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WARRANTS
 9 Months Ended
Sep. 30, 2023
WARRANTS [Abstract]  
WARRANTS
13)
WARRANTS


On March 9, 2022, in connection with a private placement of equity (the “March 2022 Private Placement”), the Company issued pre-funded warrants to purchase approximately 68,000 shares of common stock (the “Pre-Funded Warrants”) and warrants to purchase approximately 343,000 shares of common stock (the “Common Warrants”).



On July 12, 2022, the investor exercised its 68,000 Pre-Funded Warrants at an exercise price of $0.10 per share for an aggregate exercise price of approximately $7,000, in cash.  The Company reclassified approximately $0.7 million of the fair value of the exercised warrants as of the exercise date from warrant liabilities to equity.  Subsequent to the exercise, no Pre-Funded Warrants remained outstanding.



The Common Warrants have an exercise price of $38.20 per share, are currently exercisable, expire five-and-one-half years from the date of issuance and are subject to customary adjustments. The Common Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99% immediately after exercise thereof, subject to increase to 9.99% at the option of the holder.



The Common Warrants and Pre-Funded Warrants were accounted for as liabilities under ASC 815-40, as these warrants provide for a cashless settlement provision that does not meet the requirements of the indexation guidance under ASC 815-40.  These warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the statement of operations.  (See Note 7 for more information related to changes in fair value.)



The fair values of the Common Warrants and the Pre-Funded Warrants at the issuance date totaled $12.6 million in the aggregate, which was $0.6 million more than the subscription amount.  The excess $0.6 million represents an inducement to the investor to enter into the transaction and was recorded in warrant liabilities expense in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2022.



The Company incurred fees of approximately $1.0 million related to the March 2022 Private Placement, which were allocated to the fair value of the Common Warrants and the Pre-Funded Warrants and recorded in other expense, net on the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2022.



In connection with the closing of the July 2023 Financing on July 14, 2023, the Company issued the Note Warrants to purchase an aggregate of approximately 6.1 million shares of common stock. The Note Warrants purchased by the investors contain a provision pursuant to which such Note Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99%, 9.99% or 19.99% immediately after exercise thereof, subject to certain increases not in excess of either 9.99% or 19.99% at the option of such holder. (See Note 5 for more information related to the Note Warrants.)



As of September 30, 2023, the Company has the following warrants outstanding that were issued in connection with transactions discussed above as well as a private placement with other investors from November 2022:


  
Warrants
Outstanding
(in thousands)
    
Exercise
Price
  
Date
Exerciseable
  
Expiration
Date
  
Classification
Common Warrants     343     $
 38.20   September 9, 2022   September 9, 2027   Liability
November 2022 Warrants
     4,370     $
 3.28   June 2, 2023   June 2, 2028   Equity
Note Warrants
     6,094
     $
 2.61
   July 14, 2023
   July 14, 2028
   Equity
      10,807                    


As of September 30, 2023, the weighted average remaining contractual life of the warrants outstanding was 4.72 years and the weighted average exercise price was $4.01.