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Stockholders' Equity/(Deficit)
 3 Months Ended
Mar. 31, 2025
Stockholders' Equity Note [Abstract]  
Stockholders' Equity/(Deficit)

NOTE 13 – STOCKHOLDERS’ EQUITY/(DEFICIT)

 

Stock Purchase Agreement

 

On December 23, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) pursuant to which the Company issued and sold an aggregate of 7,377,912 shares of Common Stock to certain accredited investors at a purchase price of $0.55 per share. The aggregate purchase price for the shares, before deduction of the Company’s expenses associated with the transaction, was approximately $4.1 million. The SPA further provides the investors with the right, but not the obligation, to purchase an additional 7,220,141 shares of Common Stock at a purchase price of $1.10 per share at a subsequent closing to be held on April 30, 2025, or such later date as may be agreed by the Company and the purchasers who purchased at least a majority of the initial shares under the SPA, provided that the subsequent closing date shall not be later than July 31, 2025. Subsequent to March 31, 2025 and through the date of this filing, 1,452,302 additional shares under the SPA had been purchased with a price of $1.10. Further, on April 28, 2025, the Company entered into an amendment to the SPA to modify the subsequent closing date to be held on May 16, 2025, or such later date as may be agreed by the Company and the purchasers who purchased at least a majority of the initial shares under the SPA, provided that the subsequent closing date shall not be later than July 31, 2025.

 

On December 23, 2024, the Company recorded the written call option as well as a capital contribution from the investors under the SPA within APIC at a fair value of approximately $1.5 million. The written call option does not require subsequent remeasurement each reporting period. The capital contribution was recorded for the excess of proceeds received compared to the fair value of Common Stock and written call option.

 

Share-Based Compensation

 

The Company recorded share-based compensation expense related to our options and restricted stock units of $45,742 and $1.5 million, for the three months ended March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025, the Company issued 36,500 shares to one consultant for services provided to the Company.

 

Options

 

On March 27, 2025, we granted options to purchase an aggregate of 7,500 shares of Common Stock to one director, which vested immediately upon being granted. The value of the stock options granted was determined using the Black-Scholes-Merton option-pricing model (“BSM”), which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the life of the option. Expected volatilities are based on the historical volatility of the Company’s stock as well as other companies operating similar businesses. The expected term (in years) is determined using historical data to estimate option exercise patterns. Forfeitures are recognized in compensation expense when they occur. The expected dividend yield is based on the annualized dividend rate over the vesting period. The risk-free interest rate is based on the rate for US Treasury bonds commensurate with the expected term of the granted option.

 

The Company used the following assumptions for the BSM to determine the fair value of the stock options granted during the three months ended March 31, 2025.

 



 

 

 

March 27, 2025

 

Risk free interest rate

 

 

 

 

4.09

%

Expected life (in years)

 

 

 

5

 

Expected volatility

 

 

 

 

119

%

Expected dividend yield

 

 

 

 

0

%

Grant-date fair value

 

 

 

0.36

 

 

Warrants

 

The following table sets forth a summary of changes in warrants outstanding from December 31, 2024 to March 31, 2025:

 

 

 

 

 

 

Weighted-Average

 

 

 

# of Shares

 

 

Exercise Price

 

Balance at December 31, 2024

 

 

10,727,387

 

 

$

2.30

 

Issued

 

 

—

 

 

$

—

 

Exercised

 

 

—

 

 

$

—

 

Cancellation/Expiration

 

 

—

 

 

$

—

 

Balance at March 31, 2025

 

 

10,727,387

 

 

$

2.30

 

 

Refer to Note 10, Fair Value Measurements for changes in fair value during the three months ended March 31, 2025 and 2024.

 

December 2023 Warrants

 

In conjunction with the Purchase Agreement on December 1, 2023, as described above, the Company issued December 2023 Notes in the aggregate amount of $3.75 million and related warrants on December 1, 2023, and December 2023 Notes in the aggregate amount of $2.25 million and related warrants on December 28, 2023. Under the terms of the first tranche of December 2023 Warrants, as amended, the holders had the right to purchase an aggregate of up to 1,411,765 shares of our Common Stock at an exercise price of $1.23 per share. Under the terms of the second tranche of December 2023 Warrants, as amended, the holders had the right to purchase an aggregate of up to 211,565 shares of our Common Stock at an exercise price of $2.05 per share. The December 2023 Warrants are exercisable at any time during the three years after issuance, ending on the close of business on December 1, 2026.

 

March 2023 Warrants

 

In conjunction with the Purchase Agreement on March 6, 2023, as described above, the Company issued the March 2023 Warrants to purchase up to 3,703,704 shares of our Common Stock. The March 2023 Warrants have an exercise price of $1.10 per share and are exercisable at any time during the three years after issuance, ending on the close of business on March 6, 2026.

 

2022 Warrants

 

On June 10, 2022, we sold an aggregate of 4,939,515 shares of our Common Stock and the 2022 Warrants to holders to purchase up to 4,939,515 shares of our Common Stock (“2022 Warrants”). The net proceeds received from sale, after offering expenses of $1.8 million, were $14.7 million. The shares of Common Stock and warrants were sold in units, with each unit consisting of one share of Common Stock and one warrant to purchase one share of Common Stock at an exercise price of $3.35 (the “2022 Warrant Price”) per share of Common Stock. Each unit was sold at a negotiated price of $3.35 per unit. The 2022 Warrants are exercisable at any time beginning on December 10, 2022, and ending on the close of business on June 10, 2027.