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Capital Structure
 12 Months Ended
Dec. 31, 2024
Capital Structure [Abstract]  
Capital Structure

7. Capital Structure

 

Common Stock

 

As of December 31, 2024 and 2023, the Company is authorized to issue 200,000,000 shares of common stock with a par value of $0.00001 per share. As of December 31, 2024 and December 31, 2023, the Company had 199,110(1) and 5,147(1) shares of common stock issued and outstanding, respectively. Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate in the future.

  

Preferred Stock

 

In October 2021, the Company amended its Certificate of Incorporation and revised the number of preferred stock shares authorized for issuance to 10,000,000 shares at a par value of $0.00001. As of December 31, 2024 and December 31, 2023, there were no shares of preferred stock issued and outstanding.

 

Reverse Stock Split

 

On June 25, 2024, the Company’s stockholders voted to authorize the Company’s Board of Directors to effect a reverse stock split of the outstanding shares of common stock within a range of 1-for-5 to 1-for-100. On June 25, 2024, the Company’s Board of Directors determined to effect the reverse stock split of the common stock at a 1-for-100 ratio, which reverse split became effective in the market on July 5, 2024.

 

On January 30, 2025, the Company’s stockholders voted to authorize the Company’s Board of Directors to effect a reverse stock split of the outstanding shares of common stock within a range of 1-for-5 to 1-for-150. On January 30, 2025, the Company’s Board of Directors determined to effect the reverse stock split of the common stock at a 1-for-150 ratio, which reverse split became effective in the market on February 18, 2025.

 

The Company’s primary reasons for effecting the reverse stock splits was to increase the per share price of our common stock to meet Nasdaq’s minimum bid price requirement for continued listing on Nasdaq.

 

Common Stock Offerings

 

On December 30, 2024, the Company entered into a securities purchase agreement pursuant to which the Company agreed to sell and issue, in a registered direct offering, 44,333(2) shares of its common stock, par value $0.00001 per share at a purchase price of $90(2) per share and 55,667(2) pre-funded warrants to purchase shares of Common Stock, at a purchase price of $89.985(2) per Pre-Funded Warrant. The Pre-Funded Warrants are classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date concluding the purchase price approximated the fair value. The offering closed on December 31, 2024. The Company received net proceeds of approximately $8.1 million from the Offering, after deducting the estimated offering expenses payable by the Company, including the placement agent fees.

 

On December 20, 2024, the Company entered into a securities purchase agreement for the sale and issuance of (i) 20,507(2) units at a public offering price per Unit of $241.50(2) with each Unit consisting of one share of common stock, par value $0.00001 per share, one Series A warrant to purchase one share of Common Stock at an exercise price of $301.875(2) per share and one Series B warrant to purchase one share of Common Stock at an exercise price of $301.875(2) and (ii) 62,309(2) pre-funded units at a public offering price of $241.485(2) per Pre-Funded Unit, with each Pre-Funded Unit consisting of one pre-funded warrant exercisable for one share of Common Stock at an exercise price of $0.015(2) per share, one Series A Warrant and one Series B Warrant. The Pre-Funded Warrants are classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date concluding the purchase price approximated the fair value. The offering closed on December 23, 2024. The net proceeds to the Company from the Offering were approximately $18.2 million, after deducting placement agent’s fees and the payment of other estimated offering expenses associated with the offering that are payable by the Company.

(2) All information has been retroactively adjusted to reflect the 1-for-150 reverse stock split effected on February 18, 2025. See Note 7, Capital Structure for details.

On April 23, 2024, the Company entered into an underwritten Agreement with Aegis Capital Corp. (“Aegis”), pursuant to which Aegis acted as the Company’s underwriter on a firm commitment basis in connection with the sale by the Company of an aggregate of 3,333(1) shares of common stock in a public offering, which included: (i) 1,320(1) shares of common stock, and (ii) pre-funded warrants to purchase 2,013(1) shares of common stock. The Pre-Funded Warrants had a nominal exercise price of $0.15(1). Each share of common stock was sold at an offering price of $1,500(1), and each Pre-Funded Warrant was sold at an offering price of $1,499.85(1). The Pre-Funded Warrants are classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date concluding the purchase price approximated the fair value. The Company determined the fair value of the Series A and Series B warrants using the Monte Carlo pricing model and treated the valuation as a liability in consideration of the variable number of the issuer’s equity shares in the warrant agreements. The offering closed on April 25, 2024. On May 3 2024, the Company closed on the sale of an additional 136(1) shares of common stock, upon exercise by the underwriter of the over-allotment option. The Company received net proceeds of approximately $4.6 million, after deducting the estimated offering expenses payable by the Company, including the placement agent fees.

 

On December 8, 2023, the Company entered into a Placement Agent Agreement with Aegis Capital Corp. (“Aegis”), pursuant to which Aegis acted as the Company’s placement agent, on a reasonable best efforts basis, in connection with the sale by the Company of an aggregate of 2,222(1) shares of common stock in a public offering, which included: (i) 765(1)  shares of common stock, and (ii) pre-funded warrants to purchase 1,458(1)  shares of common stock. The Pre-Funded Warrants had a nominal exercise price of $0.15(1). Each share of common stock was sold at an offering price of $2,250(1), and each Pre-Funded Warrant was sold at an offering price of $2,249.85(1). The Pre-Funded Warrants are classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date concluding the purchase price approximated the fair value. The offering closed on December 12, 2023. The Company received net proceeds of approximately $4.5 million, after deducting the estimated offering expenses payable by the Company, including the placement agent fees.

 

At the Market Equity Financing 

 

On May 31, 2023, the Company entered into an ATM Sales Agreement with Virtu Americas LLC (the “ATM Sales Agreement”), under which the Company may, from time to time, sell shares of the Company’s common stock at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The ATM Sales Agreement and related prospectus is limited to sales of up to an aggregate maximum $8.8 million of shares of the Company’s common stock. The Company pays Virtu Americas LLC up to 3.0% of the gross proceeds as a commission. As of December 31, 2024, a total of 4,524(1) shares of common stock were sold through Virtu Americas LLC under the ATM Sales Agreement. As of December 31, 2024, the Company has received net proceeds of $8,597,957 after payment of commission fees of $175,468 and other related expenses of $60,465.

 

Private Placement Offering

 

On November 12, 2024, the Company entered into a Securities Purchase Agreement (“SPA”) with certain investors pursuant to which we sold, in a private placement, senior notes with an aggregate principal amount of $4,375,000 (the “Notes”), and received proceeds before expenses of $3,500,000. The Notes matured on February 12, 2025, with 20% interest rate. As consideration for entering into the SPA, we issued a total of 2,701(1) shares of common stock of the Company to the Purchasers on November 13, 2024. The common stock and the Notes were recorded at the relative fair values in accordance with ASC 470-20-25-2. The placement agent fee and other offering expenses were allocated based on the aforementioned fair values as a reduction to the carrying amount of the debt and a reduction of the equity in accordance with ASC 505-10. The amortization of the debt discount and issuance costs was recorded in interest income (expense) on the consolidated statement of operations. As of December 31, 2024, the Notes were paid in full.

(1)All information has been retroactively adjusted to reflect the 1-for-100 reverse stock split effected on July 3, 2024 and the 1-for-150 reverse stock split effected on February 18, 2025. See Note 7, Capital Structure for details.

Common Stock Warrants

 

As a part of the securities purchase agreement on December 20, 2024, the following warrants were issued, all of which contain standard anti-dilution protections in the event of subsequent rights offerings, stock splits, stock dividends or other extraordinary dividends, or other similar changes in the Company’s common stock or capital structure, and none of which have any participating rights for any losses(2): 

 

Securities into which warrants are convertible  Warrants
outstanding		   Exercise
Price		   Expiration
Date		  Fair
value		 
Series A   82,816   $301.88   January 2030  $5,268,691 
Series B   82,816   $301.88   July 2027   17,075,456 
Total   165,632           $22,344,147 

 

The Company used the following assumptions:

 

   Series A
Warrants		   Series B Warrants 
Fair value of underlying securities  $0.4689   $0.4689 
Expected volatility   159.8%   159.8%
Expected term (in years)   5.0    5.0 
Risk-free interest rate   4.28%   4.28%

 

The Company subsequently remeasures the fair value of the Warrants each reporting period as long as the Warrants remains classified as a liability with changes in the fair value reported under other income (expense) on the consolidated statements of operations.

 

The following warrants were outstanding as of December 31, 2024, all of which contain standard anti-dilution protections in the event of subsequent rights offerings, stock splits, stock dividends or other extraordinary dividends, or other similar changes in the Company’s common stock or capital structure, and none of which have any participating rights for any losses:

 

Securities into which warrants are convertible  Warrants
outstanding		   Exercise
Price		   Expiration
Date		  Fair
value		 
Common stock (Initial Public Offering)(1)   9   $40,650   October 2026  $170,397 
Common stock (Private Placement)(1)   426   $140,625   April 2027   6,071,114 
Common stock (Series A)(2)   277,778   $90   January 2030   6,581,789 
Common stock (Series B)(2)   82,816   $301.88   July 2027   21,122,138 
Total   361,029           $33,945,438 

 

The Company accounts for warrants in accordance with ASC 480, Distinguishing Liabilities from Equity, depending on the specific terms of the warrant agreement. The Company determined the fair value of the Initial Public Offering and Private Placement warrants using the Black-Scholes pricing model and treated the valuation as equity instruments in consideration of the cashless settlement provisions in the warrant agreements. The warrants are not marked-to-market each reporting period, and thus there is no impact to earnings. Any future exercises of the warrants will be recorded as cash received and recorded in cash, with a corresponding increase to common stock and additional paid-in capital in stockholders’ equity.

 

The Company used the following assumptions:

 

   Initial
Public
Offering
Warrants		   Private
Placement Warrants		 
Fair value of underlying securities  $2.88   $1.37 
Expected volatility   51.0%   45.0%
Expected term (in years)   5.0    5.0 
Risk-free interest rate   1.13%   2.92%
(1) All information has been retroactively adjusted to reflect the 1-for-100 reverse stock split effected on July 3, 2024 and the 1-for-150 reverse stock split effected on February 18, 2025. See Note 7, Capital Structure for details.
(2)All information has been retroactively adjusted to reflect the 1-for-150 reverse stock split effected on February 18, 2025. See Note 7, Capital Structure for details.

The Company accounts for warrants in accordance with ASC 480, Distinguishing Liabilities from Equity, depending on the specific terms of the warrant agreement. In accordance with ASC 470-20, Debt, the Company allocated the proceeds of the deal based on the relative fair values for the Series A and Series B warrants. The Company determined the fair value of the warrants using the Monte Carlo pricing model and treated the valuation as a liability in consideration of the variable number of the issuer’s equity shares in the warrant agreements.

 

The Company used the following assumptions:

 

   Series A
Warrants		   Series B
Warrants		 
Fair value of underlying securities  $0.85   $0.85 
Expected volatility   161.78%   161.78%
Expected term (in years)   5.0    5.0 
Risk-free interest rate   4.29%   4.29%

 

The following warrants were outstanding as of December 31, 2023, all of which contain standard anti-dilution protections in the event of subsequent rights offerings, stock splits, stock dividends or other extraordinary dividends, or other similar changes in the Company’s common stock or capital structure, and none of which have any participating rights for any losses(1):

 

Securities into which warrants are convertible  Warrants
outstanding		   Exercise
Price		   Expiration
Date		  Fair
value		 
Common stock (Initial Public Offering)   9   $140,625   October 2026  $170,397 
Common stock (Private Placement)   473   $40,650   April 2027   6,745,681 
Total   482           $6,916,078