XML 21 R11.htm IDEA: XBRL DOCUMENT v3.25.1
STOCKHOLDERS’ EQUITY
 3 Months Ended
Mar. 31, 2025
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 4 - STOCKHOLDERS’ EQUITY

 

Warrant Exercise and Issuance

 

On February 6, 2024, the Company entered into agreements with certain holders of its existing warrants exercisable for an aggregate of 3,351,580 shares of its Common Stock (collectively, the “Existing Warrants”), to exercise their warrants at a reduced exercise price of $2.33 per share, in exchange for the issuance of new warrants (the “New Warrants”) as described below (the “Warrant Exercise and Issuance”). The aggregate gross proceeds from the exercise of the Existing Warrants and the payment of the New Warrants, as described below, was approximately $8.1 million, before deducting cash issuance costs in the amount of $595,364. The reduction of the exercise price of the Existing Warrants and the issuance of the New Warrants was structured as an at-market transaction under Nasdaq rules. Of the 3,351,580 shares of Common Stock underlying the Existing Warrants, 1,201,580 shares issuable to Auctus Fund, LLC (“Auctus”) were held in abeyance as of December 31, 2024, due to Auctus’ maximum beneficial ownership limitation (the “Abeyance Shares”). On March 20, 2025, the Company issued 63,525 of these shares, reducing the remaining Abeyance Shares to 1,138,055. As of March 31, 2025, the Company had issued an aggregate of 2,213,525 shares of Common Stock. Such Abeyance Shares have been fully paid for and are issuable upon notice from Auctus to the Company.

 

In consideration for the immediate exercise of the Existing Warrants for cash and the payment of $0.125 per share underlying the New Warrants, the exercising holders received the New Warrants to purchase shares of Common Stock in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The New Warrants will be exercisable for a period of five years into an aggregate of 2,513,686 shares of Common Stock at an exercise price of $2.43 per share. The securities offered in the private placement have not been registered under the Securities Act or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. As part of the transaction, the Company agreed to file a resale registration statement with the SEC to register the resale of the shares of Common Stock underlying the New Warrants issued in the private placement. Such resale registration statement was filed and was declared effective by the SEC on April 18, 2024. In connection with the transaction described above, the Company entered into a financial advisory services agreement, dated February 5, 2024, with Roth Capital Partners, LLC (“Roth”), pursuant to which the Company has paid Roth a cash fee of approximately $528,000 for its services, in addition to reimbursement for certain expense. During the three months ended March 31, 2024, the Company incurred an aggregate of $595,364 of cash issuance costs related to the Warrant Exercise and Issuance.

 

Prior to the Warrant Exercise and Issuance, the Existing Warrants were classified as derivative liabilities. Additionally, the Company analyzed the form of the New Warrants and determined that they should be classified as derivative liabilities in accordance with ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity. Under the New Warrants, the Company does not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the New Warrants and not result in a change of control of the Company. As a result, such New Warrants do not meet the criteria for equity treatment. Additionally, certain New Warrants contain adjustments to the settlement amount based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815-40 and, accordingly, such New Warrants are not considered indexed to the Company’s own stock and are not eligible for an exception from derivative accounting. See Note 6 – Fair Value Measurement for details regarding the valuation of warrants accounted for as derivative liabilities.

 

Warrants

 

See Note 6 – Fair Value of Financial Instruments for details regarding the valuation of warrants accounted for as derivative liabilities.

 

A summary of the Company’s warrant activity and related information follows:

 

           Weighted 
       Weighted   Average 
       Average   Remaining 
   Number of   Exercise   Life 
   Warrants   Price   In Years 
Outstanding, January 1, 2025   3,951,634   $5.22      
Expired   (250)   60.00      
Outstanding, March 31, 2025   3,951,384   $5.21    3.05 
                
Exercisable, March 31, 2025   3,951,384   $5.21    3.05 

 

 

Stock Options

 

On February 14, 2025, the Company granted options to purchase an aggregate 2,152,908 shares of the Company’s Common Stock at an exercise price of $2.46 per share to employees, the Company’s board of directors and a member of the Company’s Scientific Advisory Board. The options had an aggregate grant date fair value of $4,044,250 and vest as follows: (i) options to purchase an aggregate 323,459 shares of common stock vest monthly over one year, and (ii) options to purchase an aggregate of 1,829,449 shares of common stock vest to the extent of 50% immediately with the remainder vesting quarterly over two years commencing one year from the date of grant. The Company will recognize the grant date fair value of the options proportionate to the vesting period.

 

In applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:

  

   For the Three Months Ended 
   March 31, 
   2025   2024 
Risk free interest rate  4.31 - 4.40%   4.14 - 4.30% 
Expected term (years)  2.77 - 5.38   2.77 - 5.27 
Expected volatility  98.65 - 99.10%   101 - 102% 
Expected dividends  0.00%   0.00% 

 

Options granted during the three months ended March 31, 2025 and 2024 had a weighted average grant date fair value per share of $1.88 and $1.11 per share, respectively.

 

A summary of the stock option activity during the three months ended March 31, 2025 is presented below:

 

           Weighted     
       Weighted   Average     
       Average   Remaining     
   Number of   Exercise   Life   Intrinsic 
   Options   Price   In Years   Value 
Outstanding, January 1, 2025   3,263,467   $2.63           
Granted   2,152,908    2.46           
Exercised   (29,249)   1.45           
Forfeited   (149,153)   2.23           
Outstanding, March 31, 2025   5,237,973   $2.58    8.3   $566,088 
                     
Exercisable, March 31, 2025   3,442,595   $2.79    7.6   $392,584 

 

Stock-Based Compensation Expense

 

The following table presents information related to stock-based compensation expense:

 

   For the Three Months Ended   Unrecognized at  

Weighted Average Remaining

Amortization

 
   March 31,   March 31,   Period 
   2025   2024   2025   (Years) 
General and administrative  $2,009,126   $2,028,374   $2,713,002    2.09 
Total  $2,009,126   $2,028,374   $2,713,002    2.09 

 

 

The following table presents stock-based compensation by award type:

 

   2025   2024 
   For the Three Months Ended 
   March 31, 
   2025   2024 
Options  $2,009,126   $1,043,336 
RSUs   -    985,038 
Total  $2,009,126   $2,028,374 

 

ATM Sales

 

During February 2025, the Company sold 492,087 shares of its common stock under the 2024 ATM program with a weighted-average gross price of approximately $2.20 per share and raised $1,083,915 of gross proceeds. During the three months ended March 31, 2025, the total commissions and related legal and accounting fees incurred were $33,608 and the Company received net proceeds of $1,050,307. During the three months ended March 31, 2025, the Company reclassified previously capitalized deferred offering costs of $148,697 to additional paid-in capital.

 

Common Stock Issuances

 

During the three months ended March 31, 2025, the Company issued 63,525 shares of common stock to Auctus Fund, LLC in partial satisfaction of shares held by abeyance.

 

During the three months ended March 31, 2025, the Company issued 29,249 shares of common stock related to the exercise of an option at an exercise price of $1.45 per share, which resulted in gross cash proceeds to the Company of $42,411.