Quarterly report pursuant to Section 13 or 15(d)

SUBSEQUENT EVENT

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SUBSEQUENT EVENT
9 Months Ended
Mar. 31, 2022
SUBSEQUENT EVENT  
SUBSEQUENT EVENT

NOTE 13 — SUBSEQUENT EVENTS

Headquarters Lease

In April 2022, the Company entered into a lease agreement for a new corporate headquarters in Redwood City, California. The space consists of approximately 9,300 square feet and provides for total base rent payments of approximately $2.9 million through the expected expiration of the lease in July 2027. The landlord is required to make improvements to the facility before it is suitable for occupancy by the Company. The lease provides for a six-month rent abatement period beginning upon commencement of the lease term which is expected to occur in August 2022. In addition, the lease provides an allowance of approximately $0.1 million that may be utilized by the Company for the purchase of furniture and equipment. The average base rent payable in cash over the 60-month lease term is approximately $48,000 per month. During the fourth quarter of the fiscal year ending June 30, 2022, the Company expects to recognize a right-of-use asset and a related operating lease liability for approximately $2.3 million.

Future payments under this operating lease agreement are as follows (in thousands):

Fiscal year ending June 30, 

    

  

Remainder of fiscal year 2022

$

50

2023

199

2024

614

2025

632

Thereafter

1,377

Total lease payments

$

2,872

Financing Activities

On May 1, 2022, the Company entered into (i) an underwriting agreement with Jefferies LLC, as representative of the underwriters listed therein, relating to the issuance and sale of equity securities in an underwritten registered direct offering (the “2022 RDO”), and (ii) a placement agency agreement with Jefferies LLC, that provides for a private placement of equity securities (the “Private Placement”).  The 2022 RDO resulted in the issuance of (i) approximately 18.0 million shares of the Company’s common stock, at a public offering price of $3.80 per share, (ii) Class A pre-funded warrants (the “Class A PFWs”) to purchase up to approximately 2.0 million shares of Common Stock at a public offering price of $3.799 per Class A PFW and (iii) Class B pre-funded warrants (the “Class B PFWs”) to purchase up to 10.9 million shares of Common Stock at a public offering price of $3.799 per Class B PFW.  The 2022 RDO closed on May 4, 2022 and resulted in net proceeds of approximately $110.5 million. The gross proceeds of the 2022 RDO amounted to $117.6 million, before deducting an aggregate of $7.1 million incurred for underwriting discounts and commissions and other offering expenses payable by the Company.  In connection with the 2022 RDO, certain of the Company’s officers and directors agreed not to sell or otherwise dispose of any common stock held by them through July 30, 2022.

Pursuant to the Private Placement, the Company entered into a securities purchase agreement (“SPA”) on May 4, 2022 with Handok and certain of its affiliates (the “Purchasers”) whereby the Company agreed to sell to the Purchasers 3.3 million Class C Warrants (the “Class C PFWs”) to purchase shares of common stock, at a purchase price of $3.799 per Class C PFW.  The closing of the Private Placement will take place upon satisfaction of the closing conditions set forth in the placement agency agreement and the SPA.  The net proceeds of the Private Placement, after deducting the placement agent fees and estimated offering expenses payable by the Company, are expected to be approximately $11.4 million.  Closing of the Private Placement is expected to occur in May 2022.

Terms of Pre-Funded Warrants

The offering price of $3.799 per share for the Class A PFWs, the Class B PFWs and the Class C PFWs (collectively, the “2022 PFWs”) represents the public offering price for the shares of common stock issued in the 2022 RDO less the $0.001 per share price that is required to be paid upon exercise of the 2022 PFWs. The exercise price of the 2022 PFWs is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock and

also upon any distributions for no consideration of assets to the Company's shareholders. In the event of certain corporate transactions, the holders of the 2022 PFWs will be entitled to receive, upon exercise of the 2022 PFWs, the kind and amount of securities, cash or other property that the holders would have received had they exercised the 2022 PFWs immediately prior to such transaction. The 2022 PFWs do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which holders of common stock are entitled.

Each Class A PFW is exercisable upon issuance. The Class B PFWs and the Class C PFWs will only be exercisable for shares of common stock upon receipt of shareholder approval for an increase in the number of authorized shares of common stock as discussed below under the caption Required Shareholder Approval.

Required Shareholder Approval

The closing of the 2022 RDO resulted in the issuance of the approximately 18.0 million shares of common stock and Class A PFWs for approximately 2.0 million shares. After these issuances, the Company had utilized the entire 40.0 million of authorized shares of common stock available under its corporate charter, consisting of issued shares and shares of common stock reserved for issuance under stock option plans and outstanding warrants discussed in Note 7. Accordingly, the Company did not have a sufficient number of shares of common stock available to permit exercise of any of the Class B PFWs and the Class C PFWs. Therefore, the Class B PFWs and the Class C PFWs will only be exercisable for shares of common stock to the extent that shareholders subsequently approve an increase in the number of authorized shares (the “Shareholder Approval”), which the Company is required to use its best efforts to obtain at an annual meeting of shareholders to be held by June 30, 2022. If the Company does not obtain Shareholder Approval by June 30, 2022, it will be required to (i) pay liquidated damages of 2.0% of the aggregate purchase price paid by each holder of Class B PFWs and Class C PFWs, and (ii) hold additional shareholder meetings every three months thereafter until approval is obtained. For each subsequent failure to obtain Shareholder Approval, the Company will be required to pay an additional 2.0% of the purchase price as liquidated damages. The aggregate purchase price of the Class B PFWs and the Class C PFWs amounts to $54.2 million whereby the initial liquidated damages payment would be approximately $1.1 million if the Company fails to obtain Shareholder Approval by June 30, 2022.

The Company expects to account for the gross proceeds of $41.6 million received from the issuance of the Class B PFWs and $12.6 million expected to be received from the issuance of the Class C PFWs as derivative liabilities whereby future changes in the fair value of the derivative liabilities will result in gains or losses until such time that Shareholder Approval is obtained.

Registration Rights Agreement

In connection with the offer of the Class B PFWs and the Class C PFWs, the Company entered into registration rights agreements with the purchasers. Pursuant to the registration rights agreements, the Company will be required to file a registration statement with the SEC to register for resale the shares issuable upon exercise of the Class B PFWs and the Class C PFWs, within two days of receipt of Shareholder Approval, and to have such registration statement declared effective by June 30, 2022 in the event the registration statement is not reviewed by the SEC, or by July 30, 2022 in the event the registration statement is reviewed by the SEC. The Company will be obligated to pay certain liquidated damages to the purchasers if the Company (i) fails to file the registration statement when required, (ii) fails to cause the registration statement to be declared effective by the SEC when required, or (iii) fails to maintain the effectiveness of the registration statement. If the Company fails to comply with the registration rights agreement, it will be obligated to pay 2.0% of the purchase price of the Class B PFWs and the Class C PFWs for an aggregate of approximately $1.1 million as liquidated damages. If liquidated damage payments are required in the future, they will be charged to expense in the period incurred.

EDA and Purchase Agreement Termination

In May 2022, the Company provided notice of termination to the Agent in accordance with the EDA entered in December 2020.  Additionally, the Company provided notice of termination to LPC for the Purchas Agreement entered in August 2021.  As a result of these termination notices, no further equity securities are issuable under either agreement.