v3.22.2.2
Note 12 - Subsequent Events
6 Months Ended
Jun. 30, 2022
Notes to Financial Statements  
Subsequent Events [Text Block]

12. Subsequent Events

 

On August 16, 2022, Petitioning Creditors filed an involuntary petition in the United States Bankruptcy Court for the District of Colorado (No. 22-13051-JGR) against the Company seeking relief under Chapter 11 of the United States Bankruptcy Code. The Company believes the involuntary petition is improper and wrongfully filed and is seeking dismissal of the petition.

 

On August 22, 2022, the Company issued 1.5 million shares of restricted common stock pursuant to a newly executed contract to provide investors relations services to the Company.

 

On September 1, 2022, the Company was notified by the Listing Qualifications Staff (the "Staff") of NASDAQ that the Company’s common stock would be subject to delisting due to the Company’s non-compliance with the filing requirement set forth in Nasdaq Listing Rule 5250(c)(1) unless the Company timely requested a hearing before the Nasdaq Hearings Panel (the "Panel"). At the time, the Company had not yet filed the Form 10-K for the fiscal year ended December 31, 2021 or the Forms 10-Q for the quarterly periods ended March 31, 2022 and June 30, 2022 (collectively, "Form 10-Qs") with the SEC. The Company intends to timely request a hearing before the Panel, which request will stay any further action by NASDAQ at least pending the issuance of a decision by the Panel and the expiration of any extension the Panel may grant to the Company following the hearing.

 

On September 2, 2022, the Company entered a Binding Letter of Intent ("LOI") with Lay Sciences, Inc. ("Lay"), pursuant to which the Company will manufacture, and test IgY polyclonal antibody products created by Lay. The LOI provides for an exclusivity period of ninety (90) days (the "Exclusivity Period") for negotiating and finalizing a definitive agreement (the "Definitive Agreement"). During the Exclusivity Period, which begins from the date of the LOI, Lay will not engage in activities with any third party in relation to the acquisition of the Company. Pursuant to the LOI, (i) Lay shall complete technology transfer to the Company; and (ii) the Company shall (A) assist Lay in testing its current and future products for activity and purity, In consideration of the manufacturing right granted to the Company by Lay, the Company shall (i) issue 500,000 shares of preferred stock of the Company to Lay and (ii) pay up to $500,000 to Lay within 30 days of the execution of the LOI.  As of the date of this filing the Company hasn't issued any shares of preferred stock or paid any cash consideration.

 

On September 2, 2022, the Board of Directors of the Company appointed John Kallassy as a director of the Company, effective September 2, 2022, to fill the vacancy created by the resignation of the chair of the audit committee. Mr. Kallassy will serve in such position until his successor is elected and qualified or until his earlier death, resignation, or removal. Mr. Kallassy will serve as a member of the Board’s audit committee, compensation committee, and nominating and corporate governance committee. The Board has affirmatively determined that Mr. Kallassy is "independent" within the meaning of the listing standards of NASDAQ. In addition, Mr. Kallassy is independent under NASDAQ heightened independence standards applicable to audit committee and compensation committee members. The Board also appointed Mr. Kallassy as an "audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K and Chairperson of the Audit Committee of the Board.

 

On October 6, 2022, the Company had a hearing before the Panel, the Company presented its plan to evidence full compliance with NASDAQ'S filing requirement and all other applicable requirements for continued listing on NASDAQ and request an extension of time to do so. The Company is taking definitive steps to evidence compliance with the NASDAQ listing criteria as soon as possible; however, there can be no assurance that the Panel will grant the Company’s request for continued listing or that the Company will satisfy the NASDAQ listing criteria within any extension period that may be provided to the Company by the Panel. The Company plans to update the market promptly following receipt of the Panel’s determination after the hearing.

 

On October 11, 2022, the Company was notified by the Staff of NASDAQ that the Company’s common stock would be subject to delisting due to the Company’s non-compliance with the minimum Stockholders' Equity requirement set forth in Nasdaq Listing Rule 5550(b)(1) and non-compliance with Listing Rule 5250(e)(2)(D) regarding notifying Nasdaq of the Company's intention to issue additional shares. Each of these matters serve as an additional and separate basis for delisting the Company’s securities from NASDAQ. The Panel will consider these matters in their decision regarding the Company’s continued listing on NASDAQ. The Company presented its views with respect to these additional deficiencies to the Panel.

 

On October 18, 2022, the Company entered into the Assignment of Promissory Note with Avenue Venture Opportunities Fund, L.P. ("Avenue Venture") and Silverback Capital Corporation ("Silverback"), pursuant to which, in consideration for a cash payment of $400,000 by Silverback to Avenue Venture, Avenue Venture assigned to Silverback a $400,000 portion (the "Apportioned Note") of that certain Promissory Note in the aggregate principal amount of $15 million (the “Partial Assignment”) issued by the Company to Avenue Venture, dated as of April 26, 2021, pursuant to the Loan and Security Agreement, dated as of the even date of the Original Note, by and between the Company and Avenue Venture, as supplemented and amended (the "Loan Agreement"). Pursuant to the Partial Assignment, the Company issued an Amended and Restated Convertible Note Due May 1, 2024 (the "A&R Note") in the principal amount of $400,000.00 to Silverback as of October 18, 2022 in exchange of the Apportioned Note. The A&R Note bears interest at a variable rate of interest per annum equal to the sum of (i) the greater of (A) the Prime Rate (as defined in the Loan Agreement) and (B) 3.25% plus (ii) 7.74%. Payment of the aggregate principal amount of the A&R Note outstanding together with all accrued interest thereon is due on May 1, 2024 (the "Maturity Date"). Additionally, Silverback has the right to convert, at any time until the Maturity Date, all or any portion of the outstanding principal amount, accrued interest and fees due and payable thereon into shares of common stock of the Company at a conversion price equal to 75% of the lowest trading price of the Company’s common stock during the five trading day period preceding the conversion date inclusive of the conversion date. The Company issued 2,551,000 shares of common stock to Silverback on October 21, 2022, which represents a conversion of $277,039 of the A&R Note.

 

On October 26, 2022, the Company received a determination from the Panel granting the Company’s request for the continued listing of its common stock on Nasdaq, subject to the Company’s satisfaction of certain interim milestones and, ultimately, the Company’s compliance with all applicable criteria for continued listing on Nasdaq, including the $1.00 bid price and $2.5 million stockholders’ equity requirements as set forth in Nasdaq Listing Rules 5550(a)(1) and 5550(b)(2), respectively, by no later than January 31, 2023. The Company is taking definitive steps to timely evidence compliance with the terms of the Panel’s decision; however, there can be no assurance that it will be able to do so.