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Stockholders' Equity | 3 Months Ended
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Mar. 31, 2023
Equity [Abstract] |
Stockholders' Equity | STOCKHOLDERS’ EQUITY March 2023 Private Placements On March 28, 2023,the Company entered into a securities purchase agreement with Jay Huang, a member of the Board of Directors, pursuant to which the Company agreed to issue and sell, in a private placement (the “March 28, 2023 Private Placement”), 108,502 shares of the Company’s common stock for a purchase price of $0.5609 per share. On March 30, 2023, the Company entered into a securities purchase agreement with Mei Yun (Gina) Huang, a member of the Board of Directors, pursuant to which the Company agreed to issue and sell, in a private placement (collectively with the March 28, 2023 Private Placement, the “March 2023 Private Placements”), 500,000 shares of the Company’s common stock for a purchase price of $0.5000 per share. Aggregate gross proceeds to the Company in respect of the March 2023 Private Placements were $305 thousand, before deducting estimated offering expenses payable by the Company. Each of the March 2023 Private Placements was priced at-the-market under the Nasdaq rules. February 2023 Private Placement On February 24, 2023, the Company entered into a securities purchase agreement with Mei Yun (Gina) Huang, a member of the Board of Directors, pursuant to which the Company agreed to issue and sell, in a private placement (the “February 2023 Private Placement”), 803,212 shares of the Company’s common stock, for a purchase price of $0.4980 per share. Gross proceeds to the Company in respect of the February 2023 Private Placement were $400 thousand, before deducting estimated offering expenses payable by the Company. The February 2023 Private Placement was priced at fair market value under the Nasdaq rules. January 2023 Sander Electronics Private Placement On January 17, 2023, the Company entered into a securities purchase agreement (the “Sander Purchase Agreement”) with certain purchasers associated with Sander Electronics, Inc., pursuant to which the Company agreed to issue and sell in a private placement (the “Sander Private Placement”) an aggregate of 5,446,252 shares of common stock for a purchase price per share of $0.5008. Consideration for the transaction included exchange of approximately $657 thousand in the aggregate of outstanding amounts on previous short-term bridge financings, including the 2022 Promissory Notes issued to Mr. Huang, as described above in Note 6, “Debt”. Aggregate gross proceeds from the Sander Private Placement were approximately $2.1 million. The Sander Private Placement was priced at-the-market under the Nasdaq rules. Pursuant to the Sander Purchase Agreement, the Company agreed to increase the size of the Board of Directors to eight members and to appoint each of Jay (Chiao Chieh) Huang and Wen-Jeng Chang as a director for a term expiring at the 2023 annual meeting of the Company’s stockholders or his earlier resignation, death or removal in accordance with the Company’s bylaws. January 2023 Transactions with Mei Yun (Gina) Huang On January 5, 2023, the Company entered into a securities purchase agreement with Mei Yun (Gina) Huang, a member of the Board of Directors, pursuant to which the Company agreed to issue and sell, in a private placement, 257,798 shares of the Company’s common stock, for a purchase price of $0.3879 per share. On January 10, 2023, the Company entered into a securities purchase agreement with Ms. Huang, pursuant to which the Company agreed to issue and sell, in a private placement, 325,803 shares of the Company’s common stock for a purchase price of $0.4604 per share. Aggregate gross proceeds to the Company in respect of these private placements to Ms. Huang are $250 thousand, before deducting estimated offering expenses payable by the Company. Each of the private placements to Ms. Huang was priced at fair market value under the Nasdaq rules. On January 17, 2023, the Company and Ms. Huang entered into exchange agreements pursuant to which the Company and Ms. Huang agreed to exchange the approximately $809,000 aggregate outstanding amounts on previous short-term bridge financings, including the 2022 Promissory Notes issued to Ms. Huang, as described above in Note 6, “Debt”, for an aggregate of 1,436,959 shares of common stock at a price per share of $0.5630. The exchanges were priced at fair market value under the Nasdaq rules. June 2022 Private Placement In June 2022, we completed a private placement (the “June 2022 Private Placement”) with certain institutional investors for the sale of 1,313,462 shares of our common stock at a purchase price of $1.30 per share. We also sold to the same institutional investors (i) pre-funded warrants (the “June 2022 Pre-Funded Warrants”) to purchase 1,378,848 shares of common stock at an exercise price of $0.0001 per share and (ii) warrants (collectively with the June 2022 Pre-Funded Warrants, the “June 2022 Warrants”) to purchase up to an aggregate of 2,692,310 shares of common stock at an exercise price of $1.30 per share. In connection with the June 2022 Private Placement, we paid the placement agent commissions of $252 thousand, plus $35 thousand in expenses, and we also paid legal, accounting and other fees of $47 thousand. Total offering costs of $334 thousand have been presented as a reduction of additional paid-in capital and have been netted within equity in the Condensed Consolidated Balance Sheet as of December 31, 2022. Net proceeds to us from the June 2022 Private Placement were approximately $3.2 million. We determined the exercise price of the June 2022 Pre-Funded Warrants to be nominal and, as such, have considered the 1,378,848 shares underlying them to be outstanding effective June 7, 2022, for purposes of calculating net loss per share. In July 2022, all of the June 2022 Pre-Funded Warrants were exercised. As of March 31, 2023, June 2022 Warrants to purchase an aggregate of 2,692,310 shares of common stock remained outstanding, with an exercise price of $1.30 per share. The exercise of the remaining June 2022 Warrants outstanding could provide us with cash proceeds of up to $3.5 million in the aggregate. December 2021 Private Placement In December 2021, we completed a private placement (the “December 2021 Private Placement”) with certain institutional investors for the sale of 1,193,185 shares of our common stock at a purchase price of $3.52 per share. We also sold to the same institutional investors (i) pre-funded warrants (the “December 2021 Pre-Funded Warrants”) to purchase 85,228 shares of common stock at an exercise price of $0.0001 per share and (ii) warrants (collectively with the December 2021 Pre-Funded Warrants, the “December 2021 Warrants”) to purchase up to an aggregate of 1,278,413 shares of common stock at an exercise price of $3.52 per share. In connection with the December 2021 Private Placement, we paid the placement agent commission of $360 thousand plus $42 thousand in expenses and we also paid legal, accounting and other fees of $97 thousand. Total offering costs of $499 thousand have been presented as a reduction of additional paid-in capital and have been netted within equity in the Consolidated Balance Sheet as of December 31, 2021. Net proceeds from the December 2021 Private Placement were approximately $4.0 million. We determined the exercise price of the December 2021 Pre-Funded Warrants to be nominal and, as such, considered the 85,228 shares underlying them to be outstanding effective December 16, 2021, for purposes of calculating net loss per share. In January 2022, all of the December 2021 Pre-Funded Warrants were exercised. As of March 31, 2023, December 2021 Warrants to purchase an aggregate of 1,278,413 shares remained outstanding, with an exercise price of $3.52 per share. The December 2021 Warrants expire on December 16, 2026. The exercise of the remaining December 2021 Warrants outstanding could provide us with cash proceeds of up to $4.5 million in the aggregate. Preferred Stock On March 29, 2019, we issued $1.7 million aggregate principal amount of subordinated convertible promissory notes (the “Convertible Notes”) to certain investors in a private placement exempt from registration requirements of the Securities Act. The Convertible Notes had a maturity date of December 31, 2021 and bore interest at a rate of 5.0% per annum until June 30, 2019 and at a rate of 10.0% thereafter. Pursuant to the terms of the Convertible Notes, on January 16, 2020, following approval by our stockholders of certain amendments to the Company’s Certificate of Incorporation, the principal amount of all of the Convertible Notes and the accumulated interest thereon at the date of conversion (totaling $1.8 million) were converted at a conversion price of $0.67 per share into an aggregate of 2,709,018 shares of the Company’s Series A Preferred Stock, which is convertible on a one-for-five basis into shares of our common stock. During the year ended December 31, 2020, 111,548 shares of the Series A Preferred Stock were converted into 22,310 shares of common stock. During the year ended December 31, 2021, 1,721,023 shares of Series A Preferred Stock were converted into 344,205 shares of common stock. The Series A Preferred Stock that was converted in 2021 was held by a Schedule 13D ownership group (under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and Rule 13d-5 promulgated thereunder) that includes Fusion Park LLC and 5 Elements Global Fund L.P. (controlled affiliates of James Tu, the Company's former Executive Chairman and Chief Executive Officer), as well as Brilliant Start Enterprise Inc. and Jag International Ltd. (controlled affiliates of Mei Yun (Gina) Huang, a member of the Company's Board of Directors). The Series A Preferred Stock was created by the filing of a Certificate of Designation with the Secretary of State of the State of Delaware on March 29, 2019, which designated 2,000,000 shares of the Company’s preferred stock, par value $0.0001 per share, as Series A Preferred Stock (the “Original Series A Certificate of Designation”). On January 15, 2020 with prior stockholder approval, the Company amended its Certificate of Incorporation to increase the number of authorized shares of preferred stock to 5,000,000. The Original Series A Certificate of Designation was also amended on January 15, 2020, to increase the number of shares of preferred stock designated as Series A Preferred Stock to 3,300,000 (the Original Series A Certificate of Designation, as so amended, the “Series A Certificate of Designation”). Pursuant to the Series A Certificate of Designation, each holder of outstanding shares of Series A Preferred Stock is entitled to vote with holders of outstanding shares of common stock, voting together as a single class, with respect to any and all matters presented to the stockholders of the Company for their action or consideration, except as provided by law. In any such vote, each share of Series A Preferred Stock shall entitle its holder to a number of votes equal to 11.07% of the number of shares of common stock into which such share of Series A Preferred Stock is convertible. The Series A Preferred Stock (a) has a preference upon liquidation equal to $0.67 per share and then participates on an as-converted basis with the common stock with respect to any additional distributions, (b) shall receive any dividends declared and payable on our common stock on an as-converted basis, and (c) is convertible at the option of the holder into shares of our common stock on a one-for-five basis. On March 29, 2019, the Company also filed a Certificate of Elimination with respect to its authorized, but unissued, Series A Participating Preferred Stock, to return such shares to the status of undesignated preferred stock available for designation as Series A Preferred Stock. The purchase agreement related to the Convertible Notes contains customary representations and warranties and provides for resale registration rights with respect to the shares of our common stock issuable upon conversion of the Series A Preferred Stock. January 2020 Equity Offering Issuance of Common Stock and Warrants In January 2020, we completed a registered direct offering for the sale of 688,360 shares of our common stock to certain institutional investors, at a purchase price of $3.37 per share. We also sold, to the same institutional investors, warrants (the “January 2020 Investor Warrants”) to purchase up to 688,360 shares of common stock at an exercise price of $3.37 per share in a concurrent private placement for a purchase price of $0.625 per warrant. In addition, we issued to the placement agent in connection with such registered direct offering and concurrent private placement warrants (the “January 2020 Placement Agent Warrants” and, collectively with the January 2020 Investor Warrants, the “January 2020 Warrants”) to purchase up to 48,185 shares of common stock at an exercise price of $4.99 per share. January 2020 Warrants issued to purchase an aggregate of 229,414 shares remain outstanding at March 31, 2023 with a weighted average exercise price of $3.67 per share. The exercise of January 2020 Warrants could provide us with cash proceeds of up to approximately $0.8 million in the aggregate if all January 2020 Warrants are exercised. During the three months ended March 31, 2023 and March 31, 2022, no January 2020 Warrants were exercised. As of March 31, 2023 and 2022, we had the following outstanding January 2020 Warrants:
| As of March 31, 2023 |  | As of March 31, 2022 |  |  |  |
| Number of Underlying Shares |  | Exercise Price |  | Expiration
Jan. 2020 Investor Warrants | 187,734 |  | 187,734 |  | $3.3700 |  | January 13, 2025
Jan. 2020 Placement Agent Warrants | 41,680 |  | 41,680 |  | $4.9940 |  | January 13, 2025
| 229,414 |  | 229,414 |  |  |  |
Stock-based compensation Stock-based compensation expense is attributable to stock options and restricted stock unit awards. For all stock-based awards, we recognize expense using a straight-line amortization method. The following table summarizes stock-based compensation expense and the impact it had on operations for the periods presented (in thousands):
|  |  | Three months ended March 31,
|  |  |  |  | 2023 |  | 2022
Cost of sales |  |  |  |  | $ | — |  |  | $ | 1 |
Product development |  |  |  |  | 4 |  |  | 6 |
Selling, general, and administrative |  |  |  |  | 22 |  |  | 37 |
Total stock-based compensation |  |  |  |  | $ | 26 |  |  | $ | 44 |
Total unearned stock-based compensation was $144 thousand at March 31, 2023, compared to $285 thousand at March 31, 2022. These costs will be charged to expense and amortized on a straight-line basis in future periods. The weighted average period over which the unearned compensation at March 31, 2023 is expected to be recognized is approximately 2.6 years. Stock options The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model. Estimates utilized in the calculation include the expected life of the option, risk-free interest rate, and expected volatility, and are further detailed below. Note that there were no grants made during the three months ended March 31, 2023.
| Three months ended March 31, |  |  |  |  |  |  |  |
| 2023 |  | 2022 |  |  |  |  |  |  |  |
Fair value of options issued | NA |  | $ | 1.17 |  |  |  |  |  |  |  |  |
Exercise price | NA |  | $ | 1.48 |  |  |  |  |  |  |  |  |
Expected life of options (in years) | NA |  | 6.1 |  |  |  |  |  |  |  |
Risk-free interest rate | NA |  | 1.9 | % |  |  |  |  |  |  |  |
Expected volatility | NA |  | 99.2 | % |  |  |  |  |  |  |  |
Dividend yield | NA |  | 0.0 | % |  |  |  |  |  |  |  |
A summary of option activity under all outstanding stock incentive plans for the three months ended March 31, 2023 is presented as follows:
| Number of Options |  | Weighted Average Exercise Price Per Share |  | Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2022 | 330,808 |  |  | $ | 1.97 |  |  |
Granted | — |  |  | — |  |  |
Canceled/forfeited | (65,903) |  |  | 2.88 |  |  |
Balance at March 31, 2023 | 264,905 |  |  | $ | 1.75 |  |  | 8.0
Vested and expected to vest at March 31, 2023 | 218,307 |  |  | $ | 1.87 |  |  | 7.8
Exercisable at March 31, 2023 | 66,734 |  |  | $ | 3.10 |  |  | 4.6
Restricted stock units A summary of restricted stock unit activity under all outstanding stock incentive plans for the three months ended March 31, 2023 is presented as follows:
| Restricted Stock Units |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Life (in years)
Balance at December 31, 2022 | 11,600 |  |  | $ | 1.59 |  |  |
Granted | — |  |  | — |  |  |
Balance at March 31, 2023 | 11,600 |  |  | $ | 1.59 |  |  | 1.4

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI https://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 + Details
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