Filed pursuant to Rule 424(b)(3)
Registration No. 333-223669

 

PROSPECTUS SUPPLEMENT

(To Prospectus Dated July 11, 2018)

 

Innovate Biopharmaceuticals, Inc.

 

Common Stock

 

 

 

13,990,403 Shares of Common Stock

Offered by Selling Stockholders

  

 

 

This prospectus supplement relates to the disposition from time to time of up to 13,990,403 shares of our common stock (including up to 2,051,771 shares issuable upon exercise of warrants), which are held by the selling stockholders named herein. We will not receive any of the proceeds from the sale of our common stock by the selling stockholders.

 

The selling stockholders identified in this prospectus, or their permitted transferees or other successors-in-interest, may offer the shares from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices, or at privately negotiated prices. We provide additional information about how the selling stockholders may sell their shares of common stock in the section entitled “Plan of Distribution” beginning on page 15 of this prospectus supplement. We will not be paying any underwriting discounts or selling commissions in connection with any offering of common stock under this prospectus.

 

Our common stock is quoted on the Nasdaq Capital Market (“Nasdaq”) under the symbol “INNT.” The last reported sale price of our common stock as reported on Nasdaq on July 13, 2018 was $23.70 per share.

 

Investing in our common stock involves a high degree of risk. Please see the section entitled “Risk Factors” beginning on page 3 of this prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

Prospectus Supplement dated July 16, 2018.

 

 

 

 

TABLE OF CONTENTS

 

  Page
SUMMARY 1
THE OFFERING 2
RISK FACTORS 3
USE OF PROCEEDS 4
SELLING STOCKHOLDERS 5
PLAN OF DISTRIBUTION 15
DESCRIPTION OF CAPITAL STOCK 16
LEGAL MATTERS 18
EXPERTS 18
WHERE YOU CAN FIND ADDITIONAL INFORMATION 18
INCORPORATION OF DOCUMENTS BY REFERENCE 18

 

 

 

ABOUT THIS PROSPECTUS SUPPLEMENT

 

This prospectus supplement and the accompanying prospectus are part of a registration statement on Form S-3 that we filed with the United States Securities and Exchange Commission, or the SEC, using a “shelf” registration process. Under this shelf process, the selling stockholders may from time to time sell up to an aggregate amount of 13,990,403 shares of our common stock (including up to 2,051,771 shares issuable upon exercise of warrants) in one or more offerings.

 

This prospectus supplement describes the specific terms of this offering and adds to and updates information contained in the prospectus and the documents incorporated by reference into this prospectus supplement and the base prospectus, which was filed with the SEC on July 11, 2018 (the “base prospectus”). The base prospectus, including the documents incorporated by reference, which provides more general information, some of which may not apply to this offering. To the extent there is a conflict between the information contained in this prospectus supplement, on the one hand, and the information contained in the base prospectus or any document incorporated herein and therein by reference, on the other hand, you should rely on the information in this prospectus supplement. If any statement in one of these documents is inconsistent with a statement in another document having a later date—for example, a document incorporated by reference in the accompanying prospectus—the statement in the document having the later date modifies or supersedes the earlier statement.

 

As permitted by the rules and regulations of the SEC, the registration statement, of which this prospectus supplement and the base prospectus form a part, includes additional information not contained in this prospectus supplement or the base prospectus. You should read this prospectus supplement, the registration statement and the base prospectus together with the documents incorporated by reference into this prospectus supplement and into the base prospectus before buying any shares of our common stock in this offering. See “Where You Can Find Additional Information” on page 18 of this prospectus supplement.

 

You should rely only on the information contained in or incorporated by reference into this prospectus supplement and the base prospectus. Neither we, nor the selling stockholders have authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor the selling stockholders are making an offer to sell these securities in any jurisdiction where such offer or sale is not permitted.

 

You should not assume that the information in this prospectus supplement, the base prospectus or any other offering materials is accurate as of any date other than the date on the front of each document, regardless of the time of delivery of this prospectus supplement, the base prospectus or such other offering materials or the time of any sale of securities. Our business, financial condition, results of operations and prospects may have changed since then. 

 

- i -

 

 

Except where the context otherwise requires or where otherwise indicated, the terms “we,” “us,” “our,” “Innovate” and “the Company” refer to Innovate Biopharmaceuticals, Inc., a Delaware corporation, and its consolidated subsidiaries. References to the “selling stockholders” refer to the stockholders listed herein under the heading “Selling Stockholders” and their donees, pledgees, transferees or other successors-in-interest.

 

Forward-Looking Statements

 

The information in this prospectus supplement and the information incorporated herein by reference, include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. When used in this report, the words “believe,” “may,” “could,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “indicate,” “seek,” “should,” “would” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements contain these identifying words. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements.

 

If any of these risks or uncertainties materialize or any of these assumptions prove incorrect, our results could differ materially from the forward-looking statements in this prospectus supplement. All forward-looking statements in this prospectus supplement are current only as of the date of this prospectus supplement. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events except as required by law.

 

- ii -

 

 

SUMMARY

 

This summary highlights the information contained elsewhere in or incorporated by reference into this prospectus supplement. Because this is only a summary, it does not contain all of the information that you should consider before deciding whether to invest in our securities. For a more complete understanding of our company’s business and the risks and uncertainties facing it, you should read this entire prospectus supplement, the base prospectus, and the information incorporated by reference herein and therein, and the information under the caption “Risk Factors,” beginning on page 3.

 

Overview

 

On January 29, 2018, Monster Digital, Inc. (“Monster”) and privately held Innovate Biopharmaceuticals Inc. (“Private Innovate”) completed a reverse recapitalization in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated July 3, 2017, as amended (the “Merger Agreement”), by and among Monster, Monster Merger Sub, Inc. (“Merger Sub”) and Private Innovate, which changed its name in connection with the transaction to IB Pharmaceuticals Inc. (“IB Pharmaceuticals”). Pursuant to the Merger Agreement, Merger Sub merged with and into IB Pharmaceuticals with IB Pharmaceuticals surviving as the wholly owned subsidiary of Monster (the “Merger”). Immediately following the Merger, Monster changed its name to Innovate Biopharmaceuticals, Inc. (“Innovate”). In connection with the closing of the Merger, Innovate’s common stock began trading on the Nasdaq Capital Market under the ticker symbol “INNT” on February 1, 2018. Prior to the Merger, Monster was incorporated in Delaware in November 2010 under the name “Monster Digital, Inc.”

 

Prior to the Merger, Monster’s primary business focus was the design, development and marketing of premium products under the “Monster Digital” brand for use in high-performance consumer electronics, mobile products and computing applications.

 

After the Merger, we are a clinical-stage biopharmaceutical company developing novel medicines for autoimmune and inflammatory diseases with unmet needs. Our pipeline includes drug candidates for celiac disease, nonalcoholic steatohepatitis (NASH), Crohn’s and ulcerative colitis. Our lead program, INN-202 (larazotide acetate or larazotide) is entering Phase 3 registration trials in the second half of 2018 and has the potential to be the first-to-market therapeutic for celiac disease, an unmet medical need, which affects an estimated 1% of the North American population or approximately 3 million individuals. Celiac patients have no treatment alternative other than a strict lifelong adherence to a gluten-free diet, which is difficult to maintain and can be deficient in key nutrients. Additionally, current FDA labeling standards allow up to 20 parts per million (ppm) of gluten in “gluten-free” labelled foods, which are sufficient to cause celiac symptoms in many patients, including abdominal pain, abdominal cramping, bloating, gas, headaches, ataxia, ‘‘brain fog,’’ and fatigue. Long-term sequelae of celiac disease include enteropathy associated T-cell lymphoma (EATL), osteoporosis and anemia.

 

Our principal executive office is currently located at 8480 Honeycutt Road, Suite 120, Raleigh, North Carolina 27615.

 

 

 - 1 - 

 

 

THE OFFERING

 

Common stock offered by the selling stockholders   13,990,403 shares of our common stock (including up to 2,051,771 shares issuable upon exercise of warrants)
     
Use of proceeds  

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

 

See “Selling Stockholders” and “Plan of Distribution.”

     
Risk Factors   See “Risk Factors” and other information included in this prospectus supplement for a discussion of factors you should consider carefully before deciding to invest in shares of our common stock.
     
Nasdaq symbol   INNT

 

 - 2 - 

 

 

RISK FACTORS

 

Before you invest in our securities, you should be aware that our business faces numerous financial and market risks, including those described below, as well as general economic and business risks. Our securities are speculative, and you should not make an investment in Innovate unless you can afford to bear the loss of your entire investment. Prior to making a decision about investing in our common stock, you should carefully consider the risks, uncertainties and assumptions discussed under Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as updated by our subsequent filings with the Securities and Exchange Commission, or the SEC, under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are incorporated herein by reference, together with the information in this prospectus supplement and the base prospectus and any other information incorporated by reference herein or therein. Before you decide whether to invest in our securities, you should carefully consider these risks and uncertainties, together with all of the other information included in or incorporated by reference into, this prospectus supplement or the base prospectus. The risks and uncertainties identified are not the only risks and uncertainties we face. If any of the material risks or uncertainties that we face were to occur, you could lose part or all of your investment.

 

 - 3 - 

 

  

USE OF PROCEEDS

 

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

 

 - 4 - 

 

 

SELLING STOCKHOLDERS

 

The shares may be offered by the selling stockholders or by pledges, donees, transferees or other successors in interest that receive such shares as a gift or through a private sale or transfer. We may amend or supplement this prospectus from time to time to update information provided in the table.

 

On January 29, 2018, prior to the closing of the Merger, Private Innovate issued to the selling stockholders 31,678,964 shares of common stock at $0.9609 per share and five-year warrants to purchase 3,774,039 shares of common stock at an exercise price of $1.201125 for aggregate gross proceeds of $18,132,660.50 (the “Equity Issuance”). Certain of the warrants were issued to affiliates of H.C. Wainwright & Co., LLC and GP Nurmenkari Inc., the placement agents for the Equity Issuance. The shares were exchanged in connection with the Merger for 11,938,632 shares of common stock. The warrants were exchanged in connection with the Merger for warrants to purchase 2,051,771 shares of common stock.

 

On January 29, 2018, Monster and Private Innovate completed a reverse recapitalization in accordance with the terms of the Merger Agreement, by and among Monster, Merger Sub and Private Innovate, which changed its name in connection with the transaction to IB Pharmaceuticals Inc. Pursuant to the Merger Agreement, Merger Sub merged with and into IB Pharmaceuticals with IB Pharmaceuticals surviving as the wholly owned subsidiary of Monster. Immediately following the Merger, Monster changed its name to Innovate Biopharmaceuticals, Inc. In connection with the closing of the Merger, Innovate’s common stock began trading on the Nasdaq Capital Market under the ticker symbol “INNT” on February 1, 2018.

 

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. The Registrant believes these transactions were exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Regulation D promulgated under the Securities Act as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their relationships with Monster or Private Innovate (as applicable) or otherwise, to information about Monster or Private Innovate (as applicable).

 

Selling Stockholder  Shares
beneficially
owned prior to
offering
   Number of
shares being
offered
   Shares
beneficially
owned after
offering
   Percentage of
outstanding
shares
beneficially
owned after
offering(1)
 
Adolfo & Donna Carmona(2)   52,635    52,635    ––    * 
Alan McIntyre(3)   23,561    23,561    ––    * 
Alexander J. Brown Trust(4)   34,200    34,200    ––    * 
Alexandra Koeppel(5)   23,532    23,532    ––    * 
Andrew and Melissa Fisher(6)   47,064    47,064    ––    * 
Argjent Mena & Lara Sabani(7)   9,413    9,413    ––    * 
B3 Group LLC(8)   470,642    470,642    ––    * 
Barry Shemaria(9)   14,120    14,120    ––    * 
Basil Palmeri(10)   14,120    14,120    ––    * 
Bozarth LLC(11)   23,532    23,532    ––    * 
Brenda & Dave Rickey Family Foundation(12)   16,473    16,473    ––    * 
Brian & Andrea Fischhoff(13)   11,765    11,765    ––    * 
Brian Eliot Peierls(14)   56,477    56,477    ––    * 
Bruce & Mitsie Levy(15)   23,532    23,532    ––    * 

 

 - 5 - 

 

 

Selling Stockholder  Shares
beneficially
owned prior to
offering
   Number of
shares being
offered
   Shares
beneficially
owned after
offering
   Percentage of
outstanding
shares
beneficially
owned after
offering(1)
 
Carl J. Domino(16)   47,064    47,064    ––    * 
Casimir S. Skrzypczak(17)   16,473    16,473    ––    * 
Charmi Vijapura(18)   47,064    47,064    ––    * 
Chirag Shah(19)   7,059    7,059    ––    * 
Christopher Washburn(20)   14,120    14,120    ––    * 
Clay Lebhar(21)   23,531    23,531    ––    * 
Dennis R. DeLoach, Jr. & Faye M. DeLoach(22)   11,766    11,766    ––    * 
Donald Sesterhenn(23)   11,765    11,765    ––    * 
Douglas Rivers(24)   235,321    235,321    ––    * 
Dyke Rogers(25)   94,128    94,128    ––    * 
E. Jeffrey Peierls(26)   70,596    70,596    ––    * 
Edward O'Connell(27)   9,413    9,413    ––    * 
Edward P. Swyer LLC(28)   235,321    235,321    ––    * 
Foster Family Trust(29)   23,532    23,532    ––    * 
FourJr Investments LTD(30)   23,532    23,532    ––    * 
Frederick B. Epstein(31)   11,766    11,766    ––    * 
GSB Holdings, Inc.(32)   235,321    235,321    ––    * 
Gubbay Investments, LLC(33)   16,507    16,507    ––    * 
Gwen Swenson-Hale(34)   11,765    11,765    ––    * 
Howard & Susan Kalka(35)   35,328    35,328    ––    * 
Howard Stringer(36)   11,766    11,766    ––    * 
Intracoastal Capital, LLC(37)   47,064    47,064    ––    * 
Iroquois Capital Investment Group LLC(38)   28,238    28,238    ––    * 
Iroquois Master Fund Ltd(39)   89,422    89,422    ––    * 
Irwin Gruverman(40)   11,765    11,765    ––    * 
Jai V. Desai(41)   14,119    14,119    ––    * 
James H. Wiesenberg(42)   11,765    11,765    ––    * 
James J. Watson(43)   23,532    23,532    ––    * 
James L. Dritz(44)   18,826    18,826    ––    * 
Jan Arnett(45)   47,064    47,064    ––    * 
Jay M. Haft(46)   11,766    11,766    ––    * 
Jayesh K. Patel & Bela J. Patel(47)   47,064    47,064    ––    * 
Jesal Kothari(48)   7,059    7,059    ––    * 
Jimmy R. Hasley(49)   14,120    14,120    ––    * 
Joan L Bonanno TTE U/A DTD 12/05/2002 By Joan L Bonanno(50)   47,064    47,064    ––    * 
John Q Joubert & Terri L Joubert(51)   47,064    47,064    ––    * 
John E. Kyees(52)   11,766    11,766    ––    * 
John V. Wagner, Jr.(53)   35,298    35,298    ––    * 
Juli-Ann Cialone(54)   4,707    4,707    ––    * 
Kara Lynn Hart(55)   11,765    11,765    ––    * 
Keith J. Gelles(56)   23,532    23,532    ––    * 
Lars Bader(57)   470,642    470,642    ––    * 
Lee J. Seidler Revocable Trust DTD 4/12/1990(58)   23,561    23,561    ––    * 
Mackie Klingbeil(59)   23,561    23,561    ––    * 
Mahendra Doobay(60)   4,706    4,706    ––    * 
Meryle Evans Family Trust(61)   11,766    11,766    ––    * 

 

 - 6 - 

 

 

Selling Stockholder  Shares
beneficially
owned prior to
offering
   Number of
shares being
offered
   Shares
beneficially
owned after
offering
   Percentage of
outstanding
shares
beneficially
owned after
offering(1)
 
Michael J. Pierce(62)   94,128    94,128    ––    * 
Michael M. Mainero(63)   11,766    11,766    ––    * 
Michael Stark(64)   11,765    11,765    ––    * 
MITZ ZHU YAN,LP(65)   23,532    23,532    ––    * 
N. Michael Wolsonovich, Jr.(66)   7,060    7,060    ––    * 
Nomis Bay LTD(67)   1,411,924    1,411,924    ––    * 
Northlea Partners LLLP(68)   11,765    11,765    ––    * 
OHB Family Trust(69)   23,532    23,532    ––    * 
Pamela M. Baker & Russell S. Baker(70)   23,532    23,532    ––    * 
Peter S. Kastner(71)   23,532    23,532    ––    * 
Provident Trust Group LLC FBO Universal Technology Inc. 401K Plan FBO Robert G. Curtin(72)   135,671    135,671    ––    * 
Rameshchandra Dabhi(73)   23,531    23,531    ––    * 
Raphael Tshibangu(74)   18,826    18,826    ––    * 
Raymond J Bonanno TTE U/A DTD 12/05/2002 By Raymond J Bonanno(75)   47,064    47,064    ––    * 
Renald J. & Catherine C. Anelle(76)   23,561    23,561    ––    * 
Richard A Brown Trust(77)   81,403    81,403    ––    * 
Richard David(78)   23,532    23,532    ––    * 
Rickey Family Trust dtd 3/22/16(79)   30,592    30,592    ––    * 
Robert Caione(80)   23,532    23,532    ––    * 
Robert G. Curtin(81)   4,975    4,975    ––    * 
Robert Harrigan(82)   26,316    26,316    ––    * 
RS & VS LTD(83)   11,765    11,765    ––    * 
RS Irrevocable Trust(84)   235,321    235,321    ––    * 
Russell S. Dritz(85)   7,060    7,060    ––    * 
Saha Living LLC(86)   47,064    47,064    ––    * 
Sal DeStefano(87)   11,765    11,765    ––    * 
Satterfield Vintage Investments, LP(88)   117,673    117,673    ––    * 
SDL Ventures, LLC(89)   141,192    141,192    ––    * 
Sphera Global Healthcare Master Fund(90)   1,142,717    1,142,717    ––    * 
HFR HE Sphera Global Healthcare Master Trust (91)   33,886    33,886    ––    * 
Stephen A. DiChiara(92)   7,059    7,059    ––    * 
Steven M. Cohen(93)   18,826    18,826    ––    * 
Suresh Patel(94)   11,765    11,765    ––    * 
The Fourys Co. LTD(95)   37,652    37,652    ––    * 
The Peierls Bypass Trust(96)   6,588    6,588    ––    * 
The Peierls Foundation, Inc.(97)   316,271    316,271    ––    * 
UD E.F. Peierls for Brian E. Peierls(98)   24,473    24,473    ––    * 
UD E.F. Peierls for E. Jeffrey Peierls(99)   24,473    24,473    ––    * 
UD E.S. Peierls for E.F. Peierls et al(100)   16,943    16,943    ––    * 
UD Ethel F. Peierls Charitable Lead Trust(101)   37,651    37,651    ––    * 
UD J.N. Peierls for Brian Eliot Peierls(102)   31,063    31,063    ––    * 
UD J.N. Peierls for E. Jeffrey Peierls(103)   31,063    31,063    ––    * 
UKR Partners LLC(104)   1,579,559    1,579,559    ––    * 

 

 - 7 - 

 

 

Selling Stockholder  Shares
beneficially
owned prior to
offering
   Number of
shares being
offered
   Shares
beneficially
owned after
offering
   Percentage of
outstanding
shares
beneficially
owned after
offering(1)
 
UW E.S. Peierls for Brian E. Peierls - Accumulation(105)   22,590    22,590    ––    * 
UW E.S. Peierls for E. Jeffrey Peierls - Accumulation(106)   13,177    13,177    ––    * 
UW J.N. Peierls for Brian E. Peierls(107)   27,297    27,297    ––    * 
UW J.N. Peierls for E. Jeffrey Peierls(108)   27,297    27,297    ––    * 
Vijay & Tejal Patel(109)   117,659    117,659    ––    * 
Valley Forge Investments LLC(110)   94,128    94,128    ––    * 
Walter G. Gans(111)   7,060    7,060    ––    * 
Yisroel Brauner & Chana Brauner(112)   23,532    23,532    ––    * 
Amit Patel   69,267    69,267    ––    * 
Anthony Barrett   58,869    58,869    ––    * 
Ashit Vijapura   80,298    80,298    ––    * 
Ashwin N. Patel & Achala A. Patel   107,065    107,065    ––    * 
Atul and Namrata Wadhwa   41,346    41,346    ––    * 
Bearing Circle Capital LLC   109,242    109,242    ––    * 
Bhavesh Patel   14,229    14,229    ––    * 
Bhikabhai Nayi   13,104    13,104    ––    * 
Bijal Patel   15,728    15,728    ––    * 
Bindu Sangani   80,344    80,344    ––    * 
Charles Mosseri-Marlio   153,442    153,442    ––    * 
David Cassimus   13,836    13,836    ––    * 
David Purdy   74,800    74,800    ––    * 
Deepen R. Patel   5,423    5,423    ––    * 
Himanshu M. Patel   51,511    51,511    ––    * 
Hiren K. Patel   27,784    27,784    ––    * 
Howard Yee   20,578    20,578    ––    * 
Nailesh Sangani   132,051    132,051    ––    * 
Janet League Katzin   222,555    222,555    ––    * 
Jay Madan   6,839    6,839    ––    * 
Jigar J. Patel   7,939    7,939    ––    * 
Jonathan Barrett   162,065    162,065    ––    * 
JRK Inc.   27,419    27,419    ––    * 
Juan Vallarino   60,044    60,044    ––    * 
Justin Prior   15,554    15,554    ––    * 
Karl Pinto   14,972    14,972    ––    * 
Kumar Patel   68,500    68,500    ––    * 
Malika Sangani   53,002    53,002    ––    * 
Malur R. Balaji   53,522    53,522    ––    * 
Marilyn Hemani   40,276    40,276    ––    * 
Mary Cheeran   53,532    53,532    ––    * 
Michael Mindlin   60,297    60,297    ––    * 
Nalini Krishnankutty   13,385    13,385    ––    * 
Niranjana Patel   8,135    8,135    ––    * 
ONE by NP   26,358    26,358    ––    * 
Parul T. Patel   53,532    53,532    ––    * 
Piyush Patel   26,761    26,761    ––    * 
Praful Patel   106,507    106,507    ––    * 
Prentice Lending II LLC   695,562    695,562    ––    * 

 

 - 8 - 

 

 

Selling Stockholder  Shares
beneficially
owned prior to
offering
   Number of
shares being
offered
   Shares
beneficially
owned after
offering
   Percentage of
outstanding
shares
beneficially
owned after
offering(1)
 
Raj S. Shah   13,104    13,104    ––    * 
Rajesh and Suny Patel   27,799    27,799    ––    * 
Rajesh B. Patel   68,460    68,460    ––    * 
Rakesh Shah   80,621    80,621    ––    * 
Rameschchandra Dabhi   105,951    105,951    ––    * 
Ramesh Donthamsetty   30,689    30,689    ––    * 
Rathin Patel   13,906    13,906    ––    * 
Saurabh Shah   14,214    14,214    ––    * 
SDS Capital Partners II, LLC   262,924    262,924    ––    * 
Sebastian Prior   15,554    15,554    ––    * 
Shuchin Bajaj   5,693    5,693    ––    * 
Sireesh Appajosyula   30,689    30,689    ––    * 
Subhashini Chandran   5,692    5,692    ––    * 
Sujata Shah   53,522    53,522    ––    * 
Sunil and Prity Vaidya   80,298    80,298    ––    * 
Sunil Kumar S. Reddy   26,761    26,761    ––    * 
Todd Gallinek   8,536    8,536    ––    * 
Vijay Patel & Mrs. Tejal Patel   106,312    106,312    ––    * 
Vijay Taunk   53,522    53,522    ––    * 
Vikram Patel   80,750    80,750    ––    * 
Wallace R. Nelms   22,768    22,768    ––    * 
Aaron Segal(113)   115,501    115,501    ––    * 
David Landskowsky(114)   74,158    74,158    ––    * 
Eric Rubenstein(115)   74,158    74,158    ––    * 
Todd Harrigan(116)   60,419    60,419    ––    * 
Tim Herrmann(117)   30,387    30,387    ––    * 
Scott Cardone(118)   18,612    18,612    ––    * 
Albert Pezone(119)   29,363    29,363    ––    * 
Steven Nicholson(120)   8,471    8,471    ––    * 
Kimberly Bechtle(121)   3,677    3,677    ––    * 
Lindsey McGrandy(122)   2,680    2,680    ––    * 
Richard Mish(123)   2,038    2,038    ––    * 
Michael Vasinkevich(124)   141,718    141,718    ––    * 
Sean Hagerty(125)   39,891    39,891    ––    * 
Noam Rubinstein(126)   26,244    26,244    ––    * 
Charles Worthman(127)   2,100    2,100    ––    * 
Total   13,990,403                

 

 

 

* Less than 1%
(1) Based upon 25,695,602 shares of common stock outstanding as of the close of business on July 5, 2018 (the “Measurement Date”) in accordance with Rule 13d-3 under the Securities Exchange Act of 1934.
(2) Shares beneficially owned includes a warrant to purchase 8,773 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(3) Shares beneficially owned includes a warrant to purchase 3,927 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(4) Shares beneficially owned includes a warrant to purchase 5,700 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(5) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.

 

 - 9 - 

 

 

(6) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(7) Shares beneficially owned includes a warrant to purchase 1,569 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(8) Shares beneficially owned includes a warrant to purchase 78,441 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(9) Shares beneficially owned includes a warrant to purchase 2,354 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(10) Shares beneficially owned includes a warrant to purchase 2,354 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(11) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(12) Shares beneficially owned includes a warrant to purchase 2,746 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(13) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(14) Shares beneficially owned includes a warrant to purchase 9,413 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(15) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(16) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(17) Shares beneficially owned includes a warrant to purchase 2,746 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(18) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(19) Shares beneficially owned includes a warrant to purchase 1,177 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(20) Shares beneficially owned includes a warrant to purchase 2,354 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(21) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(22) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(23) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(24) Shares beneficially owned includes a warrant to purchase 39,221 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(25) Shares beneficially owned includes a warrant to purchase 15,688 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(26) Shares beneficially owned includes a warrant to purchase 11,766 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(27) Shares beneficially owned includes a warrant to purchase 1,569 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(28) Shares beneficially owned includes a warrant to purchase 39,221 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(29) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(30) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(31) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(32) Shares beneficially owned includes a warrant to purchase 39,221 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.

 

 - 10 - 

 

 

(33) Shares beneficially owned includes a warrant to purchase 2,752 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(34) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(35) Shares beneficially owned includes a warrant to purchase 5,888 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(36) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(37) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase. Mitchell P. Kopin (“Mr. Kopin”) and Daniel B. Asher (“Mr. Asher”), each of whom are managers of Intracoastal Capital LLC (“Intracoastal”), have shared voting control and investment discretion over the securities reported herein that are held by Intracoastal. As a result, each of Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the securities reported herein that are held by Intracoastal.
(38) Shares beneficially owned includes a warrant to purchase 4,707 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(39) Shares beneficially owned includes a warrant to purchase 14,904 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(40) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(41) Shares beneficially owned includes a warrant to purchase 2,354 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(42) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(43) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(44) Shares beneficially owned includes a warrant to purchase 3,138 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(45) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(46) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(47) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(48) Shares beneficially owned includes a warrant to purchase 1,177 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(49) Shares beneficially owned includes a warrant to purchase 2,354 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(50) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(51) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(52) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(53) Shares beneficially owned includes a warrant to purchase 5,883 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(54) Shares beneficially owned includes a warrant to purchase 785 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(55) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(56) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(57) Shares beneficially owned includes a warrant to purchase 78,441 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.

 

 - 11 - 

 

 

(58) Shares beneficially owned includes a warrant to purchase 3,927 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(59) Shares beneficially owned includes a warrant to purchase 3,927 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(60) Shares beneficially owned includes a warrant to purchase 785 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(61) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(62) Shares beneficially owned includes a warrant to purchase 15,688 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(63) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(64) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(65) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(66) Shares beneficially owned includes a warrant to purchase 1,177 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(67) Shares beneficially owned includes a warrant to purchase 235,321 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(68) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(69) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(70) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(71) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(72) Shares beneficially owned includes a warrant to purchase 22,612 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(73) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(74) Shares beneficially owned includes a warrant to purchase 3,138 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(75) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(76) Shares beneficially owned includes a warrant to purchase 3,927 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(77) Shares beneficially owned includes a warrant to purchase 13,568 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(78) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(79) Shares beneficially owned includes a warrant to purchase 5,099 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(80) Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(81) Shares beneficially owned includes a warrant to purchase 830 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(82) Shares beneficially owned includes a warrant to purchase 4,386 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(83) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(84) Shares beneficially owned includes a warrant to purchase 39,221 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.

 

 - 12 - 

 

 

(85) Shares beneficially owned includes a warrant to purchase 1,177 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(86) Shares beneficially owned includes a warrant to purchase 7,844 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(87) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(88) Shares beneficially owned includes a warrant to purchase 19,613 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(89) Shares beneficially owned includes a warrant to purchase 23,532 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(90) Shares beneficially owned includes a warrant to purchase 190,453 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(91) Shares beneficially owned includes a warrant to purchase 5,648 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(92) Shares beneficially owned includes a warrant to purchase 1,177 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(93) Shares beneficially owned includes a warrant to purchase 3,138 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(94) Shares beneficially owned includes a warrant to purchase 1,961 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(95) Shares beneficially owned includes a warrant to purchase 6,276 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(96) Shares beneficially owned includes a warrant to purchase 1,098 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(97) Shares beneficially owned includes a warrant to purchase 52,712 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(98) Shares beneficially owned includes a warrant to purchase 4,079 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(99) Shares beneficially owned includes a warrant to purchase 4,079 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(100)  Shares beneficially owned includes a warrant to purchase 2,824 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(101)  Shares beneficially owned includes a warrant to purchase 6,276 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(102)  Shares beneficially owned includes a warrant to purchase 5,178 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(103)  Shares beneficially owned includes a warrant to purchase 5,178 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(104)  Shares beneficially owned includes a warrant to purchase 117,661 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(105)  Shares beneficially owned includes a warrant to purchase 3,765 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(106)  Shares beneficially owned includes a warrant to purchase 2,196 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(107)  Shares beneficially owned includes a warrant to purchase 4,550 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(108)  Shares beneficially owned includes a warrant to purchase 4,550 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(109)  Shares beneficially owned includes a warrant to purchase 19,610 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(110)  Shares beneficially owned includes a warrant to purchase 15,688 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(111)  Shares beneficially owned includes a warrant to purchase 1,177 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.

 

 - 13 - 

 

 

(112)  Shares beneficially owned includes a warrant to purchase 3,922 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(113)  Shares beneficially owned includes a warrant to purchase 115,501 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(114)  Shares beneficially owned includes a warrant to purchase 74,158 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(115)  Shares beneficially owned includes a warrant to purchase 74,158 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(116)  Shares beneficially owned includes a warrant to purchase 60,419 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(117)  Shares beneficially owned includes a warrant to purchase 30,387 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(118)  Shares beneficially owned includes a warrant to purchase 18,612 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(119)  Shares beneficially owned includes a warrant to purchase 29,363 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(120)  Shares beneficially owned includes a warrant to purchase 8,471 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(121)  Shares beneficially owned includes a warrant to purchase 3,677 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(122)  Shares beneficially owned includes a warrant to purchase 2,680 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(123)  Shares beneficially owned includes a warrant to purchase 2,038 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(124)  Shares beneficially owned includes a warrant to purchase 141,718 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(125)  Shares beneficially owned includes a warrant to purchase 39,891 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(126)  Shares beneficially owned includes a warrant to purchase 26,244 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.
(127)  Shares beneficially owned includes a warrant to purchase 2,100 shares of our common stock, which is fully exercisable for up to five (5) years from the date of purchase.

 

 - 14 - 

 

 

PLAN OF DISTRIBUTION

 

The shares may be sold from time to time by the selling stockholders, or by pledgees, donees, transferees or other successors in interest. Such sales may be made on one or more exchanges or in the over-the-counter market or otherwise, at prices and at terms then prevailing or at prices related to the then current market price, or in negotiated transactions. The shares may be sold by one or more of the following: (a) a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; (b) purchases by a broker-dealer as principal and resale by such broker-dealer for its account pursuant to this prospectus supplement and the accompanying prospectus; (c) an exchange distribution in accordance with the rules of such exchange; (d) ordinary brokerage transactions and transactions in which the broker solicits purchasers; and (e) any other method permitted pursuant to applicable law. In effecting sales, broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in the resales.

 

In connection with distributions of the shares or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers. In connection with such transactions, broker-dealers may engage in short sales of the shares hereunder in the course of hedging the positions they assume with selling stockholders. The selling stockholders may also sell shares short and redeliver the shares to close out such short positions. The selling stockholders may also enter into option or other transactions with broker-dealers which may require the delivery to the broker-dealer of the shares hereunder, which the broker-dealer may resell or otherwise transfer pursuant to this prospectus supplement and the accompanying prospectus. The selling stockholder may also pledge the shares registered hereunder to a broker-dealer and upon a default the broker-dealer may effect sales of the pledged shares pursuant to this prospectus supplement and the accompanying prospectus.

 

A selling stockholder that is an entity may elect to make a pro rata in-kind distribution of shares of our common stock to its members, partners or stockholders pursuant to the registration statement of which this prospectus supplement forms a part by delivering the base prospectus and this prospectus supplement. To the extent that such members, partners or stockholders are not affiliates of such selling stockholder, such members, partners or stockholders would thereby receive freely tradeable shares of our common stock pursuant to the distribution through a registration statement.

 

Rule 144

 

The selling stockholders may also resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conforms to the requirements of that rule.

 

The selling stockholders and any broker-dealers that act in connection with the sale of securities may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act in connection with such sales, and any commissions received by such broker-dealers and any profit on the resale of the securities sold by them while acting as principals may be deemed to be underwriting discounts or commissions under the Securities Act. In the event that any selling stockholder is deemed to be an "underwriter" within the meaning of Section 2(11) of the Securities Act, such selling stockholder will be subject to the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

 

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DESCRIPTION OF CAPITAL STOCK

 

This section summarizes our authorized and outstanding securities and certain of the provisions of our amended and restated certificate of incorporation and our amended and restated bylaws.

 

General

 

The Company’s authorized capital stock consists of 360,000,000 shares of capital stock, par value $0.0001 per share, of which 350,000,000 shares are common stock, par value $0.0001 per share and 10,000,000 of preferred stock, par value $0.0001. As of July 6, 2018, the Company had 25,695,602 shares of common stock outstanding held by approximately 341 stockholders of record, and no shares of preferred stock outstanding.

 

Common Stock

 

The holders of our common stock (i) have equal ratable rights to dividends from funds legally available, therefore, when, as and if declared by our Board; (ii) are entitled to share in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs; (iii) do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and (iv) are entitled to one non-cumulative vote per share on all matters on which stockholders may vote. Reference is made to the Company's Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, and the applicable statutes of the State of Delaware for a more complete description of the rights and liabilities of holders of the Company's securities.

 

Preferred Stock

 

The Company has authorized 10,000,000 shares of preferred stock. There is no preferred stock outstanding.

 

Non-cumulative Voting

 

Holders of shares of our common stock do not have cumulative voting rights; meaning that the holders of 50.1% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.

 

Dividends

 

We have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our Board and will depend upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

 

Warrants

 

As of the date of this registration statement, the Company has warrants outstanding, which entitle their holders to purchase (i) 1,702,216 shares of common stock, with a term of five years and an exercise price of $3.18 per share, and (ii) 349,555 shares of common stock, with a term of five years and an exercise price of $2.54 per share. Such warrants contain certain customary exceptions, as well as customary provisions for adjustment in the event of stock splits, subdivision or combination, mergers, and similar business combinations.

  

Anti-Takeover Effects of Certain Provisions of Delaware Law and Charter and Bylaw Provisions

 

Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by our board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our Common Stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management or delaying or preventing a transaction that might benefit you or other minority stockholders.

 

Certain Limitations on Stockholder Actions. Our bylaws will also impose some procedural requirements on stockholders who wish to:

 

  · make nominations in the election of directors;

 

  · propose that a director be removed;

 

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  · propose any repeal or change in our bylaws; or

 

  · propose any other business to be brought before an annual or special meeting of stockholders.

 

Under these procedural requirements, in order to bring a proposal before a meeting of stockholders, a stockholder must deliver timely notice of a proposal pertaining to a proper subject for presentation at the meeting to our corporate secretary along with the following:

 

  · a description of the business or nomination to be brought before the meeting and the reasons for conducting such business at the meeting;

 

  · the stockholder's name and address;

 

  · any material interest of the stockholder in the proposal;

 

  · the number of shares beneficially owned by the stockholder and evidence of such ownership; and

 

  · the names and addresses of all persons with whom the stockholder is acting in concert and a description of all arrangements and understandings with those persons, and the number of shares such persons beneficially own.

 

To be timely, a stockholder must generally deliver notice not less than 90 days prior the anniversary date of the immediately preceding annual meeting of stockholders.

 

In order to submit a nomination for our board of directors, a stockholder must also submit any information with respect to the nominee that we would be required to include in a proxy statement, as well as some other information. If a stockholder fails to follow the required procedures, the stockholder's proposal or nominee will be ineligible and will not be voted on by our stockholders.

 

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LEGAL MATTERS

 

The validity of the shares of common stock offered by this prospectus supplement and other legal matters will be passed upon for us by Wilson Sonsini Goodrich & Rosati, PC, San Diego, California.

 

EXPERTS

 

The consolidated financial statements of Monster Digital, Inc., as of December 31, 2017 and 2016, and for the years then ended, have been incorporated by reference herein and in the registration statement, which includes an explanatory paragraph relating to the Company’s ability to continue as a going concern, in reliance upon the report of CohnReznick LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

 

Mayer Hoffman McCann P.C., our independent registered public accounting firm, has audited our balance sheets as of December 31, 2017 and 2016, and the related statements of operations and comprehensive loss, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2017, as set forth in their report, which report expresses an unqualified opinion and includes an explanatory paragraph relating to our ability to continue as a going concern. We have incorporated by reference the financial statements in this registration statement in reliance on the report of Mayer Hoffman McCann P.C. given on their authority as experts in accounting and auditing.

 

WHERE YOU CAN FIND ADDITIONAL INFORMATION

 

We file annual, quarterly and other reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, including any amendments to those reports, and other information we file with or furnish to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act can also be accessed free of charge at our website at http://www.innovatebiopharma.com. Such information is made available on our website as soon as reasonably practicable after we electronically file it with or furnish it to the SEC. Information contained on our website is not part of this prospectus supplement.

 

INCORPORATION OF DOCUMENTS BY REFERENCE

 

The SEC allows us to “incorporate by reference” into this prospectus supplement the information we file with the SEC, which means we may disclose important information to you by referring you to other documents we file separately with the SEC. The information we incorporate by reference is considered a part of this prospectus supplement. We hereby incorporate by reference the following documents:

 

  · Innovate’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed on March 14, 2018, as amended on June 29, 2018;
     
  · Innovate’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed on May 15, 2018; and

 

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  · Innovate’s Current Reports on Form 8-K filed on January 5, January 11, February 2 (as amended on March 29, 2018, and April 18, 2018), February 22, February 23, March 14, April 20, May 15, June 18, and June 29, 2018.

 

Any information in the foregoing documents will automatically be deemed to be modified or superseded to the extent that information in this prospectus supplement modifies or replaces such information. We also incorporate by reference any future filings (other than information furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that are related to such items) made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until we file a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold. Information in such future filings shall be deemed to update and supplement the information provided in this prospectus supplement, and any statements in such future filings will automatically be deemed to modify and supersede any information in any document we previously filed with the SEC that is incorporated or deemed to be incorporated herein by reference to the extent that the statements in the later filed document modify or replace such earlier statements.

 

You may obtain from us copies of the documents incorporated by reference in this prospectus supplement, at no cost, by requesting them in writing or by telephone at:

 

Innovate Biopharmaceuticals, Inc.

8480 Honeycutt Road, Suite 120

Raleigh, NC 27615

(919) 275-1933

  

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