1. Description of Business Cempra, Inc. (the Company or Cempra) is the successor entity of Cempra Pharmaceuticals, Inc. which was incorporated on November 18, 2005 and commenced operations in January 2006. Cempra is located in Chapel Hill, North Carolina, and is a pharmaceutical company focused on developing differentiated anti-infectives for acute care and community settings to meet critical medical needs in the treatment of infectious diseases. The Company expects to continue to incur losses and require additional financial resources to advance its products to either commercial stage or liquidity events. There can be no assurance that the Company will be able to obtain additional debt or equity financing or generate revenues from collaborative partners, on terms acceptable to the Company, on a timely basis or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Companys business, results of operations and financial condition. In August 2017, the Company entered into an Agreement and Plan of Merger and Reorganization (Merger Agreement), with Melinta Therapeutics Inc. (Melinta). Under the terms of the Merger Agreement, shares of Melinta stock will be exchanged for Company shares whereby the current shareholders of Melinta will own approximately 52% of the Companys stock after completion of the merger. The exchange ratio is subject to adjustment based upon the following; (1) the Companys net cash balance at the closing of the transaction, (2) incremental debt incurred by Melinta before the close of the transaction, and (3) amount of transaction-related expenses incurred by Melinta. Consummation of the transaction is subject to certain closing conditions, including, among other things, approval by the stockholders of the Company of the transactions contemplated by the Merger Agreement and related matters. The Merger Agreement contains certain termination rights for both the Company and Melinta, and further provides that,