Note 11 - Stockholders' Equity (Deficit) and Common Stock Warrants

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Equity [Text Block]

11. Stockholders’ Equity (Deficit) and Common Stock Warrants

On August 16, 2023 in connection with the closing of the Merger, the following is reflected on the consolidated financial statements of convertible preferred stock and stockholders’ equity (deficit) for the year ended December 31, 2023: (i) the issuance of 795,905 shares of common stock and 101,367 pre-funded warrants upon the settlement of the Convertible Notes, (ii) the conversion of 3,331,201 shares of convertible preferred stock into 2,936,566 shares of common stock and 394,628 prefunded warrants, and (iii) the issuance of 1,360,244 shares of common stock to Diffusion stockholders as consideration for the Merger.

In July 2023, EIP sold 63,422 shares of common stock at $12.78 per share (as adjusted for the Exchange Ratio) for net proceeds of approximately $0.8 million.

Warrants

As of December 31, 2023, the Company had the following warrants outstanding to acquire shares of its common stock:

	Warrants		Exercise
	Outstanding		Price			Expiration Date
Historical Diffusion common stock warrants		58,844	$26.27	-	$459.06	May 2024 through February 2026
Historical EIP common stock warrants		43,618	$19.81			April 2028
Pre-funded warrants issued related to closing of reverse recapitalization		495,995	$0.001			None
		598,457

Upon completion of the Merger, the Convertible Notes and outstanding shares of EIP preferred stock converted into shares of EIP Common Stock which were subsequently converted into the right to exchange such shares for shares of the Company’s common stock or, in certain cases, pre-funded warrants to purchase the Company’s common stock. All of the warrants are equity-classified because they are indexed to the Company’s own shares and meet the criteria to be classified as an equity instrument.

The Company is party to the 2022 Sales Agreement with BTIG. The 2022 Sales Agreement is an "at-the-market" sales agreement pursuant to which the Company may, from time to time and through BTIG as the Company’s agent, sell up to an aggregate of $20.0 million in shares of common stock by any permissible method deemed an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act. As of the date of this Annual Report, however, the Company has not sold any shares pursuant to the 2022 Sales Agreement.