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Note 11 - Common Stock Warrants | 9 Months Ended
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Sep. 30, 2024
Notes to Financial Statements |
Stockholders' Equity Note, Warrants or Rights Disclosure [Text Block] | NOTE 11. COMMON STOCK WARRANTS See Notes 2, “Summary of Significant Accounting Policies”; 3, “Fair Value Measurements”; 9, “Financing Activities”; and 12, “Stockholders’ Equity” for certain defined terms below and additional discussion of financing activities and related accounting policies and fair value estimates. July 2024 Pre-Funded Warrants In July 2024, in conjunction with the 2024 Public Offering, the Company issued 2,041,814 pre-funded warrants (in lieu of shares of common stock (see additional discussion in Note 9, “Financing Activities”). The July 2024 Pre-Funded Warrants were classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, were immediately exercisable, did not embody an obligation for us to repurchase our shares, and permitted the holders to receive a fixed number of shares of common stock upon exercise. As of September 30, 2024, all of the July 2024 Pre-Funded Warrants had been exercised, resulting in the Company issuing 2,041,814 shares of common stock. In connection with such exercises, the Company received net proceeds of approximately $20 thousand. July 2024 Warrants In July 2024, in conjunction with the 2024 Public Offering, the Company issued new common stock purchase warrants (collectively the “July 2024 Warrants”).
| ● | July 2024 Series F-1 Warrants exercisable for 3,537,212 shares of common stock for an initial exercise price of $1.10 per share through July 30, 2029 (“July 2024 Series F-1 Warrants”); and
| ● | July 2024 Series F-2 Warrants exercisable for 3,537,212 shares of common stock for an initial exercise price of $1.10 per share through January 29, 2025 (“July 2024 Series F-2 Warrants”); and
| ● | July 2024 Series F-3 Warrants exercisable for 3,537,212 shares of common stock for an initial exercise price of $1.10 per share through July 29, 2025 (“July 2024 Series F-3 Warrants”).
The July 2024 Warrants down round feature adjustment was triggered on September 27, 2024, resulting in a reduced exercise price of $0.66. As a result of the reduced exercise price, a deemed dividend of $1.0 million was recognized in accordance with a Black Scholes valuation model. See Note 3, “Fair Value Measurements”, subheading “Black Scholes Valuation Models and Assumptions”. June 2024 Warrants In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company issued new common stock purchase warrants (the “June 2024 Warrants”) exercisable for 90,381 shares of common stock for $2.57 per share through December 17, 2029. March 2024 Warrant In March 2024, the Company executed the First Amendment and Subsidiary Guarantee Consent as part of the 2024 Subsidiary Guarantee Termination with holders of the Secured Convertible Notes (see Note 10, “Convertible Notes”) in order to close the DERMAdoctor Divestiture (see additional discussion in Note 9, “Financing Activities” and Note 18, “Divestiture and Discontinued Operations”). In exchange for the consent of each holder, the option, at the holder’s election, to receive upon the closing of the DERMAdoctor sale either, a new common stock warrant (the “March 2024 Warrant”), or a new unsecured convertible note (see additional discussion in Note 18, “Divestiture and Discontinued Operations”). One holder elected the option to receive a March 2024 Warrant exercisable for 1,000,000 shares of common stock (28,572 shares post-Reverse Stock Split) for $0.14 per share ($4.90 per share post-Reverse Stock Split). The March 2024 Warrant was initially classified as a liability from the date of issuance until Company stockholder approval on May 28, 2024, at which time it was reclassified to equity. December 2023 Warrants In December 2023, in conjunction with the 2023 Warrant Reprice Transaction, the Company issued new common stock purchase warrants (the “December 2023 Warrants”) exercisable for 2,528,848 shares of common stock (72,256 shares post-Reverse Stock Split) for $0.25 per share ($8.75 per share post-Reverse Stock Split) through June 21, 2029. The December 2023 Warrants were initially classified as liabilities from the date of issuance until Company stockholder approval was received on May 28, 2024, at which time it was reclassified to equity. May 2023 Warrants In May 2023, in conjunction with the 2023 Private Placement, the Company issued the following new common stock purchase warrants (collectively, the “May 2023 Warrants”):
| ● | May 2023 Series B-1 Warrants exercisable for 2,538,464 shares of common stock (72,528 shares post-Reverse Stock Split) for an initial exercise price of $1.30 per share ($45.50 per share post-Reverse Stock Split) through June 9, 2028 (“May 2023 B-1 Warrants”); and
| ● | May 2023 Series B-2 Warrants exercisable for 2,538,464 shares of common stock (72,528 shares post-Reverse Stock Split) for an initial exercise price of $1.30 per share ($45.50 per share post-Reverse Stock Split) through June 9, 2025 (“May 2023 B-2 Warrants”).
In December 2023, in conjunction with the 2023 Warrant Reprice Transaction, the Company amended certain May 2023 Warrants to reduce their exercise prices to $0.25 ($8.75 post-Reverse Stock Split). Immediately after amendment, the following May 2023 Warrants were exercised (while any unexercised May 2023 Warrants maintained an exercise price of $1.30 ($45.50 post-Reverse Stock Split)):
| ● | May 2023 B-1 Warrants exercisable for 634,616 shares of common stock (18,132 shares of post-Reverse Stock Split); and
| ● | May 2023 B-2 Warrants exercisable for 1,894,232 shares of common stock (54,120 shares post-Reverse Stock Split).
In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain May 2023 Warrants to reduce their exercise prices to $2.50. Immediately after amendment, the following May 2023 Warrants were exercised (while any unexercised May 2023 Warrants maintained an exercise price of $8.75):
| ● | May 2023 B-1 Warrants exercisable for 54,396 shares of common stock; and
| ● | May 2023 B-2 Warrants exercisable for 18,408 shares of common stock.
For the amendments in December 2023 and June 2024, the Company recognized a loss on modification of common stock warrants related to the May 2023 Warrants of $170 thousand and $47 thousand, respectively. November 2022 Warrants In November 2022, in conjunction with the 2022 Private Placement, the Company issued the following common stock purchase warrants (collectively, the “November 2022 Warrants”):
| ● | November 2022 Series A-1 Warrants exercisable for 515,876 shares of common stock (14,741 shares post-Reverse Stock Split) for an initial exercise price of $6.30 per share ($220.50 per share post-Reverse Stock Split) through November 20, 2028 (“November 2022 A-1 Warrants”); and
| ● | November 2022 Series A-2 Warrants exercisable for 515,876 shares of common stock (14,741 shares post-Reverse Stock Split) for an initial exercise price of $6.30 per share ($220.50 per share post-Reverse Stock Split) through May 20, 2024 (“November 2022 A-2 Warrants”).
In May 2023, in conjunction with the 2023 Private Placement, the Company amended certain November 2022 Warrants to reduce their exercise prices from $6.30 ($220.50 post-Reverse Stock Split) to $1.50 ($52.50 post-Reverse Stock Split) as follows:
| ● | November 2022 A-1 Warrants exercisable for 436,510 shares of common stock (12,473 shares post-Reverse Stock Split); and
| ● | November 2022 A-2 Warrants exercisable for 436,510 shares of common stock (12,473 shares post-Reverse Stock Split).
In May 2024, all November 2022 Series A-2 Warrants for 14,741 shares of common stock remained unexercised and expired. In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain November 2022 Warrants to reduce their exercise prices from $52.50 to $2.50 as follows:
| ● | November 2022 A-1 Warrants exercisable for 12,473 shares of common stock.
For the amendments in May 2023 and June 2024, the Company recognized a loss on modification of common stock warrants related to the November 2022 Warrants of $74 thousand and $16 thousand, respectively. September 2022 Warrants In September 2022, in conjunction with the warrant reprice transaction (the “2022 Warrant Reprice Transaction”), the Company issued new common stock purchase warrants (the “September 2022 Warrants”) exercisable for 327,860 shares of common stock (9,371 shares post-Reverse Stock Split) for an initial exercise price of $6.30 per share ($220.50 per share post-Reverse Stock Split) through September 11, 2028. In May 2023, in conjunction with the 2023 Private Placement, the Company amended certain September 2022 Warrants exercisable for 238,574 shares of common stock (6,819 shares post-Reverse Stock Split) to reduce their exercise prices from $6.30 ($220.50 post-Reverse Stock Split) to $1.50 ($52.50 post-Reverse Stock Split). In June 2024, in conjunction with the 2024 Warrant Reprice Transaction, the Company amended certain September 2022 Warrants exercisable for 5,104 shares of common stock to reduce their exercise prices from $52.50 to $2.50. For the amendments in May 2023 and June 2024, the Company recognized a loss on modification of common stock warrants related to the September 2022 Warrants of $28 thousand and $6 thousand, respectively. November 2021 Warrants In November 2021, in conjunction with a private placement transaction, the Company issued new common stock purchase warrants (the “November 2021 Warrants”) exercisable for 1,071,434 shares of common stock (30,616 shares post-Reverse Stock Split) for an initial exercise price of $18.55 per share ($649.25 per share post-Reverse Stock Split) through March 9, 2023. In September 2022, in conjunction with the 2022 Warrant Reprice Transaction, the Company amended all November 2021 Warrants to reduce their exercise prices from $18.55 ($649.25 post-Reverse Stock Split) to $6.30 ($220.50 post-Reverse Stock Split) and extend their termination date to September 11, 2028. Immediately after amendment, November 2021 Warrants were exercised for 7,654 shares of common stock. In May 2023, in conjunction with the 2023 Private Placement, the Company amended certain November 2021 Warrants exercisable for 535,716 shares of common stock (15,308 shares post-Reverse Stock Split) to reduce their exercise prices from $6.30 ($220.50 post-Reverse Stock Split) to $1.50 ($52.50 post-Reverse Stock Split). For the amendments in September 2022 and May 2023, the Company recognized a loss on modification of common stock warrants related to the November 2021 Warrants of $1.5 million and $0.1 million, respectively. July 2020 Warrants In July 2020, in conjunction with a private placement transaction, the Company issued new common stock purchase warrants (the “July 2020 Warrants”) exercisable for 197,105 shares of common stock (5,635 shares post-Reverse Stock Split) for an initial exercise price of $57.75 per share ($2,021.25 per share post-Reverse Stock Split) through January 22, 2026. In September 2022, in conjunction with the 2022 Warrant Reprice Transaction, the Company amended certain July 2020 Warrants exercisable for 137,145 shares of common stock (3,921 shares post-Reverse Stock Split) to reduce their exercise prices from $57.75 ($2,021.25 post-Reverse Stock Split) to $6.30 ($220.50 post-Reverse Stock Split). Immediately after amendment, July 2020 Warrants were exercised for 60,000 shares of common stock (1,715 shares post-Reverse Stock Split). In May 2023, in conjunction with the 2023 Private Placement, the Company amended certain July 2020 Warrants exercisable for 77,145 shares of common stock (2,206 shares post-Reverse Stock Split) to reduce their exercise prices from $6.30 ($220.50 post-Reverse Stock Split) to $1.50 ($52.50 post-Reverse Stock Split). For the amendments in September 2022 and May 2023, the Company recognized a loss on modification of common stock warrants related to the July 2020 Warrants of $0.4 million and $9 thousand, respectively. Summary of Common Stock Warrant Activity and Outstanding Activity related to common stock warrants outstanding at September 30, 2024 and 2023 were as follows:
|  | Warrants |  |  | Weighted- Average Exercise Price |
Outstanding at December 31, 2022 |  |  | 65,886 |  |  | $ | 269.54 |
Warrants granted |  |  | 145,056 |  |  | $ | 45.50 |
Warrants exercised |  |  | — |  |  | $ | — |
Warrants expired |  |  | — |  |  | $ | — |
Outstanding at September 30, 2023 |  |  | 210,942 |  |  | $ | 76.23 |
Outstanding at December 31, 2023 |  |  | 210,946 |  |  | $ | 50.96 |
Warrants granted |  |  | 10,730,589 |  |  | $ | 0.69 |
Pre-funded Warrants granted |  |  | 2,041,814 |  |  | $ | 0.01 |
Warrants exercised |  |  | (90,381 | ) |  | $ | 2.50 |
Pre-funded Warrants exercised |  |  | (2,041,814 | ) |  | $ | 0.01 |
Warrants expired |  |  | (14,879 | ) |  | $ | 88.87 |
Outstanding at September 30, 2024 |  |  | 10,836,275 |  |  | $ | 1.41 |
Common stock warrants outstanding as of September 30, 2024 were as follows:
Series |  | Exercise Price* |  | Expiration Date |  | Warrants* |
July 2020 Warrants |  | $ | 2,021.25 |  | January 22, 2026 |  |  | 1,714 |
July 2020 Warrants |  | $ | 52.50 |  | January 22, 2026 |  |  | 2,206 |
TLF Warrants |  | $ | 822.96 |  | January 15, 2026 |  |  | 13 |
November 2021 Warrants |  | $ | 220.50 |  | September 11, 2028 |  |  | 7,654 |
November 2021 Warrants |  | $ | 52.50 |  | September 11, 2028 |  |  | 15,308 |
September 2022 Warrants |  | $ | 220.50 |  | September 11, 2028 |  |  | 2,552 |
September 2022 Warrants |  | $ | 52.50 |  | September 11, 2028 |  |  | 1,715 |
November 2022 A-1 Warrants |  | $ | 220.50 |  | November 20, 2028 |  |  | 2,268 |
December 2023 Warrants |  | $ | 8.75 |  | June 21, 2029 |  |  | 72,256 |
March 2024 Warrant |  | $ | 4.90 |  | March 24, 2029 |  |  | 28,572 |
June 2024 Warrants |  | $ | 2.57 |  | December 17, 2029 |  |  | 90,381 |
July 2024 F-1 Warrants |  | $ | 0.66 |  | July 30, 2029 |  |  | 3,537,212 |
July 2024 F-2 Warrants |  | $ | 0.66 |  | January 29, 2025 |  |  | 3,537,212 |
July 2024 F-3 Warrants |  | $ | 0.66 |  | July 29, 2025 |  |  | 3,537,212 |
Outstanding at September 30, 2024 |  |  |  |  |  |  |  | 10,836,275 |
* | After giving retroactive effect to the 1-for-35 Reverse Stock Split that became effective May 30, 2024.
Summary of Common Stock Warrant Liabilities The following is a reconciliation of the beginning and ending balances for warrant liabilities measured at fair value on a recurring basis (in thousands). See additional information per Note 3, “Fair Value Measurements”, subheading “Black Scholes Valuation Models and Assumptions.”
Warrant liabilities as of December 31, 2023 |  | $ | 334 |
Decrease in fair value of December 2023 Warrant liability during period |  |  | (122 | )
Fair value of March 2024 Warrant upon issuance |  |  | 92 |
Increase in fair value of March 2024 Warrant liability during period |  |  | 8 |
Reclassification of December 2023 Warrant liability to equity during period |  |  | (212 | )
Reclassification of March 2024 Warrant liability to equity during period |  |  | (100 | )
Warrant liabilities as of September 30, 2024 |  | $ | — |

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