolutions proposing the Charter Amendment to effect the Reverse
Split and directed that it be submitted to our stockholders for
approval at the Special Meeting.
Management and the Board have considered the potential harm to the
Company and our stockholders should Nasdaq delist our Common Stock
from trading. Delisting could adversely affect the liquidity of our
Common Stock since alternatives, such as the OTC Bulletin Board and
the pink sheets, are generally considered to be less efficient
markets. An investor likely would find it less convenient to sell,
or to obtain accurate quotations in seeking to buy, our Common
Stock on an over-the-counter market. Many investors likely would
not buy or sell our Common Stock due to difficulty in accessing
over-the-counter markets, policies preventing them from trading in
securities not listed on a national exchange, or other
reasons.
Other Effects. The Board
also believes that the increased market price of our Common Stock
expected as a result of implementing the Reverse Split could
improve the marketability and liquidity of our Common Stock and
will encourage interest and trading in our Common Stock. The
Reverse Split, if effected, could allow a broader range of
institutions to invest in our Common Stock (namely, funds that are
prohibited from buying stock whose price is below a certain
threshold), potentially increasing the trading volume and liquidity
of the Company’s Common Stock. The Reverse Split could help
increase analyst and broker’s interest in Common Stock, as
their policies can discourage them from following or recommending
companies with low stock prices. Because of the trading volatility
often associated with low-priced stocks, many brokerage houses and
institutional investors have internal policies and practices that
either prohibit them from investing in low-priced stocks or tend to
discourage individual brokers from recommending low-priced stocks
to their customers. Some of those policies and practices may make
the processing of trades in low-priced stocks economically
unattractive to brokers. Additionally, because brokers’
commissions on low-priced stocks generally represent a higher
percentage of the stock price than commissions on higher-priced
stocks, a low average price per share of common stock can result in
individual stockholders paying transaction costs representing a
higher percentage of their total share value than would be the case
if the share price were higher.
Our Board does not intend for this transaction to be the first step
in a series of plans or proposals effect a “going private
transaction” within the meaning of Rule 13e-3 of the Exchange
Act.
Risks of the Proposed Reverse Split
We cannot assure
you that the proposed Reverse Split will increase the price of our
Common Stock and have the desired effect of maintaining compliance
with Nasdaq.
If the Reverse Split is implemented, our Board expects that it will
increase the market price of our Common Stock so that we are able
to regain and maintain compliance with the Nasdaq minimum bid price
requirement. However, the effect of the Reverse Split upon the
market price of our Common Stock cannot be predicted with any
certainty, and the history of similar stock splits for companies in
like circumstances is varied. It is possible that (i) the per
share price of our Common Stock after the Reverse Split will not
rise in proportion to the reduction in the number of shares of our
Common Stock outstanding resulting from the Reverse Split,
(ii) the market price per post-Reverse Split share may not
exceed or remain in excess of the $1.00 minimum bid price for a
sustained period of time, or (iii) the Reverse Split may not
result in a per share price that would attract brokers and
investors who do not trade in lower priced stocks. Even if the
Reverse Split is implemented, the market price of our Common Stock
may decrease due to factors unrelated to the Reverse Split. In any
case, the market price of our Common Stock will be based on other
factors which may be unrelated to the number of shares outstanding,
including our future performance. If the Reverse Split is
consummated and the trading price of our Common Stock declines, the
percentage decline as an absolute number and as a percentage of our
overall market capitalization may be greater than would occur in
the absence of the Reverse Split. Even if the market price per
post-Reverse Split share of our Common Stock remains in excess of
$1.00 per share, we may be delisted due to a failure to meet other
continued listing requirements, including Nasdaq requirements
related to the minimum number of shares that must be in the public
float and the minimum market value of the public
float.
A decline in the market price of our Common Stock after the Reverse
Split is implemented may result in a greater percentage decline
than would occur in the absence of a reverse stock
split.
If the Reverse Split is implemented and the market price of our
Common Stock declines, the percentage decline may be greater than
would occur in the absence of a reverse stock split. The market
price of our Common Stock will, however, also be based upon our
performance and other factors, which are unrelated to the number of
shares of Common Stock outstanding.
The proposed
Reverse Split may decrease the liquidity of our Common
Stock.
The liquidity of our Common Stock may be harmed by the proposed
Reverse Split given the reduced number of shares of Common Stock
that would be outstanding after the Reverse Split, particularly if
the stock price does not increase as a result of the Reverse
Split.
Determination of the Ratio for the Reverse Split
If this
Proposal is approved by stockholders and the Board determines that
it is in the best interests of the Company and its stockholders to
move forward with the Reverse Split, the Approved Split Ratio will
be selected by the Board, in its sole discretion. However, the
Approved Split Ratio will not be less than a ratio of one-for-five
(1:5) or exceed a ratio of one-for-ten (1:10). In determining which
Approved Split Ratio to use, the Board will consider numerous
factors, including the historical and projected performance of our
Common Stock, prevailing market conditions and general economic
trends, and will place emphasis on the expected closing price of
our Common Stock in the period following the effectiveness of the
Reverse Split. The Board will also consider the impact of the
Approved Split Ratios on investor interest. The purpose of
selecting a range is to give the Board the flexibility to meet
business needs as they arise, to take advantage of favorable
opportunities and to respond to a changing corporate environment.
Based on the number of shares of Common Stock issued and
outstanding as of January 7, 2021, after completion of the Reverse
Split, we will have approximately between 6,190,062 and 3,095,031
shares of Common Stock issued and outstanding, depending on the
Approved Split Ratio selected by the Board of
Directors.
Principal Effects of the Reverse Split
After the effective date of the proposed Reverse Split, each
stockholder will own a reduced number of shares of Common Stock.
Except for adjustments that may result from the treatment of
fractional shares as described below, the proposed Reverse Split
will affect all stockholders uniformly. The proportionate voting
rights and other rights and preferences of the holders of our
Common Stock will not be affected by the proposed Reverse Split
(other than as a result of the payment of cash in lieu of
fractional shares). For example, a holder of 2% of the voting power
of the outstanding shares of our Common Stock immediately prior to
a Reverse Split would continue to hold 2% (assuming there is no
impact as a result of the payment of cash in lieu of issuing
fractional shares and no other shares of Common Stock issuable upon
exercise or conversion of any other derivative securities are
issued) of the voting power of the outstanding shares of our Common
Stock immediately after such Reverse Split. The number of
stockholders of record also will not be affected by the proposed
Reverse Split, except to the extent that any stockholder holds only
a fractional share interest and receives cash for such interest
after the Reverse Split.
The following table contains approximate number of issued
and outstanding shares of Common Stock, and the estimated per share
trading price following a 1:5 to 1:10 Reverse Split, without giving effect to any adjustments for
fractional shares of Common Stock or the issuance of any derivative
securities, as of January 7, 2020, assuming that Proposal 2 above
is not approved by our stockholders.
After
Each Reverse Split Ratio
|
|
|
|
|
|
|
|
Common
Stock Authorized
|
150,000,000
|
30,000,000
|
25,000,000
|
21,428,571
|
18,750,000
|
16,666,667
|
15,000,000
|
Common
Stock Issued and Outstanding
|
34,900,382
|
6,980,076
|
5,816,730
|
4,985,768
|
4,362,547
|
3,877,820
|
3,490,038
|
Number
of Shares of Common Stock Reserved for Issuance (1)
|
89,089,644
|
17,817928
|
14,848,274
|
12,727,092
|
11,136,205
|
9,898,849
|
8,908,964
|
Number
of Shares of Common Stock Authorized but Unissued and
Unreserved
|
26,009,974
|
5,201,994
|
4,334,995
|
3,715,710
|
3,251,246
|
2,889,997
|
2,600,997
|
Price
per share, based on the closing price of our Common Stock on
January 7, 2021
|
$0.8160
|
$4.08
|
$4.896
|
$5.712
|
$6.528
|
$7.344
|
$8.16
|
(1)
As noted above in
Proposal 2, this figure does not include the 39,569,901 shares of
Common Stock issuable upon the exercise of the Investor Warrants,
the Placement Agent Warrants and the warrants potentially issuable
to holders of Series B Preferred Stock in connection with their
exercise of the Exchange Rights. As of January 7, 2020, we did not
have a sufficient number of authorized but unissued and unreserved
shares of Common Stock to cover these issuances. Until we have
obtained approval of Proposal 2 to increase our amount of
authorized shares, the Private
The following table contains approximate number of issued
and outstanding shares of Common Stock, and the estimated per share
trading price following a 1:5 to 1:10 Reverse Split, without giving effect to any adjustments for
fractional shares of Common Stock or the issuance of any derivative
securities, as of January 7, 2020, assuming Proposal No. 2 above is
approved by our stockholders.
After
Each Reverse Split Ratio
|
|
|
|
|
|
|
|
Common
Stock Authorized
|
250,000,000
|
50,000,000
|
41,666,667
|
35,714,285
|
31,250,000
|
27,777,777
|
25,000,000
|
Common
Stock Issued and Outstanding
|
34,900,382
|
6,980,076
|
5,816,730
|
4,985,768
|
4,362,547
|
3,877,820
|
3,490,038
|
Number
of Shares of Common Stock Reserved for Issuance
|
128,659,545
|
25,731,909
|
21,443,257
|
18,379,935
|
16,082,443
|
14,259,505
|
12,865,954
|
Number
of Shares of Common Stock Authorized but Unissued and
Unreserved
|
86,440,164
|
17,288,032
|
14,406,694
|
12,348,594
|
10,805,020
|
9,604,462
|
8,644,016
|
Price
per share, based on the closing price of our Common Stock on
January 7, 2021
|
$0.8160
|
$4.08
|
$4.896
|
$5.712
|
$6.528
|
$7.344
|
$8.16
|
After the effective date of the Reverse Split, our Common Stock
would have a new committee on uniform securities identification
procedures (CUSIP) number, a number used to identify our Common
Stock.
Our Common Stock is currently registered under Section 12(b)
of the Exchange Act, and we are subject to the periodic reporting
and other requirements of the Exchange Act. The proposed Reverse
Split will not affect the registration of our Common Stock under
the Exchange Act. Our Common Stock would continue to be reported on
Nasdaq under the symbol “AZRX,” assuming that we are
able to regain compliance with the minimum bid price requirement,
although it is likely that Nasdaq would add the letter
“D” to the end of the trading symbol for a period of
twenty trading days after the effective date of the Reverse Split
to indicate that the Reverse Split had occurred.
Effect on Outstanding Derivative Securities
The Reverse Split will require that proportionate adjustments be
made to the conversion rate, the per share exercise price and the
number of shares issuable upon the exercise or conversion of the
following outstanding derivative securities issued by us, in
accordance with the Approved Split Ratio (all figures are as of
January 7, 2021 and are on a pre-Reverse Split basis), without
application of the Beneficial Ownership Limitation or the Issuable
Maximum (each as defined and described in greater detail in the
disclosures accompanying Proposal No. 1 above)
including:
●
4,082,506
shares of Common Stock issuable upon the exercise of stock options,
at a weighted average exercise price of $1.24 per share under our
2014 Plan;
●
387,000
shares of granted, but unissued restricted stock and restricted
stock units under our 2014 Plan;
●
35,525,861
shares of Common Stock issuable upon exercise of outstanding
warrants, with a weighted average exercise price of $1.04 per
share;
●
216,185
shares of Common Stock issuable upon the exercise of stock options,
at a weighted average exercise price of $0.97 per share under our
2020 Plan;
●
9,738,815
shares of Common Stock that are available for future issuance under
our 2020 Plan;
●
27,386,327
shares of Common Stock issuable upon conversion of Series B
Convertible Preferred Stock, including accrued and unpaid dividends
of approximately $39,867 as of January 7, 2021;
●
up
to 742,343 shares of Common Stock issuable upon conversion of
Series C Preferred Stock that may be issued pursuant to the
Exchange Right;
●
up
to 28,156,566 shares of Common Stock issuable upon exercise of
Investor Warrants that may be issued pursuant to the Exchange
Right;
●
3,260,869
shares of Common Stock issuable upon conversion of preferred stock
issued to First Wave pursuant to the License
Agreement;
●
746,667
shares of Common Stock issuable upon exercise of Placement Agent
Warrants;
●
5,333,334
shares of Common Stock issuable upon conversion of Series C
Preferred Stock sold in the Private Placement; and
●
10,666,668
shares of Common Stock issuable upon exercise of Investor Warrants
sold in the Private Placement.
The adjustments to the above securities, as required by the Reverse
Split and in accordance with the Approved Split Ratio, would result
in approximately the same aggregate price being required to be paid
under such securities upon exercise, and approximately the same
value of shares of Common Stock being delivered upon such exercise
or conversion, immediately following the Reverse Split as was the
case immediately preceding the Reverse Split.
Effect on Stock Option Plans
As of January 7, 2020, we had 4,082,506 shares of Common Stock
reserved for issuance pursuant to the exercise of outstanding
options issued under our 2014 Plan. Further, we have 10,000,000
shares of Common Stock available for issuance under the 2020 Plan.
Pursuant to the terms of the 2014 Plan and the 2020 Plan, the
Board, or a designated committee thereof, as applicable, will
adjust the number of shares of Common Stock underlying outstanding
awards, the exercise price per share of outstanding stock options
and other terms of outstanding awards issued pursuant to the 2014
Plan and the 2020 Plan to equitably reflect the effects of the
Reverse Split. The number of shares subject to vesting under
restricted stock awards and the number of shares issuable as
contingent consideration as part of an acquisition by the Company
will be similarly adjusted, subject to our treatment of fractional
shares. Furthermore, the number of shares available for future
grant under the 2014 Plan and the 2020 Plan will be similarly
adjusted.
Effective Date
The proposed Reverse Split would become effective on the date of
filing of the Amendment with the office of the Secretary of State
of the State of Delaware. On the effective date, shares of Common
Stock issued and outstanding shares of Common Stock held in
treasury, in each case, immediately prior thereto will be combined
and converted, automatically and without any action on the part of
our stockholders, into new shares of Common Stock in accordance
with the Approved Split Ratio set forth in this Proposal No. 3. If
the proposed Charter Amendment is not approved by our stockholders,
a Reverse Split will not occur.
Treatment of Fractional Shares
No fractional shares of Common Stock will be issued as a result of
the Reverse Split. Instead, in lieu of any fractional shares to
which a stockholder of record would otherwise be entitled as a
result of the Reverse Split, we will pay cash (without interest)
equal to such fraction multiplied by the average of the closing
sales prices of our Common Stock on the Nasdaq during regular
trading hours for the five consecutive trading days immediately
preceding the effective date of the Reverse Split (with such
average closing sales prices being adjusted to give effect to the
Reverse Split). After the Reverse Split, a stockholder otherwise
entitled to a fractional interest will not have any voting,
dividend or other rights with respect to such fractional interest
except to receive payment as described above.
Upon stockholder approval of this Proposal No. 3, if the Board
elects to implement the proposed Reverse Split, stockholders owning
fractional shares will be paid out in cash for such fractional
shares. For example, assuming the Board elected to consummate an
Approved Split Ratio of 1:5, if a stockholder held six shares of
Common Stock immediately prior to the Reverse Split, then such
stockholder would be paid in cash for the one share of Common Stock
but will maintain ownership of the remaining share of Common
Stock.
Record and Beneficial Stockholders
If the Reverse Split is authorized by our stockholders and our
Board elects to implement the Reverse Split, stockholders of record
holding some or all of their shares of Common Stock electronically
in book-entry form under the direct registration system for
securities will receive a transaction statement at their address of
record indicating the number of shares of Common Stock they hold
after the Reverse Split along with payment in lieu of any
fractional shares. Non-registered stockholders holding Common Stock
through a bank, broker or other nominee should note that such
banks, brokers or other nominees may have different procedures for
processing the consolidation and making payment for fractional
shares than those that would be put in place by us for registered
stockholders. If you hold your shares with such a bank, broker or
other nominee and if you have questions in this regard, you are
encouraged to contact your nominee.
If the Reverse Split is authorized by the stockholders and our
Board elects to implement the Reverse Split, stockholders of record
holding some or all of their shares in certificate form will
receive a letter of transmittal, as soon as practicable after the
effective date of the Reverse Split. Our transfer agent will act as
“exchange agent” for the purpose of implementing the
exchange of stock certificates. Holders of pre-Reverse Split shares
will be asked to surrender to the exchange agent certificates
representing pre-Reverse Split shares in exchange for post-Reverse
Split shares and payment in lieu of fractional shares (if any) in
accordance with the procedures to be set forth in the letter of
transmittal. Until surrender, each certificate representing shares
before the Reverse Split would continue to be valid and would
represent the adjusted number of whole shares based on the approved
exchange ratio of the Reverse Split selected by the Board. No new
post-Reverse Split share certificates will be issued to a
stockholder until such stockholder has surrendered such
stockholder’s outstanding certificate(s) together with the
properly completed and executed letter of transmittal to the
exchange agent.
STOCKHOLDERS SHOULD NOT DESTROY ANY PRE-SPLIT STOCK CERTIFICATE AND
SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL THEY ARE REQUESTED TO DO
SO.
Accounting Consequences
The par value per share of Common Stock would remain unchanged at
$0.0001 per share after the Reverse Split. As a result, on the
effective date of the Reverse Split, the stated capital on our
balance sheet attributable to the Common Stock will be reduced
proportionally, based on the Approved Split Ratio selected by the
Board, from its present amount, and the additional paid-in capital
account shall be credited with the amount by which the stated
capital is reduced. The per share Common Stock net income or loss
and net book value will be increased because there will be fewer
shares of Common Stock outstanding. The shares of Common Stock held
in treasury, if any, will also be reduced proportionately based on
the Approved Split Ratio selected by the Board. Retroactive
restatement will be given to all share numbers in the financial
statements, and accordingly all amounts including per share amounts
will be shown on a post-split basis. We do not anticipate that any
other accounting consequences would arise as a result of the
Reverse Split.
No Appraisal Rights
The Company’s stockholders are not entitled to
dissenters’ or appraisal rights under the Delaware General
Corporation Law with respect to this Proposal No. 3 and we will not
independently provide our stockholders with any such right if the
Reverse Split is implemented.
Material Federal U.S. Income Tax Consequences of the Reverse
Split
The following is a summary of the material U.S. federal income tax
consequences of a Reverse Split to our stockholders. The summary is
based on the Internal Revenue Code of 1986, as amended (the
“Code”), applicable Treasury Regulations
promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of
this Proxy Statement. Changes to the laws could alter the tax
consequences described below, possibly with retroactive effect. We
have not sought and will not seek an opinion of counsel or a ruling
from the Internal Revenue Service regarding the federal income tax
consequences of a Reverse Split. This discussion on addresses
stockholders who hold Common Stock as capital assets. It does not
purport to be complete and does not address stockholders subject to
special rules, such as financial institutions, tax-exempt
organizations, insurance companies, dealers in securities, foreign
stockholders, stockholders who hold their pre-reverse stock split
shares as part of a straddle, hedge or conversion transaction, and
stockholders who acquired their pre-reverse stock split shares
pursuant to the exercise of employee stock options or otherwise as
compensation. The state and local tax consequences of a Reverse
Split may vary significantly as to each stockholder, depending upon
the jurisdiction in which such stockholder resides. Stockholders
are urged to consult their own tax advisors to determine the
particular consequences to them.
In general, the federal income tax consequences of a Reverse Split
will vary among stockholders depending upon whether they receive
cash for fractional shares or solely a reduced number of shares of
Common Stock in exchange for their old shares of Common Stock. We
believe that because the Reverse Split is not part of a plan to
increase periodically a stockholder’s proportionate interest
in our assets or earnings and profits, the Reverse Split should
have the following federal income tax effects. The Reverse Split is
expected to constitute a “recapitalization” for U.S.
federal income tax purposes pursuant to Section 368(a)(1)(E) of the
Code. A stockholder who receives solely a reduced number of shares
of Common Stock will not recognize gain or loss. In the aggregate,
such a stockholder’s basis in the reduced number of shares of
Common Stock will equal the stockholder’s basis in its old
shares of Common Stock and such stockholder’s holding period
in the reduced number of shares will include the holding period in
its old shares exchanged. A stockholder who receives cash in lieu
of a fractional share as a result of the Reverse Split should
generally be treated as having received the payment as a
distribution in redemption of the fractional share, as provided in
Section 302(a) of the Code. Generally, if redemption of the
fractional shares of all stockholders reduces the percentage of the
total voting power held by a particular redeemed stockholder
(determined by including the voting power held by certain related
persons), the particular stockholder should recognize gain or loss
equal to the difference, if any, between the amount of cash
received and the stockholder’s basis in the fractional share.
In the aggregate, such a stockholder’s basis in the reduced
number of shares of Common Stock will equal the stockholder’s
basis in its old shares of Common Stock decreased by the basis
allocated to the fractional share for which such stockholder is
entitled to receive cash, and the holding period of the reduced
number of shares received will include the holding period of the
old shares exchanged. If the redemption of the fractional shares of
all stockholders leaves the particular redeemed stockholder with no
reduction in the stockholder’s percentage of total voting
power (determined by including the voting power held by certain
related persons), it is likely that cash received in lieu of a
fractional share would be treated as a distribution under
Section 301 of the Code. Stockholders should consult their own
tax advisors regarding the tax consequences to them of a payment
for fractional shares.
We will not recognize any gain or loss as a result of the proposed
Reverse Split.
THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN
FEDERAL U.S. INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT AND DOES
NOT PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL
POTENTIAL TAX EFFECTS RELEVANT THERETO. YOU SHO
Required Vote and Recommendation
In
accordance with our Charter and Delaware law, approval and adoption
of this Proposal No. 3 requires the affirmative vote of at least a
majority of our issued and outstanding voting securities.
Abstentions and broker non-votes will have the same effect as a
vote “AGAINST” this Proposal No. 3.
Bifurcation of Proposal No. 2 and Proposal No. 3
While
this Proposal No. 3 reflects the proposed amendment to our Charter
to authorize our Board to effect a Reverse Split, the approval of
this Proposal No. 3 is not conditioned on the approval of Proposal
No. 2 to increase the number of authorized shares by 100,000,000
shares to 250,000,000 shares. To the extent that only one of either
of these Proposals is approved by stockholders, only the amendment
to affect the Proposal that was approved by stockholders will be
filed with the Secretary of State of the State of Delaware. To the
extent that both Proposal No. 2 and Proposal No. 3 are approved by
stockholders, the amendment to our Charter to (i) increase the
number of authorized shares of Common Stock will be promptly filed
following approval at the Special Meeting, and (ii) effect the
Reverse Split, subject to implementation by the Board, as more
particularly set forth in this Proposal No. 3.
OUR BOARD RECOMMENDS A VOTE
“FOR” PROPOSAL THREE.
PROPOSAL NO. 4:
|
APPROVAL OF THE ADJOURNMENT OF THE SPECIAL MEETING TO THE EXTENT
THERE ARE INSUFFICIENT PROXIES AT THE MEETING TO APPROVE ANY ONE OR
MORE OF THE FOREGOING PROPOSALS.
|
Adjournment of the Special Meeting
In the
event that the number of shares of Common Stock present or
represented by proxy at the Special Meeting and voting
“FOR” the adoption of any one or more of the foregoing
proposals are insufficient to approve any such proposal, we may
move to adjourn the Special Meeting in order to enable us to
solicit additional proxies in favor of the adoption of any such
proposal. In that event, we will ask stockholders to vote only upon
the adjournment proposal and not on any other proposal discussed in
this proxy statement. If the adjournment is for more than thirty
(30) days, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
For the
avoidance of doubt, any proxy authorizing the adjournment of the
Special Meeting shall also authorize successive adjournments
thereof, at any meeting so adjourned, to the extent necessary for
us to solicit additional proxies in favor of the adoption of any
such proposal.
Required Vote and Recommendation
This
Proposal 4 requires the affirmative (“FOR”) vote of a
majority of votes cast by shares present or represented by proxy
and entitled to vote at the Special Meeting and voting
affirmatively or negative on such matter. Unless otherwise
instructed on the proxy or unless authority to vote is withheld,
shares represented by executed proxies will be voted
“FOR” this Proposal 4. Any abstentions or broker
non-votes are not counted as votes cast and will not affect the
outcome of this Proposal 4, although they will be counted for
purposes of determining whether there is a quorum
present.
OUR BOARD RECOMMENDS A VOTE
“FOR” PROPOSAL FOUR.
ADDITIONAL INFORMATION
Deadline for Receipt of Stockholder Proposals for the 2021 Annual
Meeting
Pursuant to Rule 14a-8 under the Exchange Act, stockholder
proposals to be included in our next proxy statement must be
received by our Chief Financial Officer by writing to AzurRx
BioPharma, Inc., Attention: Chief Financial Officer –
1615 South Congress Avenue, Suite
103 Delray Beach, Florida
33445, no later than 90 days
nor more than 120 days prior to the first anniversary of the
preceding year’s annual meeting. Submitted proposals must
comply with applicable Delaware law, the rules and regulations
promulgated by the SEC and the procedures set forth in our
Bylaws.
We reserve the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not
comply with these and all other applicable
requirements.
Householding of Proxy Materials
The SEC
has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements
with respect to two or more stockholders sharing the same address
by delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
“householding,” potentially means extra convenience for
stockholders and cost savings for companies.
A
number of brokers with account holders who are stockholders of the
Company will be “householding” our proxy materials. A
single set of our proxy materials will be delivered to multiple
stockholders sharing an address unless contrary instructions have
been received from the affected stockholders. Once you have
received notice from your broker that they will be
“householding” communications to your address,
“householding” will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in “householding” and would
prefer to receive a separate set of our proxy materials at no
charge, please notify your broker or direct a written request to
AzurRx BioPharma, Inc., Attention: Chief Financial Officer –
1615 South Congress Avenue, Suite 103,
Delray Beach, Florida 33445, or contact us at (646)
699-7855. We undertake to deliver promptly, upon any such verbal or
written request, a separate copy of our proxy materials to a
stockholder at a shared address to which a single copy of these
documents was delivered. Stockholders who currently receive
multiple copies of our proxy materials at their address and would
like to request “householding” of their communications
should contact their broker, bank or other nominee, or contact us
at the above address or phone number.
Other Matters
At the
date of this proxy statement, we know of no other matters, other
than those described above, that will be presented for
consideration at the Special Meeting. If any other business should
come before the Special Meeting, it is intended that the proxy
holders will vote all proxies using their best judgment in the
interest of the Company and the stockholders.
Solicitation of Proxies
The
solicitation of proxies pursuant to this proxy statement is being
made by us. Proxies may be solicited, among other methods, by mail,
facsimile, telephone, telegraph, Internet and in
person.
The
expenses of preparing, printing and distributing this proxy
statement and the accompanying form of proxy and the cost of
soliciting proxies will be borne by us.
Copies
of soliciting materials will be furnished to banks, brokerage
houses and other custodians, nominees and fiduciaries for
forwarding to the beneficial owners of shares of Common Stock for
whom they hold shares, and we will reimburse them for their
reasonable out-of-pocket expenses in connection
therewith.
We have
also retained Alliance Advisors LLC to assist it in the
solicitation of proxies. Alliance Advisors LLC will solicit proxies
on behalf of us from individuals, brokers, bank nominees and other
institutional holders in the same manner described above. Alliance
Advisors LLC will receive a base fee of $7,500, plus approved and
reasonable out of pocket expenses and additional processing fees
for any call campaigns, for its services to us for the solicitation
of the proxies. We have also agreed to indemnify Alliance Advisors
LLC against certain claims.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING
VIRTUALLY, PLEASE READ THE ACCOMPANYING PROXY STATEMENT AND
THEN VOTE BY INTERNET, TELEPHONE OR MAIL AS PROMPTLY AS POSSIBLE TO
ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL
MEETING.
|
|
|
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ James
Sapirstein
|
Delray
Beach, Florida
|
JAMES
SAPIRSTEIN
|
January , 2021
|
President, Chief Executive Officer and Director
|
If you have any questions or require any assistance in voting your
shares, please call:
Alliance Advisors LLC
200
Broadacres Drive, 3rd Floor, Bloomfield, NJ 07003
(833)
550-0994
AZURRX BIOPHARMA INC
1615 SOUTH CONGRESS AVENUE, SUITE 103
DELRAY BEACH, FLORIDA 33445
«FName»
«Address12»
«Address3»
«COUNTRY»
Control #: «ControlNumberExt»
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS:
|
|
Voting Instructions
You can vote by Internet or Telephone!
Instead
of mailing your proxy, you may choose one of the three voting
options outlined below
|
|
|
|
|
|
VOTE BY INTERNET – https://www.virtualshareholdermeeting.com/AZRX2021SM
●
You can
view the AZURRX BIOPHARMA INC Proxy Statement and submit your vote
online at the website listed above up until 05:00 PM MT on
02/23/2021. You will need the control number at the left in order
to do so.
●
Follow
the instructions on the secure website to complete your
vote.
|
|
|
|
|
|
VOTE BY PHONE – 877-285-8605
●
You may
vote by phone until 05:00 PM MT on 02/23/2021.
●
Please
have your notice and proxy card in hand when you call.
|
|
|
|
|
|
VOTE BY MAIL
●
If you
have not voted via the internet OR telephone, mark, sign and return
your proxy ballot in the postage-paid envelope
provided.
●
Votes
by mail must be received by 02/23/2021.
|
THIS PROXY BALLOT IS VALID ONLY WHEN SIGNED AND DATED.
The
undersigned revokes all previous proxies and constitutes and
appoints James Sapirstein and Daniel Schneiderman, and each of
them, the true and lawful agent and proxy with full power of
substitution in each, to represent and to vote on behalf of the
undersigned all of the shares of AzurRx BioPharma, Inc. (the
“Company”)
which the undersigned is entitled to vote at the Company’s
Special Meeting of Stockholders (the “Special Meeting”), to be held
virtually on February 24, 2021 at 9:00 A.M. Eastern Time, and at
any adjournment(s) or postponement(s) thereof, upon the following
proposals, each of which are more fully described in the Notice of
Special Meeting of Stockholders and Proxy Statement for the Special
Meeting (receipt of which is hereby acknowledged).
|
|
|
|
For
|
Against
|
Abstain
|
1.
|
APPROVAL
OF THE ISSUANCE OF MORE THAN 20% OF OUR COMMON STOCK PURSUANT TO
THE OFFERINGS FOR PURPOSES OF NASDAQ LISTING RULE
5635.
|
|
☐
|
☐
|
☐
|
2.
|
APPROVAL
OF A PROPOSAL TO AMEND THE COMPANY’S CHARTER
TO INCREASE THE TOTAL NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK BY 100,000,000
SHARES TO 250,000,000 SHARES;
|
|
☐
|
☐
|
☐
|
3.
|
APPROVAL
TO OF A PROPOSAL TO AMEND OUR CERTIFICATE OF INCORPORATION TO
AUTHORIZE THE BOARD TO EFFECT A REVERSE SPLIT OF BOTH OUR ISSUED
AND OUTSTANDING AND AUTHORIZED SHARES OF COMMON STOCK AT A SPECIFIC
RATIO, RANGING FROM ONE-FOR-FIVE (1:5) TO ONE-FOR-TEN (1:10), AT
ANY TIME PRIOR TO THE ONE YEAR ANNIVERSARY DATE OF THE SPECIAL
MEETING, WITH THE EXACT RATIO TO BE DETERMINED BY THE BOARD OF
DIRECTORS (THE “REVERSE
SPLIT”);
|
|
☐
|
☐
|
☐
|
4.
|
APPROVAL
OF AN ADJOURNMENT OF THE SPECIAL MEETING, TO THE EXTENT THERE ARE
INSUFFICIENT PROXIES AT THE MEETING TO APPROVE ANY ONE OR MORE OF
THE FOREGOING PROPOSALS.
|
|
☐
|
☐
|
☐
|
This
Proxy Statement when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is
made, this proxy will be voted FOR each of Proposals No. 1, 2, 3
and 4, each of which have been proposed by the Board, and at the
discretion of the proxy holder upon other matters as may properly
come before the Special Meeting.
Please
indicate if you plan to attend the Special
Meeting. Yes ☐
No ☐
Sign
exactly as name appears hereon. For joint accounts, all co-owners
should sign. Executors, administrators, custodians, trustees, etc.
should so indicate when signing.
|
|
|
|
|
Signature
|
Date
|
|
Signature (Joint Owners)
|
Date
|
Appendix A
CERTIFICATE OF AMENDMENT TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AZURRX BIOPHARMA, INC.
AzurRx BioPharma, Inc. (the “Corporation”), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
FIRST: That a resolution was
duly adopted on December 31, 2020, by the Board of Directors of the
Corporation pursuant to Section 242 of the General Corporation Law
of the State of Delaware setting forth an amendment to the
Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment at a special meeting of
stockholders held on, 2021, in accordance with Section 242 of the
General Corporation Law of the State of Delaware. The proposed
amendment set forth as follows:
Article FOURTH of the Amended and Restated Certificate of
Incorporation of the Corporation, as amended to date, be and hereby
is amended by deleting the following sentence in the first
paragraph of Article FOURTH:
The total number of shares which the Corporation shall have
authority to issue is one hundred sixty million (160,000,000)
shares, of which one hundred and fifty million (150,000,000) shares
shall be common stock, par value $0.0001 per share, and ten million
(10,000,000) shares shall be preferred stock, par value $.0.0001
per share.
The first reflected above under the first paragraph of
Article FOURTH will be replaced by the
following:
The total number of shares which the Corporation shall have
authority to issue is two hundred and sixty million (260,000,000)
shares, of which two hundred and fifty million (250,000,000) shares
shall be common stock, par value $0.0001 per share, and ten million
(10,000,000) shares shall be preferred stock, par value $.0.0001
per share.
SECOND: That said
amendment will have an Effective Time of 5:00 P.M., Eastern Time,
on the filing date of this Certificate of Amendment to the Amended
and Restated Certificate of Incorporation
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President and Chief Executive Officer
this __ day of February, 2021.
|
|
President and Chief Executive Officer
|
Appendix B
CERTIFICATE OF AMENDMENT TO THE
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AZURRX BIOPHARMA, INC.
AzurRx BioPharma, Inc. (the “Corporation”), a corporation organized and existing
under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
FIRST: That a resolution was
duly adopted on December 31, 2020, by the Board of Directors of the
Corporation pursuant to Section 242 of the General Corporation Law
of the State of Delaware setting forth an amendment to the
Certificate of Incorporation of the Corporation and declaring said
amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment at a special meeting of
stockholders held on , 2021, in accordance with Section 242 of the
General Corporation Law of the State of Delaware. The proposed
amendment set forth as follows:
Article FOURTH of the Amended and Restated Certificate of
Incorporation of the Corporation, as amended to date, be and hereby
is further amended by inserting the following immediately after the
first paragraph of Article FOURTH:
Upon effectiveness (“Effective
Time”) of this amendment
to the Amended and Restated Certificate of Incorporation of the
Corporation, a __ reverse stock split of the Corporation’s
Common Stock shall become effective, pursuant to which each __
share of Common Stock outstanding and held of record by each
stockholder of the Corporation (including treasury shares)
immediately prior to the Effective Time (“Old Common
Stock”) shall be
reclassified and split into __ shares of Common Stock automatically
and without any action by the holder thereof upon the Effective
Time and shall represent __ shares of Common Stock from and after
the Effective Time (“New Common
Stock”), with a
corresponding reduction in the number of authorized shares of our
Common Stock by a corresponding ratio.
No fractional shares of Common Stock will be issued in connection
with the reverse stock split. Stockholders of record who otherwise
would be entitled to receive fractional shares, will be entitled to
receive cash (without interest) in lieu of fractional shares, equal
to such fraction multiplied by the average of the closing sales
prices of our Common Stock on the exchange the Corporation is
currently trading during regular trading hours for the five
consecutive trading days immediately preceding the effective date
of the Reverse Split (with such average closing sales prices being
adjusted to give effect to the Reverse Split).
Each holder of record of a certificate or certificates for one or
more shares of the Old Common Stock shall be entitled to receive as
soon as practicable, upon surrender of such certificate, a
certificate or certificates representing the largest whole number
of shares of New Common Stock to which such holder shall be
entitled pursuant to the provisions of the immediately preceding
paragraphs. Any certificate for one or more shares of the Old
Common Stock not so surrendered shall be deemed to represent one
share of the New Common Stock for each five shares of the Old
Common Stock previously represented by such
certificate.
SECOND: That said
amendment will have an Effective Time of 5:00 P.M., Eastern Time,
on the filing date of this Certificate of Amendment to the Amended
and Restated Certificate of Incorporation
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President and Chief Executive Officer
this __ day of February, 2021.
|
|
President and Chief Executive Officer
|
AzurRx BioPharma (NASDAQ:AZRX)
Historical Stock Chart
From Aug 2024 to Sep 2024
AzurRx BioPharma (NASDAQ:AZRX)
Historical Stock Chart
From Sep 2023 to Sep 2024