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Stockholders' Equity
 6 Months Ended
Jun. 30, 2024
Stockholders' Equity [Abstract]  
STOCKHOLDERS’ EQUITY

6. STOCKHOLDERS’ EQUITY

 

Pursuant to the Certificate of Incorporation of 60 Degrees Pharmaceuticals, Inc., the Company’s authorized shares consist of (a) 150,000,000 shares of common stock, par value $0.0001 per share and (b) 1,000,000 shares of preferred stock, par value $0.0001 per share, of which 80,965 have been designated as Series A Non-Voting Convertible Preferred Stock (“Series A Preferred Stock”). As of June 30, 2024, 1,017,198 shares of common stock and 78,803 shares of Series A Preferred Stock are issued and outstanding.

 

Following stockholder approval in July 2024, on July 30, 2024, the Company filed an Amendment to the Certificate of Incorporation with the Secretary of State of Delaware to effect the 1:12 Reverse Stock Split of the issued and outstanding shares of the Company’s common stock, which was effective as of August 12, 2024. The Reverse Stock Split did not change the authorized number of shares of common stock or preferred stock, or the number of issued and outstanding shares of Series A Preferred Stock. All references to numbers of shares of the Company’s common stock and per share information have been retroactively adjusted, as appropriate, to reflect the Reverse Stock Split. See Note 12 – Subsequent Events for further details.

 

(a) Common Stock

 

In January and March 2023, the Board of Directors, with the consent of Tyrone Miller and Geoffrey S. Dow, respectively, approved resolutions to cancel an aggregate of 16,009 shares of common stock issued to Tyrone Miller and 104,910 shares of common stock issued to the Geoffrey S. Dow Revocable Trust to allow the Company to issue new shares to vendors in exchange for valuable services to be provided for use in the Company’s operations. The cancelled shares represented approximately 61% of the issued and outstanding shares as of December 31, 2022.

 

In January and March 2023, the Company issued a total of 120,253 shares of common stock to certain vendors as payment for services rendered or to be provided to the Company.

 

On January 29, 2024, the Company, entered into an Underwriting Agreement with WallachBeth Capital LLC (the “Underwriting Agreement”), relating to the Company’s public offering (the “January 2024 Offering”) of 438,409 units (the “Units”) at an offering price of $4.62 per Unit and 83,259 pre-funded units (the “Pre-Funded Units”) at an offering price of $4.50 per Pre-Funded Unit. Each Unit consisted of one share of common stock and one warrant exercisable for one share of common stock (the “Warrants”). Each Warrant has an exercise price of $5.082 per share (110% of the offering price per Unit), is exercisable immediately upon issuance and expires five years from the date of issuance. Each Pre-Funded Unit consists of one pre-funded warrant exercisable for one share of common stock (the “Pre-Funded Warrant”) and one warrant identical to the Warrants included in the Units. The purchase price of each Pre-Funded Unit was equal to the price per Unit sold to the public in the offering, minus $0.12, and the exercise price of each Pre-Funded Warrant is $0.12 per share. The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full.

 

The Company granted WallachBeth Capital LLC an option, exercisable within 45 days after the closing of the offering, to purchase up to 65,762 shares of the Company’s common stock at a price of $4.62 per share and/or 78,250 Warrants at a price of $0.12 per Warrant and/or 12,489 Pre-Funded Warrants at a price of $4.50 per Pre-Funded Warrant, or any combination of additional shares of common stock, Warrants and/or Pre-Funded Warrants, representing, in the aggregate, up to 15% of the number of Units sold in the offering, 15% of the Warrants underlying the Units and Pre-Funded Units sold in the offering and 15% of the Pre-Funded Warrants underlying the Pre-Funded Units sold in the offering, in all cases less the underwriting discount to cover over-allotments, if any. WallachBeth Capital LLC partially exercised its over-allotment option with respect to 68,182 Warrants on January 31, 2024, and purchased an additional 5 shares of common stock at a purchase price of $4.50 per share and 5 Warrants at a purchase price of $0.12 per Warrant on February 14, 2024.

 

The Company also issued to WallachBeth Capital LLC warrants (the “January 2024 Representative Warrants”) to purchase 31,300 shares of the Company’s common stock, which is equal to 6% of the common stock sold that were part of the Units and the pre-funded warrants sold in the Offering, at an exercise price of $5.082 per share (110% of the offering price per Unit). The January 2024 Representative Warrants may be exercised beginning on January 31, 2024 until January 31, 2029. 

 

The Units and Pre-Funded Units were offered and sold pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-276641), originally filed with the SEC on January 22, 2024 (the “January 2024 Registration Statement”) and the final prospectus filed with the SEC pursuant to Rule 424(b)(4) of the Securities Act of 1933, as amended. The January 2024 Registration Statement was declared effective by the SEC on January 29, 2024. The closing of the January 2024 Offering occurred on January 31, 2024. The net proceeds to the Company from the Offering were approximately $1.9 million, after deducting underwriting discounts and commissions and the payment of other offering expenses payable by the Company.

 

On February 1, 2024, the Company issued 41,630 shares of common stock upon the exercise of 41,630 Pre-Funded Warrants, resulting in proceeds to the Company of $4,995.

 

On April 1, 2024, the Company entered into an Amendment to the Debt Exchange Agreement with Trevally, LLC (“Trevally”), which amends the original agreement with Trevally (executed in January 2023). Pursuant to the Amendment, Trevally agreed to return 10,000 shares of the Company’s common stock, initially issued to Trevally in January 2023 as advance consideration for agreeing to complete the synthesis of research materials for the Company. Trevally returned the previously issued shares for no consideration on April 3, 2024. Trevally delivered the completed research materials to the Company on July 1, 2024.

 

On April 9, 2024, the Company issued 41,629 shares of common stock upon the exercise of 41,629 Pre-Funded Warrants, resulting in proceeds to the Company of $4,995.

 

(b) Common Stock Warrants

 

As of June 30, 2024, the Company accounts for all issued and outstanding warrants to purchase common stock as equity-classified instruments based on the guidance in ASC 480 and ASC 815.

 

On January 31, 2024, the Company executed a Warrant Agent Agreement with Equity Stock Transfer, LLC, acting as warrant agent for the January 2024 Offering (defined above), which sets forth the procedures for registering, transferring and exercising the Warrants and the Pre-Funded Warrants issued in connection with the January 2024 Offering. The Warrants and the Pre-Funded Warrants issued in the January 2024 Offering are accounted for as equity-classified financial instruments.

 

There were no equity-classified warrants issued or outstanding during the three and six months ended June 30, 2023. The following table presents a summary of the activity for the Company’s equity-classified warrants during the three and six months ended June 30, 2024:

 

   Number of
Warrants		   Weighted
Average
Exercise
Price		   Weighted
Average
Remaining
Contractual Life (Years)		 
Total outstanding, December 31, 2023   263,659   $74.00    4.47 
Granted   704,414    4.50    5.00 
Exercised   (41,630)   0.12    Indefinite 
Forfeited   
-
    
-
    
-
 
Expired   
-
    
-
    
-
 
Total outstanding, March 31, 2024   926,443   $24.47    4.67 
Granted   
-
    
-
    
-
 
Exercised   (41,629)   0.12    Indefinite 
Forfeited   
-
    
-
    
-
 
Expired   
-
    
-
    
-
 
Total outstanding, June 30, 2024   884,814   $25.62    4.41 
Total exercisable, June 30, 2024   884,814   $25.62    4.41 

 

During the three months ended June 30, 2024, the Company received aggregate cash proceeds of $4,995 upon the exercise of 41,629 Pre-Funded Warrants with an exercise price of $0.12. During the six months ended June 30, 2024, the Company received aggregate cash proceeds of $9,990 upon the exercise of 83,259 Pre-Funded Warrants with an exercise price of $0.12.

 

The following table summarizes the significant assumptions used in determining the fair value of equity-classified warrants granted during the six months ended June 30, 2024:

 

   January 31,
2024		 
Stock price  $3.36 
Exercise price  $5.08 
Risk-free interest rate   3.91%
Expected volatility   95.00%
Expected term (years)   5.00 
Expected dividend yield   0.00%

 

(c) Series A Preferred Stock

 

The holders of shares of Series A Preferred Stock have the rights, preferences, powers, restrictions and limitations as set forth below.

 

Voting Rights - The holders of shares of Series A Preferred Stock are not entitled to any voting rights.

 

Dividends - From and after the date of issuance of any share of Series A Preferred Stock, cumulative dividends shall accrue, whether or not declared by the Board and whether or not there are funds legally available for the payment of dividends, on a daily basis in arrears at the rate of 6.0% per annum on the sum of the Liquidation Value (as defined below). Accrued dividends shall be paid in cash only when, as and if declared by the Board out of funds legally available therefor or upon a liquidation or redemption of the Series A Preferred Stock. On March 31 of each calendar year, any accrued and unpaid dividends shall accumulate and compound on such date, and are cumulative until paid or converted. Holders of shares of Series A Preferred Stock are entitled to receive accrued and accumulated dividends prior to and in preference to any dividend, distribution, or redemption on shares of Common Stock or any other class of securities that is designated as junior to the Series A Preferred Stock. During the three and six months ended June 30, 2024, dividends in the amount of $117,881 and $235,762, accrued on outstanding shares of Series A Preferred Stock. As of June 30, 2024, cumulative dividends on outstanding shares of Series A Preferred Stock amount to $456,475. To date, the Company has not declared or paid any dividends.

 

Liquidation Rights - In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Preferred Stock then outstanding will share ratably in any distribution of the remaining assets and funds of the Company with all other stockholders as if each share of Series A Preferred Stock had been converted by the Company to Common Stock as described below.

 

Conversion Rights - The Company has the right, in its sole discretion, to convert all or any portion of the outstanding shares of Series A Preferred Stock (including any fraction of a share), plus the aggregate accrued or accumulated and unpaid dividends thereon into a number of shares of Common Stock determined by (i) multiplying the number of shares to be converted by $100 per share, as adjusted for any stock splits, stock dividends, recapitalizations or similar transactions with respect to the Series A Preferred Stock (but unchanged as a result of the Reverse Stock Split impacting the Common Stock on August 12, 2024 – See Note 12) (the “Liquidation Value”), (ii) plus all accrued and accumulated and unpaid dividends on such shares to be converted, and then (ii) dividing the result by the then-effective Conversion Price in effect, provided that such conversion would not result in the holders of shares of Series A Preferred Stock owning more than 19.9% of the outstanding shares of common stock on an as-converted basis. The “Conversion Price” is equal to the lesser of (a) the Liquidation Value, (b) the offering price per share of Common Stock in the Company’s IPO, as adjusted for the 1:12 Reverse Stock Split after August 12, 2024, or $60 per share or (c) the 10-day volume weighted average price per share of Common Stock, as reasonably determined by the Company.