Stockholders’ Equity

12 Months Ended

Dec. 31, 2024

Equity [Abstract]

Stockholders’ Equity

7. Stockholders’ Equity

Preferred Stock

The Company increased authorized shares of preferred stock from 10,000,000 shares to 50,000,000 shares upon the filing of an amendment to the Company’s Certificate of Formation with the Secretary of State of Texas on November 27, 2023. No shares of preferred stock were issued and outstanding as of December 31, 2024 and 2023.

Common Stock

Holders of common stock are entitled to one vote per share, and to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders.

The Company has 300,000,000 shares of common stock authorized for issuance at par value of $0.01. As of December 31, 2024, 15,427,385 shares of common stock were issued and a total of 8,130,609 shares were reserved for conversion of convertible notes (2,831,472 shares), warrants issued to investors or in connection with funding’s (1,909,810 shares), share-based compensation awards (1,855,697 shares) and ATM reserved (1,533,630 shares).

The Company issued 247,500 shares of common stock to officers, and employees for achieving non-financial milestones or for on-boarding bonuses. The fair value of the special stock bonus was $88,996 based on the closing price of the common stock at the date of major shareholder approval was obtained and was recorded immediately as selling, general and administrative and research and development expenses in the Statements of Operations as no future service is required.

Public Offering of Common Stock and Warrants

The Company completed its public offering (the “Offering”) of an aggregated 780,000 units at a price of $4.25 per unit on August 9, 2022. Each unit issued in the Offering consisted of 0.2 share of common stock and one unit of warrant to purchase 0.2 share of common stock of the Company at a price of $21.25 per share (the “Public Warrants”). In addition, the Company issued its underwriters a 45-day over-allotments option to purchase up to an additional 23,400 shares of common stock and/or up to an additional 117,000 units of Public Warrants at the public offering price. The underwriters exercised its option to purchase an additional 117,000 units of Public Warrants at $0.01 per unit for a total cash proceeds of $1,170. The Company received aggregate net proceeds of approximately $1.78 million after deducting direct offering cost of approximately $1.54 million including underwriting commissions and legal fees.

The Public Warrants may be exercised from February 5, 2023 (181 days from the effective date of the Company’s S-1 Registration Statement made effective August 8, 2022, hereafter “Registration Date”) to August 8, 2027 (5 years from the Registration Date). The fair value of the Public Warrants was around $3.28 million and was determined using the Black-Scholes option pricing model with the assumptions: $18.30 of stock price, $21.25 of strike price, 5-year expected term, 277% of expected volatility, 0% of expected dividend rate and 2.97% of risk-free interest rate.

On August 11, 2022, the Company agreed to issue to the representative of the underwriters warrants to purchase up to a total of 7,800 shares of common stock (the “Representative’s Warrants”) pursuant to an underwriting agreement. The Representative’s Warrants are exercisable at $23.375 per share, are initially exercisable 180 days after the effective date of the Offering and have a term of five years from their initial exercise date. The fair value of the Representative’s Warrants was around $107 thousands which was recorded in the additional paid-in capital and was determined using the Black-Scholes option pricing model with the assumptions: $13.75 of stock price, $23.375 of strike price, 5-year expected term, 304% of expected volatility, 0% of expected dividend rate and 2.91% of risk-free interest rate.

The direct issue cost paid in cash of $1.54 million together with the cost of the Representative’s Warrants was allocated based on the relative fair value of common stocks issued for the Offering and the Public Warrants, and was recorded as a reduction to the additional paid-in capital.

Upon completion of the Offering, convertible notes outstanding in the principal amount of $30.4 million and accrued interest of $42,959 were automatically converted into 1,814,627 shares of common stock in 2022 August.

Warrants

As of December 31, 2024 and 2023, warrants issued and outstanding in connection with financing are summarized as below:

	December 31,
(In number of shares of common stock to purchase when warrants exercised)	2024		2023
Lind Warrant with exercise price of from $2.16 to $4.50		1,201,944		691,244
Public Warrants with exercise price of $21.25		179,400		179,400
Representative’s Warrants with exercise price of $23.375		7,800		7,800
Placement agent warrant with exercise price of $8.25		20,666		16,000
ASE Warrant with exercise price of $4.50		500,000		-
Total		1,909,810		894,444

As discussed in Note 6, the Company issued the Lind Warrant on September 28, 2023, December 21, 2023, and January 23, 2024 in connection with the private placement of the Lind Note. The Company total issued 20,666 shares of warrants with an exercise price of $8.25 per share to the placement agent as the agent fee. Each warrant has a contractual term of 5 years and can be exercised for the purchase of one share of common stock of the Company. The carrying amount of the Lind Warrant is nil after allocating proceeds to the Lind Note measured at fair value. The fair value of the placement agent warrant is estimated as $21,479 using the Black-Scholes Model.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the warrants issued in connection with the underwritten public offering and the private placement of Lind Note qualify for equity accounting treatment and are recorded as additional paid-in capital.

As of December 31, 2024, none of the warrants have been exercised nor have expired. The remaining contractual life of the warrants was 2.78 years as of December 31, 2024.

Dividends

The Company has never declared or paid, and does not anticipate declaring or paying, any cash dividends on any of its capital stock. The Company does not anticipate paying any dividends in the foreseeable future, and currently intends to retain all available funds and any future earnings for use in the operation of the business, to finance the growth and development and for future repayment of debt. Future determinations as to the declaration and payment of dividends, if any, will be at the discretion of the Company’s board of directors and will depend on then-existing conditions, including operating results, financial condition, contractual restrictions, capital requirements, business prospects and other factors of the Company that the board of directors may deem relevant.