Filing Details

Kevin C. Tang is the beneficial owner of 3,326,165 shares of the Issuer’s Common Stock, which is comprised of the 3,291,165 shares of the Issuer’s Common Stock beneficially owned by Tang Capital Partners, LP and 35,000 shares of the Issuer’s Common Stock underlying stock options owned by Mr. Tang that are exercisable within 60 days of the date of this Statement.  Mr. Tang also owns additional stock options to purchase up to 13,000 shares of the Issuer’s Common Stock that are excluded from his beneficial ownership as of the date of this Statement, as they are not exercisable within 60 days from such date.  Additionally, Mr. Tang is the beneficial owner of the 3,519.315 shares of the Series C-1² Preferred owned by Tang Capital Partners, LP and 157.015 shares of the Series C-1² Preferred owned by the Kevin C. Tang Foundation, Inc.  As described below, the shares of Series C-1² Preferred beneficially owned by Mr. Tang are not currently convertible.

 

The Series C-1² Preferred is convertible into the Issuer’s Common Stock at a rate of 1,724 shares of Common Stock for each share of Series C-1² Preferred.  There is no right to convert the Series C-1² Preferred to the extent that, after giving effect to such conversion, the holder and its affiliates would beneficially own in excess of 9.999% of the outstanding shares of the Issuer’s Common Stock following such conversion.  The holder can amend or waive the foregoing limitation by written notice to the Issuer, with such waiver taking effect only upon the expiration of a 61-day notice period.  The foregoing limitation remains in effect with respect to the Series C-1² Preferred owned by the Reporting Persons, and, accordingly, no shares are currently issuable upon conversion of the Series C-1² Preferred.  This description of the Series C-1² Preferred is qualified in its entirety by reference to: (i) the Issuer’s Amended and Restated Articles of Incorporation, which is set forth on Exhibit 3 and incorporated by reference herein (the “Charter”); (ii) the Consent and Amendment Agreement dated January 19, 2012, which is set forth on Exhibit 4 and incorporated by reference herein (the “First Consent”); (iii) the Consent and Waiver Agreement dated December 7, 2012, which is set forth on Exhibit 5 and incorporated by reference herein (the “Second Consent”); and (iv) the Consent and Waiver Agreement dated September 24, 2013, which is set forth on Exhibit 6 and incorporated by reference herein (the “Third Consent”). Neither the filing of this Schedule 13D/A nor any of its contents shall be deemed to constitute an admission by the Reporting Persons or any other person that it is the beneficial owner of any of the Issuer’s Common Stock underlying such Series C-1² Preferred for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, or for any other purpose, and, as such, beneficial ownership is expressly disclaimed and is not reflected herein.