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Note 4 - Capital Stock
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Equity [Text Block]

Note 4 - Capital Stock

 

Common Stock

 

The Company’s common stock, par value $0.0001 per share (the “Common Stock”), is listed on the Nasdaq Capital Market (“Nasdaq”), under the ticker symbol “OBLG”. As of September 30, 2024, we had 150,000,000 shares of our Common Stock authorized, with 1,071,545 and 1,071,356 shares issued and outstanding, respectively.

 

On August 23, 2024, the Company effected the Reverse Stock Split. The Company's shares of Common Stock began trading on a split-adjusted basis at the commencement of trading on August 26, 2024. Upon effectiveness, every 40 shares of Common Stock were converted into 1 share of Common Stock. The number of authorized shares and the par value of each share remained unchanged. No fractional shares were issued as a result of the Reverse Split, and any fractional shares that would have otherwise resulted from the Reverse Split were rounded up to the nearest whole share.

 

During the nine months ended September 30, 2023, 8,516 shares of the Company's Common Stock were issued related to the exercise of 8,516 warrants granted at various dates between October 2020 and June 2021. During the three months ended September 30, 2024, 208,933 shares of the Company's Common Stock were issued related to the exercise of 208,933 Common Warrants. Details related to these exercises are below.

 

During the three and nine months ended September 30, 2023, 49,143 and 52,812 shares of the Company's Common Stock were issued related to the conversion of 1,229 and 1,404 shares of Series F Preferred Stock, plus accrued dividends, respectively. During the nine months ended September 30, 2024, 288,968 shares of the Company's Common Stock were issued related to the conversion of 3,033 shares of Series F Preferred Stock, plus accrued dividends. See Note 5 - Preferred Stock for further detail.

 

During the nine months ended September 30, 2023, 4,491 shares of the Company's Common Stock were issued related to stock compensation.  See Note 6 - Stock Based Compensation for further detail.

 

Common Stock activity for the year ended December 31, 2023 and nine months ended September 30, 2024 is presented below.

 

Issued Shares as of December 31, 2022

  208,018 

Issuances from Preferred Stock conversions

  352,624 

Issuances related to warrant exercises

  18,681 

Issuances related to stock compensation

  4,491 

Common shares exchanged for prepaid warrants

  (10,170)

Issued Shares as of December 31, 2023

  573,644 

Issuances from Common Warrant Exercises

  208,933 

Issuances from Preferred Stock conversions

  288,968 

Issued Shares as of September 30, 2024

  1,071,545 

Less Treasury Shares:

  (189)

Outstanding Shares as of September 30, 2024

  1,071,356 

 

 

Common Stock Warrants

 

On March 30, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (the “Investors”), pursuant to which we issued and sold, in a private placement (the “Private Placement”) (i) 6,550 shares of our newly designated Series F Preferred Stock, $0.0001 par value per share (the “Series F Preferred Stock”), (ii) preferred warrants (the “Preferred Warrants”) to acquire 32,750 shares of Series F Preferred Stock, and (iii) common warrants (“Common Warrants” and with the Preferred Warrants the “Investor Warrants”) to acquire up to 95,764 shares of Common Stock. Please refer to Note 5 - Preferred Stock for further discussion on the Series F Preferred Stock and Preferred Warrants.

 

In connection with the Private Placement, pursuant to an engagement letter dated March 30, 2023 (the "Engagement Letter"), between the Company and Dawson James Securities, Inc. (the “Placement Agent”), the Company agreed to (i) pay the Placement Agent a cash fee equal to 8% of the aggregate gross proceeds raised in the Private Placement, and (ii) grant to the Placement Agent warrants (the “Placement Agent Warrants”) to purchase 7,663 shares of Common Stock.

 

On March 31, 2023, the Company issued the Common Warrants and the Placement Agent Warrants to purchase an aggregate of 103,427 shares of the Company’s Common Stock. The Common Warrants and Placement Agent Warrants have a term of 5 years, commencing six months and one day from the date of issuance, and were initially exercisable for $68.40 per share. The exercise price is subject to customary adjustments for stock splits, stock dividends, stock combination, recapitalization, or other similar transactions involving the Common Stock, and subject to price-based adjustment, on a full ratchet basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price for the Common Warrants (subject to certain exceptions). The Common Warrants and Placement Agent Warrants are exercisable for cash, provided that if there is no effective registration statement available permitting the resale of the common shares, they may be exercised on a cashless basis. Exercise of the Common Warrants and Placement Agent Warrants is subject to certain limitations, including a 4.99% beneficial ownership limitation.

 

On October 6, 2023, the Company and the Investors holding a majority of the outstanding shares of the Preferred Stock agreed to waive any and all provisions, terms, covenants and obligations in the Certificate of Designations or Common Warrants to the extent such provisions permit the conversion or exercise of the Preferred Stock and the Common Warrants, respectively, to occur at a price below $11.168 (the "Waiver"). Notwithstanding anything to the contrary in the Certificate of Designations, each of the “Alternate Conversion Price” and the “Floor Price” as set forth in the Certificate of Designations shall in no event be less than $11.168 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events). On September 13, 2024, the Company and the Investors agreed to delete Section 2 of the Waiver, removing the minimum price restriction on the exercise of Common Warrants.

 

During the nine months ended September 30, 2024, 24,104 Common Warrants were issued in accordance with the exercise provisions of the Preferred Warrants. See Note 5 - Preferred Stock for additional detail on the exercises of the Preferred Warrants. These Common Warrants were exercisable at an initial exercise price of $68.40 and have a term of five years.

 

Pursuant to Sections 2(a) and 2(c) of the Common Warrants (the "Make Whole Provision"), as a result of the Reverse Split, the exercise price of the Common Warrants and Placement Agent Warrants were adjusted to $3.41438 per share, and the number of Common Warrant shares that may be purchased upon exercise of the Common Warrants and the Placement Agent Warrants were increased proportionately, so that after the exercise price adjustment the aggregate exercise price payable hereunder for the adjusted number of Common Warrant Shares was the same as the aggregate exercise price in effect immediately prior to the exercise price adjustment. These adjustments resulted in an aggregate of 2,401,047 Common Warrants and 153,470 Placement Agent Warrants remaining outstanding following the Reverse Split. The additional warrants created by the Make Whole Provision resulted in an aggregate deemed dividend of $8,974,000 which will reduce the net income available to common shareholders. Details of the Make Whole Provision transactions are presented below:

 

 

Warrant Tranche

 

Original Warrants Issued

  

Original Exercise Price (1)

  

Warrants Post Reverse Split (2)

  

Exercise Price Post Reverse Split (2)

  

Warrants Post Make Whole Provision (3)

  

Exercise Price Post Make Whole Provision (4)

  

Deemed Dividend

 

Common Warrants issued in 2023

  3,830,417  $1.71   95,764  $68.40   1,918,371  $3.41  $6,739,000 

Common Warrants issued in 2024

  963,745  $1.71   24,104  $68.40   482,676  $3.41  $1,696,000 

Placement Agent Warrants

  306,433  $1.71   7,663  $68.40   153,470  $3.41  $539,000 

Total

  5,100,595       127,531       2,554,517      $8,974,000 
                             

Aggregate Exercise Price

 $8,722,000      $8,722,000      $8,722,000         

 

(1) Original exercise price based on the March 30, 2023 initial exercise price.

(2) Adjusted by the Reverse Split.

(3) Based on the original aggregate exercise price divided by the Make Whole Provision exercise price.

(4) Calculated by dividing (x) the sum of the dollar volume-weighted average price of the Company's Common Stock for each of the five lowest trading days during the sixteen trading days after the Reverse Split by (y) five.

 

During the three months ended September 30, 2024, 208,933 Common Warrants were exercised, at a price of $3.41438 per share, for 208,933 shares of Common Stock. The Company received gross and net proceeds of $713,000 and $671,000, respectively. Subsequent to September 30, 2024, an additional 73,381 Common Warrants were exercised, at a price of $3.41438 per share, for 73,381 shares of Common Stock.  The Company received gross and net proceeds of $251,000 and $231,000, respectively.

 

One of our directors, Jonathan Schechter, is currently a partner at The Special Equities Group ("SEG"), a division of Dawson James Securities, Inc. In March 2023, prior to Mr. Schechter's appointment to our board in May 2023 and pursuant to our Engagement Letter, SEG acted as placement agent in connection with our March 30, 2023 Purchase Agreement. During the three months ended September 30, 2024, pursuant to the terms of the Placement Agent Agreement, we paid SEG a cash fee equal to 8% of the aggregate gross proceeds raised from the exercise of the 208,933 Common Stock Warrants. The fee was $57,000. Mr. Schechter did not receive any of the fee paid.

 

Common Warrants outstanding as of September 30, 2024 are as follows:

 

Issue Date

 

Warrants Outstanding

  

Exercise Price

 

Expiration Date

          

Q2 2021

  19  $2,640.00 

Q4 2024

Q1 2023

  1,872,908  $3.41 

Q3 2028

Q2 2024

  472,676  $3.41 

Q4 2029

   2,345,603      

 

Common Warrant activity for the year ended December 31, 2023 and nine months ended September 30, 2024 is presented below.

 

  

Outstanding and Exercisable

 
  

Number of Warrants

  

Weighted Average Exercise Price

 

Warrants outstanding and exercisable, December 31, 2022

  8,609  $2,653.60 

Granted

  113,597   10.17 

Exercised

  (18,681)  31.18 

Expired

  (72)  2,853.75 

Warrants outstanding and exercisable, December 31, 2023

  103,453   69.03 

Granted

  24,104   68.40 

Make Whole Provision

  2,426,986   3.41 

Exercised

  (208,933)  3.41 

Expired

  (7)  2,400.00 

Warrants outstanding and exercisable, September 30, 2024

  2,345,603  $3.44 

 

Treasury Shares

 

The Company maintains treasury stock for the Common Stock shares bought back by the Company when withholding shares to cover taxes on transactions related to equity awards. There were no treasury stock transactions during the nine months ended September 30, 2024 or the year ended December 31, 2023.