Capital Structure

6 Months Ended

Jun. 30, 2024

Capital Structure [Abstract]

Capital Structure

7. Capital Structure

Common Stock

As of June 30, 2024 and December 31, 2023, the Company is authorized to issue 200,000,000 of common stock with a par value of $0.00001 per share. As of June 30, 2024 and December 31, 2023, the Company had 1,769,946 and 759,831 shares of common stock issued and outstanding, respectively. Holders of common stock have no pre-emptive, conversion or subscription rights and there is no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate in the future.

Preferred Stock

In October 2021, the Company amended its Certificate of Incorporation and revised the number of preferred stock shares authorized for issuance to 10,000,000 shares at a par value of $0.00001. As of June 30, 2024 and December 31, 2023, there were no shares of preferred stock issued and outstanding.

Common Stock Offerings

On April 23, 2024, the Company entered into an underwritten Agreement with Aegis Capital Corp. (“Aegis”), pursuant to which Aegis acted as the Company’s underwriter on a firm commitment basis in connection with the sale by the Company of an aggregate of 500,000⁽¹⁾ shares of common stock in a public offering, which included: (i) 198,000⁽¹⁾ shares of common stock, and (ii) pre-funded warrants to purchase 302,000⁽¹⁾ shares of common stock. The Pre-Funded Warrants had a nominal exercise price of $0.00001. Each share of common stock was sold at an offering price of $0.10, and each Pre-Funded Warrant was sold at an offering price of $0.09999. The offering closed on April 25, 2024.

On May 3, the Company closed on the sale of an additional 20,400⁽¹⁾ shares of common stock, upon exercise by the underwriter of the over-allotment option.

The Company received gross proceeds of approximately $5.2 million before deducting transaction related expenses payable by the Company. All commissions, qualified legal, accounting, registration and other direct costs of $0.6 million related to the public offering were offset against the gross proceeds. The Company is using the net proceeds to fund its cash needs.

⁽¹⁾ All information has been retroactively adjusted to reflect the 1-for-100 reverse stock split effected on July 3, 2024. See Note 14, Subsequent Events for details.

On December 8, 2023, the Company entered into a Placement Agent Agreement with Aegis Capital Corp. (“Aegis”), pursuant to which Aegis acted as the Company’s placement agent, on a reasonable best efforts basis, in connection with the sale by the Company of an aggregate of 333,334⁽¹⁾ shares of common stock in a public offering, which included: (i) 114,668⁽¹⁾ shares of common stock, and (ii) pre-funded warrants to purchase 218,666⁽¹⁾ shares of common stock. The Pre-Funded Warrants had a nominal exercise price of $0.00001. Each share of common stock was sold at an offering price of $0.15, and each Pre-Funded Warrant was sold at an offering price of $0.14999.

The public offering closed on December 12, 2023. The Company received gross proceeds of approximately $5 million before deducting transaction related expenses payable by the Company. All commissions, qualified legal, accounting, registration and other direct costs of $0.5 million related to the public offering were offset against the gross proceeds. The Company is using the net proceeds to fund its cash needs.

At the Market Equity Financing 

On May 31, 2023, the Company entered into an ATM Sales Agreement with Virtu Americas LLC (the “ATM Sales Agreement”), under which the Company may, from time to time, sell shares of the Company’s common stock at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The ATM Sales Agreement and related prospectus is limited to sales of up to an aggregate maximum $8.8 million of shares of the Company’s common stock. The Company pays Virtu Americas LLC up to 3.0% of the gross proceeds as a commission. For the three and six months ended as of June 30, 2024, a total of 251,691⁽¹⁾ and 384,718⁽¹⁾, respectively, shares of common stock were sold through Virtu Americas LLC under the ATM Sales Agreement. As of June 30, 2024, the Company has received net proceeds of $6,825,672 after payment of commission fees of $139,299 and other related expenses of $60,465.

Common Stock Warrants

The following warrants were outstanding as of June 30, 2024 and December 31, 2023, all of which contain standard anti-dilution protections in the event of subsequent rights offerings, stock splits, stock dividends or other extraordinary dividends, or other similar changes in the Company’s common stock or capital structure, and none of which have any participating rights for any losses:

Securities into which warrants are convertible	Warrants outstanding(1)		Exercise Price		Expiration Date	Fair value
Common stock (Initial Public Offering)		1,400	$	9.375	October 2026	$	170,397
Common stock (Private Placement)		70,969	$	2.71	April 2027		6,745,681
Total		72,369				$	6,916,078

The Company accounts for warrants in accordance with ASC 480, “Distinguishing Liabilities from Equity”, depending on the specific terms of the warrant agreement. The Company determined the fair value of the warrants using the Black-Scholes pricing model and treated the valuation as equity instruments in consideration of the cashless settlement provisions in the warrant agreements. The warrants are not marked-to-market each reporting period, and thus there is no impact to earnings. Any future exercises of the warrants will be recorded as cash received and recorded in cash, with a corresponding increase to common stock and additional paid-in capital in stockholders’ equity.

⁽¹⁾ All information has been retroactively adjusted to reflect the 1-for-100 reverse stock split effected on July 3, 2024. See Note 14, Subsequent Events for details.

The Company used the following assumptions:

	Initial Public Offering Warrants			Private Placement Warrants
Fair value of underlying securities	$	2.88		$	1.37
Expected volatility		51.0	%		45.0	%
Expected term (in years)		5.0			5.0
Risk-free interest rate		1.13	%		2.92	%