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STOCKHOLDERS’ EQUITY
 12 Months Ended
Dec. 31, 2022
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 18 - STOCKHOLDERS’ EQUITY

 

Registered Direct Offerings

 

On January 14, 2021, the Company consummated a registered direct offering (the “Offering”) of (i) 140,000 shares of common stock (“Shares”), (ii) pre-funded warrants to purchase up to 360,000 shares of Common Stock (the “Pre-Funded Warrants”), issuable to investors whose purchase of shares of Common Stock would otherwise result in such investor, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding Common Stock immediately following the consummation of the Registered Offering (“Pre-Funded Warrants”); and (iii) common stock purchase warrants (“Warrants”) to purchase up to an aggregate of 500,000 shares of Common Stock (the “Warrant Shares”), which are exercisable for a period of five years after issuance at an initial exercise price $65.00 per share, subject to certain adjustments, as provided in the Warrants. The Offering was conducted pursuant to a placement agency agreement, dated January 12, 2021, between the Company and Kingswood Capital Markets, division of Benchmark Investments, Inc., who acted as the exclusive placement agent in connection with the Offering pursuant to a placement agency agreement. The Shares and accompanying Warrants in the Offering were sold at a combined offering price of $61.90 per Share and accompanying Warrant and the Pre-Funded Warrants and accompanying Warrants in the Offering were sold at a combined offering price of $61.70 per Pre-Funded Warrant and accompanying Warrant.

 

The securities in the Offering were issued pursuant to a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 (File No. 333-239419). The placement agency agreement contained customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the placement agent. The placement agent received discounts and commissions of six percent (6%) of the gross cash proceeds received by the Company from the sale of the securities sold in the Offering and certain expenses.

 

The Company received approximately $28,941,000 ($29,013,000 upon full exercise of the prefunded warrants) in net proceeds from the Offering after deducting the discounts, commissions, and other estimated offering expenses payable by the Company. As of December 31, 2021, all pre-funded warrants have been fully exercised. The Company plans to use the net proceeds from the Offering for working capital, product development, order fulfilment and for general corporate purposes.

 

The Company received net proceeds from this offering as follows:

  

Description  Amount 
Net proceeds received:     
    
Proceeds from the sale of 140,000 shares of Common Stock at $61.90 per share  $8,666,000 
Proceeds from the sale of pre-funded warrants to purchase 360,000 shares of Common Stock at $61.70 per share   22,212,000 
Less: Placement agent fees and other expenses of the offering   (1,937,000)
      
Net proceeds of the offering  $28,941,000 

 

In conjunction with this Offering, the Company issued prefunded Common Stock purchase warrants to purchase up to 360,000 shares Common Stock at $61.90 per share ($61.70 prefunded at closing) and Common Stock purchase warrants to purchase up to 500,000 shares of Common Stock at $65.00 per share. The underlying warrant terms provide for net cash settlement outside the control of the Company under certain circumstances in the event of tender offers. As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the consolidated statements of operations as the change in fair value of warrant derivative liabilities. Accordingly, the Company allocated a portion of the net proceeds of this offering to warrant derivative liabilities based on their estimated fair value as follows (See Notes 11 and 17):

 

 

Description  Amount 
     
Warrant derivative liabilities  $21,922,158 
Pre-funded warrant derivative liabilities   378,615 
Total allocation of the net proceeds of the offering to warrant derivative liabilities  $22,300,773 

 

Registered Direct Offerings

 

On February 1, 2021, the Company consummated an registered direct offering (the “Second Offering”) of (i) 162,500 shares of common stock (“February 2021 Shares”), (ii) pre-funded warrants to purchase up to 552,500 shares of Common Stock (the “February 2021 Pre-Funded Warrants”), issuable to investors whose purchase of shares of Common Stock would otherwise result in such investor, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding Common Stock immediately following the consummation of the Registered Offering; and (iii) common stock purchase warrants (“February 2021 Warrants”) to purchase up to an aggregate of 715,000 shares of Common Stock (the “February 2021 Warrant Shares”), which are exercisable for a period of five years after issuance at an initial exercise price $65.00 per share, subject to certain adjustments, as provided in the February 2021 Warrants. The Second Offering was conducted pursuant to a placement agency agreement, dated January 28, 2021, between the Company and Kingswood Capital Markets, division of Benchmark Investments, Inc., who acted as the exclusive placement agent in connection with the Second Offering pursuant to a placement agency agreement. The February 2021 Shares and accompanying February 2021 Warrants in the Second Offering were sold at a combined offering price of $56.00 per February 2021 Share and accompanying February 2021 Warrant and the February 2021 Pre-Funded Warrants and accompanying February 2021 Warrants in the Offering were sold at a combined offering price of $55.80 per February 2021 Pre-Funded Warrant and accompanying February 2021 Warrant.

 

The securities in the Second Offering were issued pursuant to a prospectus supplement to the Company’s effective shelf registration statement on Form S-3 (File No. 333-239419). The placement agency agreement contained customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the placement agent. The placement agent received discounts and commissions of six percent (6%) of the gross cash proceeds received by the Company from the sale of the securities sold in the Second Offering and certain expenses.

 

 

The Company received approximately $37,447,100 ($37,557,600 upon full exercise of the prefunded warrants) in net proceeds from the Second Offering after deducting the discounts, commissions, and other estimated offering expenses payable by the Company. As of December 31, 2021, all pre-funded warrants have been fully exercised. The Company plans to use the net proceeds from the Second Offering for working capital, product development, order fulfilment and for general corporate purposes.

 

The Company received net proceeds from this offering as follows:

 

Description  Amount 
Net proceeds received:     
      
Proceeds from the sale of 162,500 shares of Common Stock at $56.00 per share  $9,100,000 
Proceeds from the sale of pre-funded warrants to purchase 552,500 shares of Common Stock at $55.80 per share   30,829,500 
Less: Placement agent fees and other expenses of the offering   (2,482,400)
      
Net proceeds of the offering  $37,447,100 

 

In conjunction with the Second Offering, the Company issued prefunded Common Stock purchase warrants to purchase up to 552,500 shares of common Stock at $56.00 per share ($55.80 prefunded at closing) and Common Stock purchase warrants to purchase up to 715,000 shares of Common Stock at $65.00 per share. The underlying warrant terms provide for net cash settlement outside the control of the Company under certain circumstances in the event of tender offers. As such, the Company is required to treat these warrants as derivative liabilities which are valued at their estimated fair value at their issuance date and at each reporting date with any subsequent changes reported in the consolidated statements of operations as the change in fair value of warrant derivative liabilities. Accordingly, the Company allocated a portion of the net proceeds of this offering to warrant derivative liabilities based on their estimated fair value as follows (See Notes 11 and 17):

 

Description  Amount 
     
Warrant derivative liabilities  $27,476,352 
Pre-funded warrant derivative liabilities   1,438,934 
Total allocation of the net proceeds of the offering to warrant derivative liabilities  $28,915,286 

 

2022 Issuance of Restricted Common Stock.

 

On January 7, 2022, the board of directors approved the grant of 26,250 shares of common stock to officers of the Company. Such shares will vest over various periods ranging from one to five years on the anniversary of the grant date, provided that each grantee remains an officer or employee on such dates.

 

On various dates in January 2022, the board of directors approved the grant of 9,500 shares of common stock to employees of the Company. Most shares will generally vest in varying amounts over the next two to five years, provided that each grantee remains an employee on such vesting dates.

 

Cancellation of Restricted Stock

 

During the year ended December 31, 2022, the Company cancelled 3,250 shares for various reasons.

 

Preferred Stock Transaction

 

On October 13, 2022, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Preferred Stock Investors”), pursuant to which the Company agreed to issue and sell, in a private placement (the “2022 Offering”), 1,400,000 shares of the Company’s Series A Convertible Redeemable Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), and 100,000 shares of the Company’s Series B Convertible Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”, and together with the Series A Preferred Stock, the “Preferred Stock”), at an offering price of $9.50 per share, representing a 5% original issue discount to the stated value of $10.00 per share, for gross aggregate proceeds of $15 million in the 2022 Offering, before the deduction of discounts, fees and offering expenses. The shares of Preferred Stock will, under certain circumstances, be convertible into shares of the Company’s common stock, at the option of the holders of the Preferred Stock and, in certain circumstances, by the Company. In connection with the 2022 Offering, the Company paid A.G.P./Alliance Global Partners (the “Financial Advisor”) an aggregate cash fee equal to $750,000 and reimbursed the Financial Advisor for certain of its expenses in an amount not to exceed $135,000.

 

Pursuant to the Purchase Agreement, the Company filed on October 17, 2022 certificates of designation (the “Certificates of Designation”) with the Secretary of the State of Nevada designating the rights, preferences and limitations of the shares of Series A Preferred Stock and Series B Preferred Stock. The Certificate of Designation for the Series A Preferred Stock provides, in particular, that the Series A Preferred Stock will have no voting rights other than the right to vote on the Amendments on an as-if-converted-to-Common-Stock basis. The Certificate of Designation for the Series B Preferred Stock provides, in particular, that the Series B Preferred Stock will have no voting rights other than the right to vote on the Amendments and each share of Series B Preferred Stock entitles the holder thereof the right to cast 2,500 votes on the Amendments.

 

The holders of Preferred Stock will be entitled to dividends, on an as-if converted-to-Common-Stock basis, equal to dividends actually paid, if any, on shares of Common Stock. The Preferred Stock is convertible, at the option of the holders and, in certain circumstances, by the Company, into shares of Common Stock at a conversion price of $20.00 per share. The conversion price can be adjusted pursuant to the Certificates of Designation for stock dividends and stock splits, subsequent rights offering, pro rata distributions of dividends or other distribution of its assets, or the occurrence of a fundamental transaction (as defined in the applicable Certificate of Designation).

 

The holders of the Series A Preferred Stock and Series B Preferred Stock have the right to require the Company to redeem their shares of the relevant series at a price per share equal to 105% of the stated value of such shares commencing (i) after the earlier of (1) the receipt of stockholder approval of the Amendments and (2) sixty (60) days after the closing of the 2022 Offering and (ii) before the date that is ninety (90) days after such closing. The Company has the option to redeem the Series A Preferred Stock and Series B Preferred Stock at a price per share equal to 105% of the stated value of such shares commencing after the 90th day following the closing of the 2022 Offering, subject to the holders’ rights to convert the shares prior to such redemption.

 

The proceeds of the 2022 Offering were held in an escrow account, along with the additional amount that would be necessary to fund the 105% redemption price until the expiration of the redemption period for the Preferred Stock, as applicable, subject to the earlier payment to redeeming holders. Upon expiration of the redemption period, any proceeds remaining in the escrow account will be disbursed to the Company.

 

The 2022 Offering closed on October 19, 2022. In December 2022, the Company redeemed 1,400,000 shares of Series A & 100,000 shares of Series B Preferred Stock, for a redemption price of $15,750,000, with a $13,365,000 carrying amount, resulting in a $2,385,000 loss on redemption.

 

Issuance of Common Stock as Consideration for the Potential Spin-Off Transaction.

 

On December 28, 2022, the Company issued a total of 25,000 shares of common stock as a portion of the consideration paid for the advisory services associated with the potential spin-off transaction.

 

 

Stock Repurchase Program

 

On December 6, 2021, the board of directors of the Company authorized the repurchase of up to $10.0 million of the Company’s outstanding common stock under the specified terms of a share repurchase program (the “Program”). During the year ended December 31, 2022, the Company repurchased 186,299 shares of its common stock for $4,026,523, in accordance with the Program.

 SCHEDULE OF STOCK REPURCHASE

Period  Total
Number of
Shares
Purchased		   Average
Price
Paid per
Shares		   Total
Number of
Shares
Purchased as
Part of
Publicly
Announced
Program		   Maximum
Approximate
Dollar Value
of
Shares that
May Yet Be
Purchased
Under the
Program		 
December 2021   86,742   $22.80    86,742    — 
January 2022   34,855    22.20    34,855    — 
February 2022   34,649    22.40    34,649    — 
March 2022   24,298    21.20    24,298    — 
April 2022   29,774    22.80    29,774    — 
May 2022   35,846    21.60    35,846    — 
June 2022   26,878    19.20    26,878    — 
Total all plans   273,041   $22.00    273,041   $3,998,398 

 

On June 30, 2022, the board of directors of the Company elected to terminate the Program, effective immediately. The Program began in December 2021, with the Company purchasing a total of 273,041 shares at a cost of $6,001,602 through June 30, 2022.

 

Noncontrolling Interests

 

The Company owns a 51% equity interest in its consolidated subsidiary, Nobility Healthcare. As a result, the noncontrolling shareholders or minority interest is allocated 49% of the income/loss of Nobility Healthcare which is reflected in the statement of (income) loss as “net (income) loss attributable to noncontrolling interests of consolidated subsidiary”. We reported net income attributable to noncontrolling interests of consolidated subsidiary of $407,933 and $56,453 for the year ended December 31, 2022 and 2021, respectively.