STANDBY EQUITY PURCHASE AGREEMENT

6 Months Ended

Jun. 30, 2023

STANDBY EQUITY PURCHASE AGREEMENT [Abstract]

STANDBY EQUITY PURCHASE AGREEMENT

14) STANDBY EQUITY PURCHASE AGREEMENT

On April 5, 2023, the Company entered into the SEPA with Lincoln Park, pursuant to which Lincoln Park committed to purchase up to $10.0 million of the Company’s common stock, subject to the terms and conditions contained in the appliable agreements. Such sales of common stock by the Company, if any, are subject to certain limitations set forth in the purchase agreement, and may occur from time to time, at the Company’s sole discretion, over a period of up to 24-months, commencing April 25, 2025, which was the date on which each of the conditions to the Lincoln Park’s purchase obligations set forth in the purchase agreement were initially satisfied.  In consideration of Lincoln Park’s entry into the purchase agreement, the Company issued to Lincoln Park approximately 74,000 shares of common stock (the “Commitment Shares”).  The value of the Commitment Shares was recorded as a period expense and included in other expense, net, in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2023.

The Company evaluated the contract that includes the right to require Lincoln Park to purchase shares of common stock in the future (“put right”) considering the guidance in ASC 815-40, Derivatives and Hedging — Contracts on an Entity’s Own Equity and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting. The Company has analyzed the terms of the freestanding put right and has concluded that it has an immaterial value as of June 30, 2023.

As of June 30, 2023, the Company had issued and sold 214,000 shares of common stock under the SEPA, including the 74,000 commitment shares, for gross proceeds of approximately $0.3 million, and there were approximately 2,860,000 shares remaining to be sold under the SEPA.

In connection with entry into the SEPA, the Company terminated its prior purchase agreements with Lincoln Park entered into during 2021.