Common stock

9 Months Ended

Sep. 30, 2022

Common stock

Common stock

9. Common stock

Common stock

The holders of common stock are entitled to one vote for each share of common stock. Subject to the approval of the holders of a majority in interest of the Company’s stockholders entitled to vote thereon, the holders of common stock are entitled to receive dividends out of legally available funds. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of common stock are entitled to share ratably in the remaining assets of the Company available for distribution.

On August 4, 2021, the Company sold 14,115 shares of the Company’s common stock for $15.94 per share to a purchaser in accordance with the Stock Purchase Agreement.

On April 28, 2021, the Company sold 1,000,000 units, each unit comprising one share of the Company’s common stock and one Series B Warrant (each, a “Series B Warrant”) to purchase one-half of a share of common stock. The units were issued in a private placement at a price of $27.00 per unit for gross proceeds of $27.0 million. The Series B Warrants are equity-classified, exercisable at any time, have an exercise price of $45.00 per share and will terminate at three years from the date of issuance. The fair value of the warrants on the date of issuance was $6.0 million. The fair value of the warrants was estimated using a Black-Scholes Option Pricing Model. The significant assumptions used in preparing the option pricing model for valuing the Company's warrants to purchase shares of common stock as of April 28, 2021 included (i) volatility of 82.7%, (ii) risk free interest rate of 0.35%, (iii) strike price of $45.00 per share, (iv) fair value of common stock of $28.70 per share, and (v) expected life of three years. As described below, in September 2022, the Series B Warrants were modified to reduce the strike price to $10.00 per share and to remove the Company’s call right.

Warrants to acquire shares of common stock

On September 2, 2022, the Company notified holders of the Company’s Series B Warrants (the “Holders”) of the Company’s agreement to permit Holders to exercise the Series B Warrants at an exercise price of $10.00 per share (reduced from the previous exercise price of $45.00 per share) at any time prior to the expiration date of the Series B Warrants. The Company recognized a deemed dividend of $0.6 million, which represents the incremental fair value of the outstanding warrants as a result of the modification. This deemed dividend is recorded in the Company's consolidated statement of operations as an increase to the net loss attributable to common stockholders for purposes of computing net loss per share, basic and diluted. The net impact to the condensed statements of changes in stockholders’ equity was zero because the warrants were equity classified before and after the modification.

At September 30, 2022, common stock warrants outstanding were as follows:

Warrants	Warrants Outstanding	Exercise Price per Share	Expiration Date
Series A	803,112	$ 9.00	June 2, 2023
Series B	500,000	$ 10.00	April 28, 2024
	1,303,112

During nine months ended September 30, 2022, no warrants were exercised. During the nine months ended September 30, 2021, 148,653 warrants exercisable for $9.00 per share were exercised, and the Company received proceeds of $1.3 million and 148,653 shares of the Company’s common stock were issued. Additionally, 72,320 warrants exercisable for $9.00 per share were exercised in cashless transactions during the nine months ended September 30, 2021 and 45,322 shares of the Company’s common stock were issued.