In February 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Craig-Hallum Capital Group LLC and Laidlaw & Company (UK) Ltd. (collectively, the “Underwriters”), relating to the issuance and sale of 5,134,731 common stock units (the “Common Stock Units”) at a public offering price of $0.68 per Common Stock Unit and, to certain investors, 5,894,680 pre-funded warrant units (the “PFW Units”) at a public offering price of $0.6799 per PFW Unit (the “February 2024 Offering”). Each Common Stock Unit consisted of (i) one share of common stock, (ii) a Series A Warrant to purchase one share of common stock (the “Series A Warrant”), (iii) a Series B Warrant to purchase one share of common stock (the “Series B Warrant”),

and (iv) a Series C Warrant to purchase one share of common stock (the “Series C Warrant”). Each PFW Unit consisted of (i) a pre-funded warrant to purchase one share of common stock (the “Pre-Funded Warrants”), (ii) a Series A Warrant, (iii) a Series B Warrant, and (iv) a Series C Warrant. The Company also issued warrants to the Underwriters to purchase up to 551,471 shares of common stock, equal to 5% of the securities sold in the February 2024 Offering (the “Representatives’ Warrants”).

Net cash proceeds from the February 2024 Offering was $6.2 million after deducting underwriter and offering expenses. The Pre-Funded Warrants, Series A Warrants, Series B Warrants, and Series C Warrants are equity classified and were recognized as additional paid-in capital on the condensed balance sheet.

In March 2024, the Company entered into an amendment with certain holders (each, a “Holder”) of its Series B Warrants and Series C Warrants (the “Warrant Amendment”). Pursuant to the Warrant Amendment, to the extent a Holder exercised its Series B Warrants before 5:00 p.m. Pacific time on March 27, 2024 (the “Amendment Exercise Deadline”), the Holder’s corresponding Series C Warrants vested and are exercisable for the lesser of (i) three times the number of Series B Warrants exercised by the Holder and (ii) the total number of Series C Warrants outstanding to the Holder. Following the Amendment Exercise Deadline, if such Holder exercised any remaining Series B Warrants, the remaining Series C Warrants, if any, vested and became exercisable on a one-for-one basis as to the same number of Series B Warrants exercised.

The Warrant Amendment also allowed a Holder to elect to receive Pre-Funded Warrants upon exercise of Series B Warrants and Series C Warrants in lieu of shares of the Company’s common stock, at a purchase price of $0.6799 per warrant exercised and an exercise price of $0.0001 per Pre-Funded Warrant.

Net cash proceeds from the Warrant Amendment were $1.2 million after deducting underwriter and offering expenses. The Warrant Amendment was entered into to encourage the exercise of Series B Warrants in order to obtain capital to meet the Minimum Stockholders’ Equity Requirement. The Warrant Amendment neither changed the number of shares of Common Stock underlying each series of warrants nor its equity classification. The incremental change in fair value from the Warrant Amendment was an equity issuance cost and was recognized within additional paid-in capital.

The following table is a summary of the Company’s warrants as of March 31, 2024:


					Shares of
	Number of		Number of		Common Stock
	Warrants Outstanding		Warrants Exercisable		Underlying Warrants		Exercise Price		Initial Exercise Date	Expiration Date
Pre-Funded Warrants		7,711,565		7,711,565		7,711,565	$	0.0001	February 13, 2024	Until Exercised in Full
Series A Warrants		11,029,411		11,029,411		11,029,411	$	0.6800	February 13, 2024	February 13, 2029
Series B Warrants		9,092,922		9,092,922		9,092,922	$	0.6800	February 13, 2024	November 13, 2024
Series C Warrants(1)		11,029,411		5,808,824		11,029,411	$	0.6800	February 13, 2024	November 13, 2024 or February 13, 2029
Representativesʼ Warrants		551,471		—		551,471	$	1.1222	August 13, 2024	February 13, 2029
Total warrants		39,414,780		33,642,722		39,414,780

(1)

The Series C Warrants are subject to a vesting schedule and may only be exercised to the extent and in proportion to a holder of the Series C Warrants exercising its corresponding Series B Warrants, subject to accelerated vesting pursuant to the Warrant Amendment described above. The Series C Warrants expire on November 13, 2024, provided that to the extent and in proportion to a holder of the Series C Warrants have vested based on the exercise of the corresponding Series B Warrants, such Series C Warrants will expire on February 13, 2029.

Stock-based compensation expense includes charges related to stock option grants. The Company measures stock-based compensation expense based on the grant date fair value of any awards granted to its employees. Such expense is recognized over the period of time that employees provide service and earn rights to the awards.

There were no stock options granted for the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company granted stock options to purchase 77,500 shares of the Company’s common stock.

The Company recognized stock-based compensation expense to employees and directors in its research and development and its selling, general and administrative functions during the three months ended March 31, 2024 and 2023 as follows:


	Three Months Ended March 31,
	2024		2023
Research and development	$	1,215	$	2,840
Selling, general and administrative		252,814		281,732
Total stock-based compensation expense	$	254,029	$	284,572

As of March 31, 2024, there was approximately $0.4 million of unrecognized compensation costs related to outstanding employee and board of director options, which are expected to be recognized over a weighted-average period of 0.72 years.