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Stockholders' (Deficit) Equity
 6 Months Ended
Jun. 30, 2024
Stockholders' (Deficit) Equity  
Stockholders' (Deficit) Equity

(7) Stockholders’ (Deficit) Equity

(a) Overview

The Company’s Amended and Restated Certificate of Incorporation was adopted on January 31, 2020, in conjunction with the closing of the Company’s initial public offering (the “IPO”) and amended on June 15, 2023 to increase the authorized number of shares. Currently, there are two classes of stock authorized which are designated, respectively, common stock and preferred stock. The total number of shares which the Company is authorized to issue is 72,000,000, each with a par value of $0.0001 per share. Of these shares, 70,000,000 is designated as common stock and 2,000,000 is preferred stock.

(b) Common Stock

Dividends

Subject to the rights of holders of all classes of Company stock outstanding having rights that are senior to or equivalent to holders of common stock, the holders of the common stock are entitled to receive dividends when and as declared by the Board.

Liquidation

Subject to the rights of holders of all classes of stock outstanding having rights that are senior to or equivalent to holders of common stock as to liquidation, upon the liquidation, dissolution or winding up of the Company, the assets of the Company will be distributed to the holders of common stock.

Voting

The holders of common stock are entitled to one vote for each share of common stock held. There is no cumulative voting.

(c) Preferred Stock

Preferred stock may be issued from time to time by the Board in one or more series. There was no preferred stock issued or outstanding as of June 30, 2024 or December 31, 2023.

(d) IPO Warrants

In conjunction with the closing of the Company’s Initial Public Offering (“IPO”), the Company granted its underwriters 100,000 warrants to purchase shares of Company common stock (“IPO Warrants”) at an exercise price of $7.50 per share, which was 125% of the IPO price. The IPO Warrants have a five-year term and were exercisable as of January 29, 2021 and have been classified by the Company as a component of stockholders’ equity. As of June 30, 2024 and December 31, 2023, 2,400 of the IPO Warrants were outstanding. No IPO Warrants were exercised during the three or six months ended June 30, 2024 or 2023.

(e) November 2023 Equity Offering and Warrant Issuance

On October 31, 2023, the Company entered into an underwritten offering with a Canaccord Genuity LLC whereby the Company sold (i) 1,250,000 shares of common stock and (ii) warrants (“Canaccord Warrants”) to purchase an aggregate of 1,250,000 shares of common stock at an exercise price of $9.00 per share. The warrants are exercisable immediately on the date of issuance and will expire five years after the date of issuance. The Company received $6.83 million in net cash proceeds after deducting underwriter discount and fees, as well as other third-party costs. The Canaccord Warrants are liability classified as they contain certain cash settlement adjustment features that are outside of the Company’s control or not deemed to be indexed to the Company’s stock.

The following is a roll-forward of the Common Stock Warrant Liability from December 31, 2023 to June 30, 2024:

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Warrant liability at December 31, 2023

    

13,680,000

Exercise of 60,000 warrants – January 2, 2024

 

(684,000)

Change in fair value of warrant liabilities

 

(6,698,692)

Warrant liability at March 31, 2024

 

6,297,308

Change in fair value of warrant liabilities

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(4,062,308)

Warrant liability at June 30, 2024

 

2,235,000

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(f) Warrant Summary

As of June 30, 2024, the Company had the following common stock warrants outstanding:

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Outstanding

    

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Outstanding

    

Exercise

    

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December 31,

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Exercised or

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June 30,

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price per

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Expiration

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Classification

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2023

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Granted

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Expired

​

2024

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share

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date

IPO Warrants

 

Equity

 

2,400

 

—

 

—

 

2,400

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$

7.50

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January 29, 2026

Canaccord Warrants

 

Liability

 

1,200,000

 

—

 

(60,000)

 

1,140,000

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$

9.00

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November 2, 2028

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(g) March 15th Registered Direct Offering (“March RDO Round 1”)

On March 15, 2024, the Company entered into a Securities Purchase Agreement with an institutional investor. Pursuant to the terms of the purchase agreement, the Company agreed to issue and sell an aggregate of 114,911 shares of Common Stock at $8.92 per share for aggregate gross proceeds of $1,025,000. Net of offering costs, proceeds from this offering were $925,000.

(h) March 21st Registered Direct Offering (“March RDO Round 2”)

On March 21, 2024, the Company entered into a Securities Purchase Agreement with an institutional investor. Pursuant to the terms of the purchase agreement, the Company agreed to issue and sell an aggregate of 316,455 shares of Common Stock at $9.48 per share for aggregate gross proceeds of $3,000,000. Net of offering costs, proceeds from this offering were $2,950,000.

(i) ELOC Purchase Agreement

As described in Note 3, on April 25, 2024, the Company entered into an ELOC Purchase Agreement with an ELOC Purchaser, whereby the Company may offer and sell, from time to time at its sole discretion, and whereby the ELOC Purchaser has committed to purchase, up to 2,051,428 shares of shares of the Company’s common stock. The term of the agreement runs until the expiration of the Company’s active S-3 Registration Statement, if not earlier terminated or exhausted. Due to certain pricing and settlement provisions, the ELOC Purchase Agreement qualifies as a standby equity purchase agreement and includes an embedded put option and embedded forward option. The Company will therefore account for the ELOC Purchase Agreement as a derivative measured at fair value, with changes in the fair value recognized in the statements of operations within other financing costs. The Company initially recognized a derivative liability of $1.7 million related to the purchased put option at inception of the ELOC Purchase Agreement. The Company will expense the difference between the discounted purchase price of the settled forward and the fair value of shares on the date of settlement as a noncash financing issuance cost. The Company recognized $0.3 million of noncash financing costs during the three and six months ended June 30, 2024 related to the discounted purchase price of the settled forward and the underlying fair value of the shares issued.

Upon execution of the ELOC Purchase Agreement, the Company agreed to issue to the ELOC Purchaser 33,937 shares of Common Stock as commitment shares (the “Commitment Shares”). The fair value of the Commitment Shares was $0.5 million, which was expensed within other financing costs in the statements of operations during the three and six month periods ended June 30, 2024. The Company also incurred issuance costs of $50,000, consisting of legal costs incurred in connection with the ELOC Purchase Agreement, which were expensed within other financing costs in the statements of operations during the three and six month periods ended June 30, 2024. The ELOC Purchaser has agreed that during the term of the Purchase Agreement, neither it nor any of its affiliates will engage in any short sales or hedging transactions involving the Company’s common stock.

In addition to the commitment shares referenced above, a total of 700,000 shares of the Company’s common stock were issued under the ELOC Purchase Agreement during the three months ended June 30, 2024, for net proceeds of $4.2 million.

Under ELOC the Purchase Agreement, on any business day (the “Purchase Date”), if the Company’s stock price is greater than or equal to $5.00 per share, the Company may direct the ELOC Purchaser to purchase common stock. The ELOC Purchaser’s committed obligation under any single Fixed Purchase shall not exceed the lower of 25,000 shares of Common Stock or $250,000 (“Fixed Purchases”).

In addition, the Company may also direct the ELOC Purchaser, on any trading day in which the Company has submitted a Fixed Purchase notice for the maximum amount allowed for such Fixed Purchase, to purchase an additional amount of the Company’s common stock (a “VWAP Purchase”). The ELOC Purchaser’s committed obligation under any single VWAP Purchase shall not exceed a number of shares of Common Stock equal to the lesser of (i) 300% of the number of Shares directed by the Company to be purchased by the Investor pursuant to the corresponding Fixed Purchase Notice and (ii) 30% of the trading volume in the Company’s Common Stock on the NYSE during the applicable VWAP Purchase Period on the applicable VWAP Purchase Date (“VWAP Purchase Maximum Amount”).

The Company may also direct the ELOC Purchaser, on any trading day for which a VWAP Purchase has been completed and all of the shares have been placed, to purchase an additional amount of the Company’s common stock (an “Additional VWAP Purchase”). The ELOC Purchaser’s committed obligation under any single Additional VWAP Purchase shall be the lesser of (i) 300% of the number of Shares directed by the Company to be purchased by the Investor pursuant to the corresponding Fixed Purchase Notice and (ii) a number of Shares equal to (A) the Additional VWAP Purchase Share Percentage multiplied by (B) the trading volume of shares of Common Stock traded during the applicable Additional VWAP Purchase Period on the applicable Additional VWAP Purchase Date for such Additional VWAP Purchase (“Additional VWAP Purchase Maximum Amount”) and collectively the (“Maximum Amounts”). The applicable pricing structure for each purchase type is outlined below:

The purchase price per share for Fixed Purchases (“Fixed Purchase Price”) equals 95% of the lesser of:

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●the daily volume weighted average price of the Company’s Common Stock on the NYSE for the five (5) Trading Days immediately preceding the applicable Fixed Purchase Date for such Fixed Purchase; and
●the Closing Sale Price of a share of Common Stock on the applicable Fixed Purchase Date for such Fixed Purchase during the full Trading Day on the NYSE on such applicable Purchase Date.

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The purchase price per share for VWAP Purchases (“VWAP Purchase Price”) equals 95% of the lesser of:

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●the Closing Sale Price of the Common Stock on the applicable VWAP Purchase Date; and
●the VWAP during the applicable VWAP Purchase Period.

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The purchase price per share for Additional VWAP Purchases (“Additional VWAP Purchase Price”) equals 95% of the lesser of:

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●the VWAP for the applicable Additional VWAP Purchase Period during the applicable Additional VWAP Purchase Date for such Additional VWAP Purchase; and
●the Closing Sale Price of the Common Stock on such applicable Additional VWAP Purchase Date for such Additional VWAP Purchase Period.

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The following is a roll-forward of the ELOC derivative liability from date of execution to June 30, 2024:

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Fair value at April 25, 2024

    

1,697,500

Settlements and changes in fair value of ELOC derivative liability

 

(1,192,500)

Fair value at June 30, 2024

 

505,000

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