Zosano Pharma Corp. (NASDAQ: ZSAN) could face legal proceedings if a law firm investigating the company’s past succeeds in finding faults with its dealings.
Shareholder rights attorneys at Lundin Law PC have announced that they are probing Zosano Pharma Corp (NASDAQ:ZSAN) in connection with potential violation of securities laws. The investigations could lead to a class action lawsuit being brought up against the company.
However, at the moment, the law firm said that no class has been certified and it seems there is no guarantee that the investigations will unearth faults committed by Zosano Pharma Corp (NASDAQ:ZSAN).
What is the investigation about?
Lundin Law’s investigations concern with potential violation of Sections 10(b) and 20(a) of Securities Exchange Act of 1934. In particular, the investigations have something to do with whether Zosano made misleading statements regarding its January 2015 IPO.
You can remember that Zosano offered more than 6.5 million shares at a price of $11 apiece during the IPO.
Equity fundraiser – Zosano Pharma Corp. (NASDAQ: ZSAN)
Lundin Law is announcing investigation of Zosano Pharma Corp. (NASDAQ: ZSAN) at a time when the company is seeking up to up $14.4 million in secondary equity offering. The company recently said that it had entered into an equity purchase agreement with a group of institutional investors and certain insiders to sell millions of units consisting of common shares and two types of warrants to purchase common shares.
The warrants are for purchase of a total of 9.6 million common shares of Zosano. Each unit has been priced at $1.57 and initial gross proceeds from the offering are expected to be $7.5 million. However, if the warrants are fully exercised, the gross proceeds could swell up to $14.4 million.
Zosano Pharma Corp. (NASDAQ: ZSAN) intends to use the funds from the equity offering to finance its M207 program with the balance being challenged to general corporate purposes.
Zosano had cash balance of $6.56 million at the end of the last quarter, offset by debt of $15.3 million.