Common Stock

The Company has authorized 300,000,000 shares of common stock, par value $0.001 per share. As of December 31, 2016 and 2015, there were 43,058,827 and 39,833,023 shares of common stock issued and outstanding, respectively. As a result of the Acquisition in 2014, the equity structure of Pieris GmbH was retroactively adjusted using the exchange ratio established pursuant to the Acquisition Agreement to reflect the number of shares of the Company issued in the Acquisition.

Each share of the Company’s common stock is entitled to one vote and all shares rank equally as to voting and other matters.

Dividends may be declared and paid on the common stock from funds legally available therefor, if, as and when determined by the Board of Directors.

Preferred Stock

The Company has authorized 10,000,000 shares of preferred stock, par value $0.001 per share. The Company has 4,963 and zero shares of preferred stock issued and outstanding during the years ended December 31, 2016 and 2015, respectively. Shares of preferred stock may be issued in one or more series at such time or times and for such consideration as the Board of Directors may determine.

Each of the 4,963 shares of preferred stock are convertible into one share of the Company’s common stock. The stockholders do not have the right to convert any portion of the preferred shares to the extent that they would beneficially own 9.99% of the number of shares of the Company´s common stock outstanding immediately after giving effect of such conversion. The preferred shares do not have any voting rights. The preferred shares are entitled to receive dividends on a pari passu basis with the Company´s common stock, when, and if declared. In any liquidation or dissolution of the Company, the Preferred Shares rank senior to the Company’s common stock in the distribution of assets, to the extent legally available for distribution.

Public Offering

In July 2015, the Company closed a public offering of an aggregate of 9,090,909 shares of the Company´s common stock at a purchase price of $2.75 per share. All shares of common stock were offered by the Company. On July 24, 2015, the underwriters exercised their over-allotment option to purchase 1,211,827 additional shares of the Company’s common stock at the public offering price of $2.75, the sale of which closed on July 28, 2015.

Gross proceeds raised by the Company in the offering, including the exercise of the over-allotment option, were $28.3 million and net of equity issuance costs are $25.8 million. The Company intends to use the net proceeds from the offering to fund research and development, including preclinical and clinical research and development of its drug candidates, working capital and general corporate purposes.

Private Placement

In June 2016, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) for a private placement of the Company’s securities with a select group of institutional investors (the “2016 PIPE”). The 2016 PIPE sale transaction, by the Company, consisted of 8,188,804 units at a price of $2.015 per unit for gross proceeds, to the Company, of approximately $16.5 million. After deducting for placement agent fees and offering expenses, the aggregate net proceeds from the private placement was approximately $15.3 million.

Each unit consisted of (i) one share of the Company’s Common Stock or non-voting series A convertible preferred stock (the “Series A Convertible Preferred Stock”) which are convertible into one share of common stock, (ii) one warrant to purchase 0.4 shares of Common Stock at an exercise price of $2.00 per share and (iii) one warrant to purchase 0.2 shares of Common Stock at an exercise price of $3.00 per share. The warrants will be exercisable for a period of five years from the date of issuance. Each share of Series A Convertible Preferred Stock was issued at a price of $2.015 per share, and is convertible into 1,000 shares of common stock, provided the holder and/or its affiliates do not own greater than 9.99% of the total number of Pieris common stock then outstanding. The Series A Convertible Preferred Stock has no registration or voting rights. In event of a true liquidation or winding down of the business, holders of Series A Convertible Preferred Stock will be paid prior to the holders of Common Stock. In connection with the 2016 PIPE, the Company issued 3,225,804 shares of Common Stock and 4,963 shares of Series A Convertible Preferred Stock to the 2016 PIPE investors.

The Company expects to use the proceeds from the 2016 PIPE towards further development and pre-clinical and clinical work of the Company´s proprietary Anticalin product portfolio, including the lead candidates as well as the development of other programs and product candidates, and general corporate purposes.

As a result of the Public Offering, the Consulting Shares (for more information on the Consulting Shares refer to Note 10 Consulting Shares) and the 2016 PIPE the Company has 43,058,827 shares of common stock and 4,963 shares of Series A Convertible Preferred Stock issued and outstanding at December 31, 2016.