Warrants

12 Months Ended

Dec. 31, 2024

Warrants and Rights Outstanding [Abstract]

In accordance with ASC 815, the warrants classified as liabilities are recorded at fair value at the issuance date, with subsequent changes in the fair value recognized in the consolidated statements of operations and

comprehensive loss at the end of each reporting period. Refer to Note 4 for changes in the fair value recognized during the periods reported.

As disclosed in Note 4, in March 2024, the Company entered into the March Subscription Agreement with GKCC, an entity controlled by a member of the Company’s board of directors, for purposes of the March Offering. Each Pre-Funded Warrant issued and sold in the March Offering is exercisable at an exercise price equal to $0.01 per share, subject to certain adjustments and limitations as provided under the terms of the Pre-Funded Warrants.

Upon issuance, the fair value of the Pre-Funded Warrants was $6.6 million. The Company recorded the $0.6 million difference between the proceeds and the grant date fair value as a loss on issuance of warrants in the statements of operations and comprehensive loss during the three months ended March 31, 2024. The fair value of the Pre-Funded Warrants was measured using the Black-Scholes option pricing model as of the grant date. For the year ended December 31, 2024, the Company recognized a gain of $1.3 million in fair value remeasurement of the Pre-Funded Warrants.

As disclosed in Notes 4 and 7, in July 2024, the Company closed its Public Offering consisting of (i) the July Shares, (ii) the July Pre-Funded Warrants, and (iii) the July Common Warrants. Each July Pre-Funded Warrant issued and sold in the Public Offering is exercisable at an exercise price equal to $0.01 per share, subject to certain adjustments and limitations as provided under the terms of the July Pre-Funded Warrants. Each July Common Warrant is exercisable at an exercise price equal to $5.00 per share, subject to certain adjustments and limitations as provided under the terms of the July Common Warrants.

Upon issuance, the fair value of the July Pre-Funded Warrants and July Common Warrants was $6.8 million and $6.5 million, respectively. The Company recorded the $2.9 million difference between the proceeds and the grant date fair value as a loss on the issuance of warrants in the statements of operations and comprehensive loss during the three months ended September 30, 2024. The fair value of the July Pre-Funded Warrants and July Common Warrants was measured using the Black-Scholes option pricing model as of the grant date. For the year ended December 31, 2024, the Company recognized a loss of $2.4 million in fair value remeasurement of the July Pre-Funded Warrants. For the year ended December 31, 2024, the Company recognized a loss of $2.8 million in fair value remeasurement of the July Common Warrants.

Following receipt of Stockholder Approval in November 2024, the Company remeasured the July Common Warrants held by that shareholder at fair value and recognized the loss from change in fair value on the consolidated financial statements during the year ended December 31, 2024. As a result of obtaining Stockholder Approval, the Common Warrants held by that shareholder met the equity classification requirements under ASC 815. During the quarter ended December 31, 2024, the Company reclassified the July Common Warrants held by the stockholder from a liability to equity. The Company will re-assess the liability classification for the remaining July Common Warrants at each period end.

The following table summarizes the issuances of warrants by the Company throughout 2024:

Number of Warrants Issued

Date of Issuance

Expiration Date

Pre-Funded Warrants(1)

1,032,702

March 2024

—

July Pre-Funded Warrants(1)

1,800,000

July 2024

—

July Common Warrants

2,300,000

July 2024

July 2029

Total Warrants Issued

5,132,702

(1) Pre-funded warrants have been purchased and have an exercise price of $.01 per share. These warrants do not have an expiration date.

The following table summarizes warrant activity regarding the Pre-Funded Warrants and Common Warrants outstanding at December 31, 2024:


	Warrants	Weighted Average Exercise Price		Weighted Average Life (years)
Outstanding at December 31, 2023	148,764	$	54.19	5.5
Issued	5,132,702	2.34
Exercised	(200,000)	0.01
Outstanding at December 31, 2024	5,081,466	$	3.85	4.5