STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2022

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

7. STOCKHOLDERS’ EQUITY

Common Stock.

Pursuant to our Third Amended and Restated Certificate of Incorporation, as amended, we currently have 150,000,000 shares of common stock authorized for issuance. On December 20, 2018, the Company’s shareholders approved the proposal to authorize the Company’s Board of Directors to, in its discretion, amend the Company’s Third Amended and Restated Certificate of Incorporation to increase the total number of authorized shares of common stock from 150,000,000 shares to 250,000,000 shares. The Company has not yet implemented this increase.

During the three and nine months ended September 30, 2022, the Company issued 26,529 and 26,795 shares of its common stock, respectively, in connection with the exercise of 26,529 and 26,795 warrants. The warrant exercises resulted in net cash proceeds to the Company of $11,000 during the nine months ended September 30, 2022.  

During the three and nine months ended September 30, 2021, the Company issued zero and 74,000 shares of its common stock, respectively, in connection with the exercise of zero and 74,000 warrants, respectively. The warrant exercises resulted in net cash proceeds to the Company of $0.4 million during the nine months ended September 30, 2021

During the nine months ended September 30, 2021, the Company issued 55,147 shares of its common stock in connection with consulting services of approximately $0.2 million.

During the three and nine months ended September 30, 2021, the Company issued 1,229 shares of its common stock, respectively, in connection with the exercise of 1,229 stock options. The stock option exercises resulted in net cash proceeds to the Company of $3,000 for the three and nine months ended September 30, 2021, respectively.

LP 2020 Purchase Agreement

On March 26, 2020, the Company entered into a purchase agreement (the “LP 2020 Purchase Agreement”) with Lincoln Park pursuant to which Lincoln Park has agreed to purchase from us, from time to time, up to $10,000,000 of our common stock, subject to certain limitations, during the 24-month term of the LP 2020 Purchase Agreement.

During the three and nine months ended September 30, 2021, we received approximately zero and $1.3 million, respectively, from the sale of zero and 500,000 shares of common stock, respectively, to Lincoln Park under the LP 2020 Purchase Agreement. The Company terminated the LP 2020 Purchase Agreement effective June 14, 2021.

At The Market Offering Agreement

On April 2, 2021, the Company entered into a sales agreement with A.G.P./Alliance Global Partners (“AGP”), pursuant to which the Company may offer and sell its common stock, par value $0.01 per share (the “Common Stock”) (the “Shares”), having aggregate sales proceeds of up to $22.0 million. Shares can be sold either directly to or through

AGP as a sales agent (the “AGP Sales Agreement”), from time to time, in an “at the market offering” (as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended) of the Shares (the “ATM Offering”). The Company is limited in the number of shares it can sell in the ATM Offering due to the offering limitations currently applicable to the Company under General Instruction I.B.6. of Form S-3 and the Company’s public float as of the applicable date of such sales, as well as the number of authorized and unissued shares available for issuance, in accordance with the terms of the AGP Sales Agreement.

The sale of our shares of Common Stock to or through AGP, will be made pursuant to the registration statement (the “Registration Statement”) on Form S-3 (File No. 333-237445), which was declared effective by the Securities and Exchange Commission (the “SEC”) on April 13, 2020, for an aggregate offering price of up to $50.0 million.

Under the AGP Sales Agreement, Shares may be sold by any method permitted by law deemed to be an “at the market offering.” AGP will also be able to sell shares of Common Stock by any other method permitted by law, including in negotiated transactions with the Company’s prior written consent. Upon delivery of a placement notice and subject to the terms and conditions of the AGP Sales Agreement, AGP is required to use its commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations, and the rules of The Nasdaq Capital Market to sell the Shares from time to time based upon the Company’s instructions, including any price, time or size limits specified by the Company. AGP is not under any obligation to purchase any of the Shares on a principal basis pursuant to the AGP Sales Agreement, except as otherwise agreed by AGP and the Company in writing and expressly set forth in a placement notice. AGP’s obligations to sell the Shares under the AGP Sales Agreement are subject to satisfaction of certain conditions, including customary closing conditions. The Company is not obligated to make any sales of Shares under the AGP Sales Agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs.

The Company has agreed to pay AGP a cash fee of 3.0% of the aggregate gross proceeds from the sale of the Shares on the Company’s behalf pursuant to the AGP Sales Agreement. The AGP Sales Agreement contains representations, warranties and covenants that are customary for transactions of this type. In addition, the Company has provided AGP with customary indemnification and contribution rights. The Company has also agreed to reimburse AGP for certain specified expenses, including the expenses of counsel to AGP. The offering of the Shares pursuant to the AGP Sales Agreement will terminate upon the termination of the AGP Sales Agreement by AGP or the Company, as permitted therein.

During the three and nine months ended September 30, 2022, we received net proceeds of $0.1 million in each period from the sale of 85,023 shares of common stock through AGP, respectively. During the three and nine months ended September 30, 2021, we received net proceeds of zero and approximately $14.9 million, respectively, from the sale of zero and 4,501,000 shares of common stock through AGP, respectively. As of the date of issuance of this Quarterly Report on Form 10-Q, we have received an aggregate of $15.1 million in net proceeds from the sale of common stock through the AGP Sales Agreement, leaving us with $6.4 million available for future sales pursuant to the AGP Sales Agreement.

Preferred Stock.

The Company’s Board of Directors is authorized to issue up to 15,000,000 shares of preferred stock in one or more series, from time to time, with such designations, powers, preferences and rights and such qualifications, limitations and restrictions as may be provided in a resolution or resolutions adopted by the Board of Directors.

Series B Preferred Stock.

The Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (“Series B Preferred Stock”) with the State of Delaware, which designates 6,900 shares of our preferred stock as Series B Preferred Stock. The Series B Preferred Stock has a stated value of $1,000 per share and a par value of $0.01 per share. The Series B Preferred Stock includes a beneficial ownership blocker but has no dividend rights (except to the extent dividends are also paid on the common stock). On August 28, 2017, the Company completed an underwritten public offering consisting of the Company’s Series B Preferred Stock and warrants.

The conversion price of the Series B Preferred Stock contains a down round feature. The Company will recognize the effect of the down round feature when it is triggered. At that time, the effect would be treated as a deemed dividend and as a reduction of income available to common shareholders in our basic earnings per share calculation.

There were no conversions of Series B Preferred Stock during the three and nine months ended September 30, 2022 and 2021, respectively. At September 30, 2022 and December 31, 2021, the Company had 6,900 shares of Series B Preferred Stock designated and issued and 47 shares of Series B Preferred Stock outstanding. Based on the stated value of $1,000 per share and a conversion price of $0.40 per share, the outstanding shares of Series B Preferred Stock at September 30, 2022 were convertible into 117,500 shares of common stock.

Common Stock Warrants.

The following represents a summary of the warrants outstanding as of September 30, 2022:

			Underlying	Exercise
	Issue Year	Expiration	Shares	Price
Warrants
(1)	2017	October 2022	666	$	0.40
(2)	2018	October 2022	7,207	$	112.50
(3)	2018	April 2023	69,964	$	5.40
(3)	2018	April 2023	78,414	$	5.40
(4)	2018	October 2022	15,466	$	11.25
(5)	2018	July 2023	14,671	$	5.40
(5)	2018	July 2023	14,672	$	5.40
(5)	2018	August 2023	20,903	$	5.40
(5)	2018	August 2023	20,903	$	5.40
(5)	2018	September 2023	19,816	$	5.40
(5)	2018	September 2023	20,903	$	5.40
(6)	2018	November 2023	75,788	$	5.40
(6)	2018	December 2023	51,282	$	5.40
(7)	2019	April 2024	147,472	$	5.40
(8)	2019	May 2024	154,343	$	9.56
			712,470

(1) These warrants were issued in connection with the waiver of default the Company received in the fourth quarter of 2017 in connection with the Convertible Promissory Notes.

(2) These warrants were issued in connection with certain debt obligation settlement agreements.

(3) These warrants were issued in connection with a 2018 securities purchase agreement, as amended, (the “2018 Note Agreement”).

(4) These warrants were issued in connection with the 2018 Note Agreement.

(5) These warrants were issued in connection with the 2018 Note Agreement.

(6) These warrants were issued in connection with the 2018 Note Agreement.

(7) These warrants were issued in connection with the 2018 Note Agreement.

(8) These warrants were issued in connection with convertible notes issued in May 2019 (the “May 2019 Bridge Notes”).

During the three months ended September 30, 2022 and 2021, 83,501 and zero warrants expired, respectively. During the nine months ended September 30, 2022 and 2021, 92,626 and 239 warrants expired, respectively. These warrants had been issued in connection with transactions which were completed in 2016 and 2017.

During the nine months ended September 30, 2021, 357 warrants were settled for cash of approximately $0.1 million. For further discussion, see the 2016 Warrant Liability in Note 8 – Fair Value.

There were 26,529 and 26,795 warrants exercised during the three and nine months ended September 30, 2022 for proceeds to the Company of approximately $11,000, respectively. During the nine months ended September 30, 2022,

the intrinsic value of the warrants exercised was less than $0.1 million. There were 74,000 warrants exercised during the nine months ended September 30, 2021 for proceeds to the Company of $0.2 million. During the nine months ended September 30, 2021, the intrinsic value of the warrants exercised was $0.1 million.

Deemed Dividends

Certain of our preferred stock and warrant issuances contain down round provisions which require us to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic earnings per share.

There were no deemed dividends during the three and nine months ended September 30, 2022 and 2021.