STOCK TRANSACTIONS

9 Months Ended

Sep. 30, 2023

STOCK TRANSACTIONS

STOCK TRANSACTIONS

NOTE 5 – STOCK TRANSACTIONS

(a) Authorized Capital

On June 28, 2023, the Company held its 2023 Annual Meeting of Stockholders, which was adjourned and reconvened on July 13, 2023 (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders, among other matters, approved an amendment to the Company’s Certificate of Incorporation, as amended, to increase the number of shares of Common Stock authorized for issuance from 144,000,000 to 185,000,000 (the “Charter Amendment”). The Charter Amendment was filed with the Secretary of State of the State of Delaware on July 25, 2023.

(b) At-the-Market (ATM) Offering

During the nine months ended September 30, 2023, the Company sold, in the aggregate, 12,560,150 shares of Common Stock under the 2023 Sales Agreement. The Company generated aggregate gross proceeds equal to approximately $24.9 million in connection with such sales. All such sales were completed during the quarters ended March 31, 2023 and June 30, 2023. No sales were completed during the three-months ended September 30, 2023.

(c)Exercise of Warrants

On May 8, 2023, the Company issued 301,810 shares of Common Stock in connection with the cash exercise of a warrant issued on March 18, 2020, as part of the Company’s private placement of Common Stock and warrants. The Company generated net proceeds equal to $0.7 million from the exercise of the warrant.

On May 10, 2023, the Company issued 237,012 shares of Common Stock in connection with the cashless exercise of a warrant to purchase 845,000 shares of Common Stock issued on March 18, 2020, as part of the Company’s private placement of Common Stock and warrants. The Company did not generate any proceeds from the cashless exercise.

No warrants were exercised during the three months ended September 30, 2023.

(d)Conversion of 2024 Notes

During the nine months ended September 30, 2023, the Company issued, in the aggregate, 4,691,623 shares of Common Stock in connection with the conversions of 2024 Notes. In connection with such conversions, during the nine months ended September 30, 2023, the Company paid to the converting holders $0.9 million representing cash payments due to accrued but unpaid interest, make-whole interest payments and payments in lieu of fractional shares. As a result of the conversions, the total principal amount of the 2024 Notes decreased by approximately $8.3 million.

No 2024 Notes were converted during the three months ended September 30, 2023.

(e)Stock based compensation

1) On June 28, 2023, at the Annual Meeting, the Company’s stockholders, among other matters, adopted amendments to the Company’s Amended and Restated 2006 Employee Stock Incentive Plan, as amended (the “Plan”) to increase the number of shares of Common Stock available under Plan from 8,475,171 shares to 12,475,171 shares and to amend certain other terms of the Plan.

2) On August 15, 2023, the Company granted, with the approval of the Company’s compensation committee, 1,371,362 shares of restricted Common Stock, in the aggregate, to certain of the Company’s officers under the Plan. Of such grants, 200,000 shares of restricted Common Stock vested upon grant, 600,000 shares of restricted Common Stock vest over a two-year period in eight equal quarterly increments and the remaining 571,362 shares of restricted Common Stock vest over a three-year period in 12 equal quarterly increments. The Company estimated the fair value of the restricted stock on the date of grant to be approximately $2.7 million.

3) On August 15, 2023, the Company granted, with the approval of the Company’s compensation committee, 10-year options to purchase 1,056,315 shares of Common Stock, in the aggregate, to certain of the Company’s officers and other employees under the Plan. The options have an exercise price equal to $1.99 per share and vest over a three-year period in 12 equal quarterly increments. Vesting of the options granted to executive officers is subject to automatic acceleration in full upon a Corporate Transaction or a Change in Control, as those terms are defined in the Plan, and are subject to certain other terms and conditions. The Company estimated the aggregate fair value of the options on the date of grant using the Black-Scholes option-pricing model to be approximately $1.5 million.

On September 14, 2023, the Company granted, with the approval of the Company’s compensation committee, 10-year options to purchase 85,715 shares of Common Stock, in the aggregate, to the new Chairman of the Company’s Board of Directors under the Plan. The options have an exercise price equal to $1.75 per share and vest over a three-year period in 12 equal quarterly increments. Vesting of the options is subject to automatic acceleration in full upon a Corporate Transaction or a Change in Control, as those terms are defined in the Plan, and are subject to certain other terms and conditions. The Company estimated the aggregate fair value of the options on the date of grant using the Black-Scholes option-pricing model to be approximately $0.1 million.

On September 29, 2023, the Company granted, with the approval of the Company’s compensation committee, 10-year options to purchase 308,380 shares of Common Stock, in the aggregate, to the non-executive directors of the Company’s Board of Directors, other than the Chairman, under the Plan. The options have an exercise price equal to $1.66 per share and vest over a three-year period in 12 equal quarterly increments. Vesting of the options is subject to automatic acceleration in full upon a Corporate Transaction or a Change in Control, as those terms are defined in the Plan, and are subject to certain other terms and conditions. The Company estimated the aggregate fair value of the options on the date of grant using the Black-Scholes option-pricing model to be approximately $0.4 million.

The fair value of each option granted during the three-month period ended September 30, 2023 is estimated at the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were applied in determining the fair value of the options described in this Note 5(e)(3) on their respective grant dates:

Weighted average grants date fair value (USD)	1.34
Exercise price (USD)	1.91
Risk free rate	4.40	%
Volatility	79.40	%
Dividend yield	0	%
Expected life (Years)	5.75