|9 Months Ended|
Mar. 31, 2020
20. Subsequent Events
Warrant Exercise - Notes Payable
As part of the Warrant Amendment and Exchange Agreement dated February 20, 2020 (see Note 11 – Stockholders' Equity for additional information), the Company issued promissory notes in the aggregate principal amount of $3,300,000. The notes do not bear interest and are payable in full on the earlier to occur of (i) August 20, 2020, or (ii) the completion of an underwritten offering of securities by the Company resulting in gross proceeds of at least $10 million. In addition, the Company is required to make payments upon any and all cash exercises of the noteholders' warrants on a dollar for dollar basis for all amounts paid pursuant to such warrant exercises. At March 31, 2020, notes payable outstanding totaled $1,196,000. On May 1, 2020, the Company paid off the total balance on the notes payable of $1,196,000.
Related Party Transaction
On April 1, 2020, the Company entered into a consulting agreement with KBI Consulting for business support services provided by a relative of iBio’s Chief Executive Officer. Per the consulting agreement the business support services are billed at $5,800 per month.
CEO Option Agreement
Effective April 21, 2020 the Company entered into an Amended and Restated Executive Employment Agreement (the “Amended Employment Agreement”) with Thomas Isett, the Company’s Chief Executive Officer and Executive Co-Chairman. Mr. Isett had been appointed Company Chief Executive Officer and Executive Co-Chairman on March 10, 2020. The Amended Employment Agreement amends and restates the original employment agreement entered into between the Company and Mr. Isett on March 10, 2020 (the “Original Agreement”).
The Amended Employment Agreement modifies the terms of the option grant contemplated under the Original Agreement. Under the Amended Employment Agreement, the Company is required to issue an option to purchase 975,000 shares of the Company’s common stock (the “Option”) to Mr. Isett pursuant to the Company’s 2018 Omnibus Equity Incentive Plan with an exercise price at the fair market value on the date of grant, as determined by the Company’s Board of Directors. The Option vests ratably over the 36-month period beginning on the date of the Original Agreement (1/36th per month) and will be deemed fully-vested upon any transaction or series of related transactions that constitutes a Change of Control Transaction (as defined in the Amended Employment Agreement). There is no requirement under the Amended Employment Agreement for the Company to exchange the Option with a new option if the trading price of the Company’s securities as measured at specified intervals falls below the exercise price of the Option, as contemplated in the Original Agreement. The exercise price of $0.8953 per share is based on the closing price of the Company's common stock on April 21, 2020.
Other than the removal of the requirement to exchange the Option based on a decline in the Company’s share price under specified circumstances, the terms of the Amended Employment Agreement remain unchanged from the Original Agreement.
On April 16, 2020, the Company received $600,000 related to its filing under the Paycheck Protection Program and Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). The payment terms of the note are as follows:
The Lender is participating in the Paycheck Protection Program to help businesses impacted by the economic impact from COVID-19. Forgiveness of this loan is only available for principal that is used for the limited purposes that qualify for forgiveness under the Small Business Administration’s (the "SBA") requirements, and that to obtain forgiveness, the Company must request it and must provide documentation in accordance with Small Business Administration (the "SBA") requirements, and certify that the amounts the Company is requesting to be forgiven qualify under those requirements. Forgiveness of the loan is dependent upon approval of the SBA and while the Company expects forgiveness of this Loan under the current terms of requirement by the SBA, there can be no assurance or certainty that forgiveness will in fact occur.
Sale of Shares to Lincoln Park Capital Fund, LLC
On May 13, 2020, the Company entered into a purchase agreement, pursuant to which the Company agreed to sell to Lincoln Park and Lincoln Park agreed to purchase 1,000,000 shares of the Company’s common stock at a price of $1.09 per share for an aggregate purchase price of $1,090,000, pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-236735), filed with the Securities and Exchange Commission in accordance with the provisions of the Securities Act of 1933, as amended, and declared effective on March 19, 2020, and the prospectus supplement thereto dated May 14, 2020..
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef