Share-based compensation, warrants and common stock issuances

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Share-based compensation, warrants and common stock issuances

Note 11 – Share-based compensation, warrants and common stock issuances

The following table sets forth total non-cash share-based compensation for the issuance of common stock, options to purchase common stock, and restricted stock unit awards by operating statement classification for the three months ended March 31, 2024 and 2023:

	Three Months ended March 31,
	2024		2023
Research and development	$	23	$	59
Sales and marketing		6		1
General and administrative		42		162
Total	$	71	$	222

As of March 31, 2024, unamortized share-based compensation for stock options was $313, with a weighted-average recognition period of 1.13 years.

Stock option and warrant activity

A summary of the Company’s stock option and warrant activity is as follows:

	Options				Warrants
	Shares Underlying Options		Weighted Average Exercise Price		Shares Underlying Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2023		60,170	$	171.23		17,455,312		$	1.99
Awarded		-	$	-		4,697,085		$	0.79
Exercised		-	$	-		(5,643,863	)	$	0.48
Expired		-	$	-		(1,132	)	$	525.0
Outstanding at March 31, 2024		60,170	$	171.23		16,507,402		$	0.96
Exercisable at March 31, 2024		21,297	$	462.93		16,507,402		$	0.96

As of March 31, 2024 and December 31, 2023, there were 1,009 outstanding restricted stock unit awards at a weighted average grant date fair value of $125.42.

As of March 31, 2024, unamortized stock compensation for restricted stock units was $14, with a weighted-average recognition period of 0.54 years.

As of March 31, 2024, in connection with the February 2024 Warrant Exercise (as defined herein) 1,980,000 warrants that were exercised during the quarter ended March 31, 2024 were not yet issued as common stock, and are held by the Company in abeyance.

Private Placement Offering

On May 17, 2023, the Company entered into a securities purchase agreement with an accredited investor pursuant to which it agreed to issue and sell in a private placement an aggregate of (i) 35,000 shares of common stock, (ii) warrants to purchase up to 241,134 shares of common stock (the “Pre-Funded Warrants”) and (iii) warrants to purchase up to 276,134 shares of common stock (the “Common Warrants”). The purchase price was $12.675 for each share of common stock and $12.674 for each Pre-Funded Warrant, resulting in net proceeds of approximately $3.0 million, inclusive of issuance costs of $0.5 million and exclusive of warrant issuance costs of $0.2 million. The closing of the offering occurred on May 19, 2023. Each Common Warrant is exercisable for a period of five and one-half years from the issuance date at an exercise price of $10.80 per share, subject to adjustment, and may, under certain circumstances, be exercised on a cashless basis. Each Pre-Funded Warrant is exercisable until exercised in full at an exercise price of $0.0001 per share and may be exercised on a cashless basis.

In addition, pursuant to the terms of the offering, the Company issued the placement agent, H.C. Wainwright & Co., LLC., warrants to purchase up to 13,806 shares of the Company’s common stock (the “Placement Agent Warrants”). The Placement Agent Warrants are exercisable for a period of five and one-half years from the issuance date, at an exercise price of $15.845 per share, subject to adjustment, and may, under certain circumstances, be exercised on a cashless basis.

December 2023 Public Offering and Convertible Note Exchange

On December 18, 2023, the Company entered into a securities purchase agreement with certain purchasers pursuant to which it agreed to issue and sell, in a public offering (the “Public Offering”), an aggregate of (i) 520,000 shares of common stock, (ii) pre-funded warrants to purchase up to 2,813,334 shares of common stock (the “Public Offering Pre-Funded Warrants”), (iii) warrants to purchase up to 3,333,334 shares of common stock (the “Series A Common Warrants”), and (iv) warrants to purchase up to 3,333,334 shares of common stock (the “Series B Common Warrants,” collectively with the other warrants issued in the Public Offering, the “Public Offering Warrants”). The purchase price was $1.50 for each share of common stock and $1.4999 for each Public Offering Pre-Funded Warrant, resulting in net proceeds of approximately $3.9 million, inclusive of issuance costs of $1.1 million and exclusive of warrant issuance costs of $0.1 million. The closing of the Public Offering occurred on December 21, 2023.

The Public Offering Pre-Funded Warrants are exercisable until exercised in full at an exercise price of $0.0001 per share. Each Series A Common Warrant is exercisable for a period of five years from the issuance date at an exercise price of $1.50 per share and each Series B Common Warrant is exercisable for a period of one and one-half years from the issuance date at an exercise price of $1.50 per share. The Public Offering Warrants may be exercised on a cashless basis. The Company is prohibited from effecting an exercise of any Public Offering Warrants to the extent that such exercise would result in the number of shares of common stock beneficially owned by such holder and its affiliates exceeding 4.99% (or 9.99% at election of the holder) of the total number of shares of common stock outstanding immediately after giving effect to the exercise.

As part of the Public Offering, the Company entered into a placement agency agreement with Alliance Global Partners (“A.G.P.”), pursuant to which A.G.P. agreed to act as exclusive placement agent for the issuance and sale of the securities in the Public Offering. In exchange for these services, the Company paid A.G.P. an aggregate cash fee of $0.4 million. In addition, the Company incurred an additional $0.6 million in legal and other fees related to the Public Offering. These fees were recorded as costs of the Public Offering and reduced the amount recorded to additional paid in capital.

In connection with the completion of the Public Offering, the Company was also obligated to issue H.C. Wainwright & Co., LLC. warrants to purchase an aggregate of 150,417 shares of Common Stock (the “Public Offering Placement Agent Warrants”). The Public Offering Placement Agent Warrants are to be exercisable for a period of five years from the issuance date, at an exercise price of $1.875 per share, subject to adjustment, and may be exercised on a cashless basis. As the obligation to issue the Public Offering Placement Agent Warrants related to services provided in facilitating the Public Offering, the Company recorded the estimated fair value of the obligation as a cost of the Public Offering. The Public Offering Placement Agent Warrants were issued on January 4, 2024, and as such, the Company recorded the estimated fair value of the obligation of $154 to issue the warrants as a liability as of December 31, 2023. Upon the issuance of the Public Offering Placement Agent Warrants in January 2024, the Company derecognized the warrant issuance obligation and recorded the Public Offering Placement Agents Warrants as a component of additional paid in capital.

As discussed in Note 8, the Company issued (i) 54,461 shares of Common Stock, (ii) the Private Pre-Funded Warrants to purchase up to 2,612,205 shares of common stock, (iii) the Series A Private Warrants to purchase up to 2,666,666 shares of common stock and (iv) the Series B Private Warrants to purchase up to 2,666,666 shares of common stock upon the exchange and cancellation of the $4,000 outstanding principal amount of the Convertible Note. The Series A Private Warrants and the Series B Private Warrants are each exercisable for one share of common stock at an exercise price of $1.50 per share and will expire on the fifth anniversary and the one and one-half year anniversary from the date of issuance, respectively. The Series B Private Warrants will not be exercisable until shareholder approval is obtained. In addition, upon a fundamental transaction that occurs within the control of the Company, the holder of the Series A Private Warrants and Series B Private Warrants shall have the right to receive payment in cash, or under certain circumstances in other consideration, from the Company at the Black Scholes value, as described in such warrants. The Private Pre-Funded Warrants are each exercisable for one share of common stock at an exercise price of $0.0001 per share and will expire when exercised in full. The Private Warrants may be exercised on a cashless basis. The Company is prohibited from effecting an exercise of any Private Warrants to the extent that such exercise would result in the number of shares of common stock beneficially owned by such holder and its affiliates exceeding 4.99% (or 9.99% at election of the holder) of the total number of shares of common stock outstanding immediately after giving effect to the exercise.

February 2024 Warrant Exchange Agreement

On February 21, 2024, the Company and an investor who had previously participated in the May 2023 Private Placement Offering and the December 2023 Public Offering entered into an agreement for the immediate exercise of certain outstanding warrants, the issuance of new warrants and the modification of other previously issued and outstanding warrants (the “February 2024 Warrant Exercise”). The February 2024 Warrant Exercise closed on February 26, 2024.

Under the terms of the February 2024 Warrant Exercise, the investor agreed to immediately exercise 2,933,334 Series B Common Warrants at a reduced exercise price of $0.925 per warrant (reduced from $1.50 per warrant). In addition, as consideration for the agreement to immediately exercise the Series B Common Warrants, the Company issued the investor a warrant to purchase 2,200,000 shares of Common Stock at an exercise price of $0.74 per share, exercisable for five years from the date of issuance (the “Series B-1 Warrant”), and a warrant to purchase 2,200,001 shares of Common Stock at an exercise price of $0.74 per share, exercisable for 18 months from the date of issuance (the “Series B-2 Warrant”). As a final consideration, the Company and the investor agreed to modify previous warrants issued in December 2023 (the Series A Common Warrants), May 2023 (the Common Warrants) and January 2021. These modifications included the reduction of the exercise prices of each such warrant to $0.74 per share, and the extension of the contractual term of each such warrant for five years from the date of closing of the modification (to February 26, 2029).

All of the previously issued warrants impacted by the February 2024 Warrant Exercise had been determined to be equity-classified by the Company. In addition, the Company determined that the newly issued Series B-1 and Series B-2 Warrants also met the requirements for equity classification. Given the terms of the February 2024 Warrant Exercise, the Company determined that the investor had agreed to exercise the Series B Common Warrants under an inducement offer, which included the reduction in exercise price of the Series B Common Warrants as well as the issuance of the Series B-1 and Series B-2 Warrants. The Company measured the additional value provided to the investor under such actions based on the reduction in exercise price (reflecting the increased intrinsic value to the investor) and the estimated fair value of the newly issued Series B-1 and Series B-2 Warrants (using a Black-Scholes model) to be approximately $5,027. In relation to the modification of the other warrants held by the investor, the Company followed the accounting guidance for the modification of equity-classified contracts and estimated the incremental fair value to be approximately $481 (using a Black-Scholes model). In total, these modifications and issuances under the inducement offer represented $5,508 in additional value provided to the investor, which was recorded as a deemed dividend. As the Company is in an accumulated deficit position as of the issuance date, the resulting deemed dividends were recorded as a reduction of additional paid-in capital and the deemed dividends were included in net loss attributable to common shareholders in the calculation of loss per share.

In connection with the completion of the February 2024 Warrant Exercise, the Company was also obligated to issue H.C. Wainwright & Co., LLC. warrants to purchase an aggregate of 146,667 shares of Common Stock (the “March 2024 Placement Agent Warrants”). The March 2024 Placement Agent Warrants are to be exercised for a period of five years from the issuance date, at an exercise price of $1.1563 per share, subject to adjustment, and may be exercised on a cashless basis. The March 2024 Placement Agent Warrants were issued on March 8, 2024. The estimated fair value of the March 2024 Placement Agent Warrants was determined utilizing a Black-Scholes model and estimated to be $0.1 million, which was recorded as a reduction in additional paid in capital as a cost of the related financing activity.