Equity Securities

6 Months Ended

Jun. 30, 2023

Equity Securities

Equity Securities

4. Equity Securities  

Common Stock

On May 26, 2023, the Company closed a private placement (the “2023 PIPE”) priced at the market under Nasdaq rules, in which it sold 458,555 shares of its Common Stock together with 342,322 pre-funded warrants to purchase up to an aggregate of 342,322 shares of Common Stock with an exercise price of $0.0001 per share (the “May 2023 Pre-Funded Warrants”), and 800,877 warrants to purchase up to an aggregate of 800,877 shares of Common Stock with an exercise price of $2.16 per share (the “May 2023 PIPE Common Warrants”) at a combined offering price of $2.285. The May 2023 PIPE Common Warrants expire on November 27, 2028. The Company received net cash proceeds of approximately $1.5 million from the 2023 PIPE after deducting underwriters’ discounts and offering expenses of approximately $0.3 million. The May 2023 Pre-Funded Warrants were exercised by June 30, 2023, and no May 2023 Pre-Funded Warrants were outstanding as of June 30, 2023.

On March 20, 2023, the Company closed a public offering (the “March 2023 Offering”) priced at the market under Nasdaq rules, in which it sold an aggregate of (i) 85,000 shares of Common Stock, (ii) pre-funded warrants (the “March 2023 Pre-Funded Warrants”) to purchase up to an aggregate of 1,533,123 shares of Common Stock with an exercise price of  $0.0001 per share, (iii) Series A warrants (the “Series A Common Warrants”) to purchase up to an aggregate of 1,618,123 shares of Common Stock, and (iv) Series B warrants (the “Series B Common Warrants” and collectively with the Series A Warrants, the “2023 Offering Warrants”) to purchase up to an aggregate of 1,618,123 shares of Common Stock. The March 2023 Offering Warrants have an exercise price of $2.82 per share. The Company received net cash proceeds of approximately $4.2 million after deducting underwriters’ discounts and offering expenses of approximately $0.8 million. The March 2023 Pre-Funded Warrants were fully exercised by March 31, 2023, adding 1,533,123 shares to Common Stock outstanding. No March 2023 Pre-Funded Warrants were outstanding as of June 30, 2023. 

On April 25, 2022, the Company closed a private placement (the “April 2022 PIPE”), in which it sold 56,161 shares of its Common Stock together with 179,687 pre-funded warrants to purchase up to an aggregate of 179,687 shares of Common Stock with an exercise price of $0.0001 per share (the “April 2022 PIPE Pre-Funded Warrants”), and 235,849 warrants to purchase up to an aggregate of 235,849 shares of Common Stock with an exercise price of $21.20 per share (the “April 2022 PIPE Common Warrants”) at a combined offering price of $21.20. The April 2022 PIPE Common Warrants related to the private placement expire on May 12, 2027. The Company received net cash proceeds of approximately $4.3 million from the April 2022 PIPE after deducting underwriters’ discounts and offering expenses of approximately $0.7 million. The April 2022 PIPE Pre-Funded Warrants were exercised fully during 2022, and no April 2022 PIPE Pre-Funded Warrants were outstanding as of December 31, 2022, or June 30, 2023.

In connection with the March 2023 Offering, the Company agreed to amend the terms of the April 2022 PIPE Common Warrants, which are held by the purchaser in the March 2023 Offering. The exercise price of the April 2022 PIPE Common Warrants were reduced from $21.20 to $2.82 per share upon closing of the March 2023 Offering. The original expiration date of the April 2022 PIPE Common Warrants was May 12, 2027, which was extended to five years after the closing of the March 2023 Offering, or March 20, 2028. The modification of the April 2022 PIPE Common Warrants resulted in an increase in additional paid-in capital since the warrants are equity classified before and after the modification in connection with the March 2023 Offering. 

Stockholders’ Agreements

On March 13, 2023, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware on March 14, 2023, a 1-for-16 reverse stock split of the Company’s issued and outstanding shares of Common Stock. All issued and outstanding Common Stock shares and per share amounts contained in the financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented.

On July 11, 2022, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of the Company’s Common Stock from 90,000,000 shares to 250,000,000 shares. The increase in the number of authorized shares was approved by the holders of a majority of the outstanding shares of Common Stock of the Company at its annual meeting on July 11, 2022.

Preferred Stock

While the Company has 10,000,000 shares of preferred stock authorized with a par value of $0.0001, no shares of preferred stock are outstanding as of June 30, 2023, or December 31, 2022.

Warrants

The Company performs an assessment of warrants upon issuance to determine their proper classification in the financial statements based upon the warrant’s specific terms, in accordance with the authoritative guidance provided in Financial Accounting Standards Board Accounting Standards Codification, or ASC, 480 Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480 and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed in the Company’s own common stock and whether the warrant holders could potentially require cash settlement of the warrants. Additional accounting guidance regarding modifications is provided in Accounting Standards Update, or ASU, 2021-04 Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the Emerging Issues Task Force), effective as of January 1, 2022.

For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be liability classified and recorded at their initial fair value on the date of issuance and remeasured at fair value at each balance sheet date thereafter. The Company has performed an assessment of all warrants issued and modified and determined that the Company’s warrants are equity classified.   

Common and Pre-Funded Warrants issued in the 2023 PIPE

In May 2023, the Company completed the 2023 PIPE, in which it sold 458,555 shares of its Common Stock together with 342,322 May 2023 Pre-Funded Warrants to purchase up to an aggregate of 342,322 shares of Common Stock with an exercise price of $0.0001 per share, and 800,877 May 2023 PIPE Common Warrants to purchase up to an aggregate of 800,877 shares of Common Stock with an exercise price of $2.16 per share, at a combined offering price of $2.285. Each May 2023 Common Warrant is immediately exercisable at the option of the holder and expires November 27, 2028.

In connection with the 2023 PIPE, the Company issued Placement Agent Warrants to purchase up to 56,061 shares of Common Stock at an exercise price equal to $2.8563 per share (the “May 2023 PIPE Placement Agent Warrants”). The May 2023 PIPE Placement Agent Warrants are exercisable immediately upon issuance and expire on May 23, 2028.

During the quarter ended June 30, 2023, all 342,322 of the May 2023 Pre-Funded Warrants were exercised. No additional May 2023 Pre-Funded Warrants are outstanding as of June 30, 2023.

Common and Pre-Funded Warrants issued with March 2023 Offering

In March 2023, the Company completed the March 2023 Offering, in which it sold 85,000 shares of its Common Stock together with 1,533,123 2023 Pre-Funded Warrants to purchase up to an aggregate of 1,533,123 shares of Common Stock with an exercise price of $0.0001 per share, and 1,618,123 Series A Common Warrants to purchase up to an aggregate of 1,618,123 shares of Common Stock with an exercise price of $2.82 per share, and 1,618,123 Series B Common Warrants to purchase up to an aggregate of 1,618,123 shares of Common Stock with an exercise price of $2.82 per share, at a combined offering price of $3.09. Each Series A Common Warrant is immediately exercisable at the option of the holder and expires March 20, 2028. Each Series B Common Warrant is immediately exercisable at the option of the holder and expires July 20, 2025.

In connection with the March 2023 Offering, the Company issued Placement Agent Warrants to purchase up to 113,269 shares of Common Stock at an exercise price equal to $3.8625 per share (the “March 2023 Offering Placement Agent Warrants”). The March 2023 Offering Placement Agent Warrants are exercisable immediately upon issuance and expire on March 16, 2028.

During the quarter ended March 31, 2023, 1,533,123 of the 2023 Pre-Funded Warrants were exercised. No additional 2023 Pre-Funded Warrants are outstanding as of June 30, 2023.

Summary of Warrants Outstanding

The table below lists outstanding warrants for the dates presented. The aggregate intrinsic value of warrants outstanding as of June 30, 2023 is calculated as the difference between the exercise price of the warrants and the closing market price of the Company's Common Stock on that date, which was $1.65 per share. The intrinsic value of warrants outstanding as of June 30, 2023, was zero due to the warrants' exercise prices above market value.

	Quantity of Warrants Outstanding as of				Exercise		Expiration
Description	June 30, 2023		December 31, 2022		Price		Date
Series 1a Warrants		4,321		4,321	$	328.00	11/15/2026
Class B Common Warrants		4,077		4,077	$	91.84	12/31/2024
IPO Warrants		184,820		184,820	$	112.00	8/17/2026
IPO Underwriter Warrants		8,035		8,035	$	128.80	8/17/2026
April 2022 PIPE Common Warrants		235,849		235,849	$	2.82	3/20/2028
Series A Common Warrants		1,618,123		-	$	2.82	3/20/2028
Series B Common Warrants		1,618,123		-	$	2.82	7/20/2025
March 2023 Offering Placement Agent Warrants		113,269		-	$	3.8625	3/16/2028
May 2023 PIPE Common Warrants		800,877		-	$	2.16	11/27/2028
May 2023 PIPE Placement Agent Warrants		56,061		-	$	2.8563	5/23/2028
Total warrants outstanding		4,643,555		437,102