Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

Stockholders' Equity

Note 14. Stockholders’ Equity

Reverse Stock Split

On November 20, 2020, the Company completed a reverse stock split of its outstanding shares of common stock pursuant to which every fifteen (15) shares of issued and outstanding common stock were exchanged for one share of its common stock. No fractional shares were issued in the reverse stock split. Instead, fractional shares that would have otherwise resulted from the stock split were purchased by us at the applicable percentage of $4.27 per share. All share and per share amounts included within these financial statements have been retrospectively adjusted to reflect the reverse stock split.

Equity Offerings

Securities Purchase Agreement

In September 2019, concurrently with the closing of an underwritten public offering, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional accredited investors (the “Purchasers”), pursuant to which the Company sold to the Purchasers, in a private placement transaction, warrants to purchase up to an aggregate of 360,779 shares of its common stock (“Warrant Shares”), at a price of $9.60 per warrant (which $9.60 price relates to the pre-funded portion of the total $9.75 exercise price per share). Each pre-funded warrant has a remaining exercise price of $0.15 per share and became immediately exercisable upon issuance, subject to certain beneficial ownership limitations. For further discussion of pre-funded warrant activity see Note 13.

ATM Offering

In November 2019, the Company entered into a Controlled Equity Offering Sales Agreement (the “Cantor Sales Agreement”) with Cantor as sales agent, pursuant to which the Company was able to offer and sell, from time to time, through Cantor, shares of its common stock, par value $0.001 per share, by any method deemed to be an “at the market offering” as defined by rule 415(a)(4) under the Securities Act (the “ATM Offering”). The Company paid Cantor a commission of 3.0% of the aggregate gross proceeds from each sale of shares for all sales made under this agreement. The shares were offered and sold pursuant to the Company’s prior shelf registration statement on Form S-3 (File No. 333-229045).

During the year ended December 31, 2021, the Company sold 2,050,879 shares of common stock under the ATM Offering at then-market prices for total gross proceeds of approximately $11.0 million. After paying sales commissions owed in connection with the ATM Offering of approximately $0.3 million, the Company’s aggregate net proceeds for the year ended December 31, 2021 were approximately $10.7 million.

During the year ended December 31, 2020, the Company sold 955,240 shares of common stock under the ATM Offering at then‑market prices for total gross proceeds of $7.9 million. After deferred offering costs of $0.1 million and paying sales commissions owned in connection with the ATM Offering of $0.2 million, the Company’s aggregate net proceeds for the year ended December 31, 2020 were $7.5 million.

Exchange and Private Placement

On February 25, 2020, the Company entered into an Exchange and Purchase Agreement (the “Exchange Agreement”) with certain accredited investors (the “Investors”) pursuant to which the Company agreed to (i) issue to the Investors an aggregate of 41,100 shares of its newly designated Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred”), in exchange for the Investors surrendering to the Company for cancellation an aggregate of 274,000 shares of its common stock (the “Exchange”) and (ii) sell and issue to the Investors an aggregate of 10,170 shares of Series A Preferred for an aggregate purchase price of $0.6 million, or $59.00 per share (the “Private Placement”), both of which were completed prior to the end of February 2020.

In February 2020, in connection with the Exchange Agreement and the planned issuance of shares of Series A Preferred pursuant to the Exchange and Private Placement, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (the “Series A Certificate of Designation”). The Series A Certificate of Designation establishes and designates the Series A Preferred and the rights, preferences and privileges thereof.

Each share of Series A Preferred is convertible into 6.67 shares of the Company’s common stock, subject to proportional adjustment and beneficial ownership limitations. In June 2020, certain of the Investors elected to convert 27,500 shares of Series A Preferred to common stock in the aggregate, resulting in the issuance of 183,333 shares of the Company’s common stock. The remaining 23,770 Series A Preferred shares remain outstanding as of December 31, 2021.

In the event of the Company’s liquidation, dissolution or winding up, holders of Series A Preferred will participate pari passu with any distribution of proceeds to holders of the Company’s common stock. Holders of Series A Preferred are entitled to receive dividends on shares of Series A Preferred equal (on an as converted to common stock basis) to and in the same form as dividends actually paid on the Company’s common stock. Shares of Series A Preferred generally have no voting rights, except as required by law.

LP Purchase Agreement

On March 24, 2020, the Company entered into a purchase agreement ("LP Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), pursuant to which, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right to sell to Lincoln Park up to $20.0 million of shares of its common stock (“Purchase Shares”) from time to time over the 36-month term of the LP Purchase Agreement. The Company may sell up to 20,000 shares of its common stock to Lincoln Park in a regular purchase on any single business day that the closing price of its stock is not below $1.50. The minimum purchase amount per day must be equal to or greater than $150,000 to the extent the Company chooses to sell shares to Lincoln Park. This amount may be increased to up to 23,333 shares if the closing price of the Company’s common stock is not below $7.50 and to up to 26,666 shares if the closing price of the Company’s common stock is not below $11.25. In each case, the maximum amount of any single business day’s Purchase Shares may be increased up to 166,666 shares. The Company may direct Lincoln Park to purchase shares as often as every business day subject to the limitations outlined above. For each sale of common stock during the period of the agreement, the purchase price of the Purchase Shares will be established by a formula based on the recent closing prices of the Company’s common stock leading up to the date of sale. In addition to the regular purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases if the closing sales price of the Company’s common stock exceeds certain threshold prices as set forth in the LP Purchase Agreement.  

Under applicable rules of The Nasdaq Capital Market, in no event may the Company issue or sell to Lincoln Park under the LP Purchase Agreement shares of its common stock in excess of 19.99% of the shares of the Company’s common stock outstanding immediately prior to execution of the LP Purchase Agreement (the “Exchange Cap”), unless (i) the Company obtains stockholder approval to issue shares of its common stock in excess of the Exchange Cap or (ii) the average price of all applicable sales of its common stock to Lincoln Park under the LP Purchase Agreement equals or exceeds $5.2155, such that issuances and sales of the common stock to Lincoln Park under the purchase agreement would be exempt from the issuance limitation under applicable Nasdaq rules. The Company determined that the right to sell additional shares represents a freestanding put option under derivative accounting guidance, but has a fair value of zero, and therefore no additional accounting was required.

Lincoln Park has no right to require the Company to sell any shares of its common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as directed by the Company, subject to the limitations outlined above. In all instances, the Company may not sell shares of its common stock to Lincoln Park under the LP Purchase Agreement if doing so would result in Lincoln Park beneficially owning more than 9.99% of the Company’s common stock.

The Company issued Lincoln Park an aggregate of 41,026 shares of its common stock as consideration for their purchase commitment pursuant to the LP Purchase Agreement. The Company did not receive cash proceeds from the issuance of such shares. The value of this commitment consideration, as well as related transaction costs of approximately $0.1 million was included in selling, general and administrative expense in the accompanying consolidated statements of operations during the year ended December 31, 2020.

During the year ended December 31, 2021, the Company sold 154,372 shares of common stock under the LP Purchase Agreement at a weighted average price of $5.83 per share for total gross proceeds of $0.9 million compared to 197,632 shares of common stock at a weighted average price of $4.94 per share for total gross proceeds of $1.0 million during the year ended December 31, 2020.

Pursuant to the March 2022 Purchase Agreement (see Note 17), the Company may not sell any shares of its common stock under the LP Purchase Agreement for the remainder of the 36-month term of the LP Purchase Agreement.

Common Stock

Pursuant to its amended and restated certificate of incorporation, the Company is authorized to issue 26,666,667 shares of common stock at a par value of $0.001 per share. Each share of common stock is entitled to one vote. The shares of common stock have no preemptive or conversion rights, no redemption or sinking fund provisions, no liability for further call or assessment, and are not entitled to cumulative voting rights.

Preferred Stock

Pursuant to its amended and restated certificate of incorporation, the Company has been authorized to issue 10,000,000 shares of preferred stock, each having a par value of $0.001. The preferred stock may be issued from time to time in one or more series with the authorization of the Company’s Board of Directors. The Board of Directors can determine voting power for each series issued, as well as designation, preferences, and relative, participating, optional or other rights and such qualifications, limitations or restrictions thereof.

Stock-based Compensation

The Company incurs stock-based compensation expense relating to the grants of RSUs and stock options to employees, non-employee directors and consultants under its equity incentive plans and through stock purchase rights granted under the ESPP.

Equity Incentive Plans

The Company initially established the 2001 Stock Option Plan (the “2001 Plan”), which included incentive and nonqualified stock options and restricted stock to be granted to directors, officers, employees, consultants and others. The 2001 Plan terminated, and no further awards were granted under the 2001 Plan upon the effective date of the Company’s 2011 Equity Incentive Plan (the “2011 Plan”). In May 2015, the 2011 Plan terminated, and no further awards were granted under the 2011 plan upon the effective date of the Company’s 2014 Equity Incentive Plan (the “2014 Plan”).

In August 2020, the Company’s stockholders, upon the recommendation of the Company’s Board of Directors, approved the 2020 Equity Incentive Plan (the “2020 Plan”) as a successor to and continuation of the 2014 Plan. Upon approval of the 2020 Plan, 744,685 shares, including 68,552 remaining shares reserved for issuance under the 2014 Plan (excluding shares available for the granting of Inducement Awards under the 2014 Plan’s inducement share pool), were reserved for issuance under the 2020 Plan. No new awards may be granted under the 2014 Plan.

There were 558,865 shares of the Company’s common stock available for issuance under the 2020 Plan as of December 31, 2021 in addition to shares that may become available from time to time as shares of our common stock subject to outstanding awards granted under the 2014 Plan (excluding Inducement Awards), the 2011 Plan or the 2001 Plan that, following the effective date of the 2020 Plan (i) are not issued because such award or any portion thereof expires or otherwise terminates without all of the shares covered by such award having been issued; (ii) are not issued because such award or any portion thereof is settled in cash; or (iii) are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such shares. The 2020 Plan does not contain an evergreen provision.

In July 2021, the Company’s Board of Directors adopted the Company’s 2021 Inducement Plan (the “2021 Inducement Plan”), pursuant to which 300,000 shares were initially authorized and reserved for issuance exclusively for the grant of awards to individuals who were not previously employees or non-employee directors of the Company, as inducement material to the individuals’ entering into employment with the Company (“Inducement Awards”). There were 160,000 shares of the Company’s stock available for issuance under the 2021 Inducement Plan as of December 31, 2021, in addition to shares that may become available from time to time as shares of the Company’s common stock subject to outstanding awards granted under the 2021 Inducement Plan are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such shares.

The Company’s Board of Directors determines the grant date for all awards granted under the 2020 Plan. The exercise price of stock options granted is generally equal to the closing price of the Company’s common stock on the date of grant or on the employee’s hire date for new hire grants. All stock options granted have a ten-year term. The vesting period of stock options and RSUs is established by the Company’s Board of Directors but typically ranges between one and four years.

Amounts recognized in the consolidated statements of operations with respect to the Company’s equity incentive plans were as follows:

	Years Ended December 31,
	2021		2020
Selling, general and administrative	$	1,154,000	$	1,461,190
Research and development		141,281		106,267
Cost of product and product-related services revenue		22,074		17,328
	$	1,317,355	$	1,584,785

The following table summarizes stock option activity during the two-year period ended December 31, 2021:

	Number of Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Balance at January 1, 2020		193,660		$	35.55		8.0	$	781
Granted		387,178			7.81
Exercised		-			-			$	-
Forfeited		(67,369	)		12.99
Expired/Cancelled		(26,242	)		32.04
Balance at December 31, 2020		487,227		$	16.78		8.6	$	1,536
Granted		153,833			5.45
Exercised		(75	)		4.35			$	107
Forfeited		(52,874	)		11.98
Expired/Cancelled		(28,775	)		20.39
Balance at December 31, 2021		559,336		$	13.93		8.2	$	30,267
Exercisable at December 31, 2020		187,031		$	27.07		7.5	$	305
Exercisable at December 31, 2021		298,987		$	20.14		7.4	$	6,269

The weighted-average fair value of stock options granted was $4.38 and $6.40 for the years ended December 31, 2021 and 2020, respectively. The 2020 stock option activity includes no Inducement Awards granted during the year ended December 31, 2020 compared with 110,000 Inducement Awards granted during the year ended December 31, 2021. As of December 31, 2021, total unrecognized compensation cost related to non-vested stock options was approximately $1.3 million, which is expected to be recognized over approximately 2.52 years.

The fair value of each stock option granted has been determined using the Black-Scholes option pricing model. The material factors incorporated in the Black-Scholes model in estimating the fair value of the stock options granted for the periods presented were as follows:

	2021	2020
Fair value of common stock on grant date	$4.07 - 6.25	$4.35 - 11.25
Risk-free interest rate	0.85% - 1.20%	0.34% - 1.65%
Expected volatility	104.2% - 107.3%	109.1% - 149.9%
Expected term	5.2 to 6.1 years	5.4 to 5.9 years
Expected dividend yield	0%	0%

• Expected stock price volatility. The expected volatility assumption is derived from the volatility of the Company’s common stock during the years ended December 31, 2021 and 2020.

• Risk-free interest rate. The risk-free interest rate assumption is based on observed interest rates on the date of grant with maturities approximately equal to the expected term.

• Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method provided by the SEC. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the stock options.

• Expected dividend yield. The expected dividend is assumed to be zero as the Company has never paid dividends and does not anticipate paying any dividends on its common stock.

In preparing its Black-Scholes option-pricing model fair value calculations, the Company does not estimate a forfeiture rate to calculate stock-based compensation. The Company uses judgment in evaluating the expected volatility and expected terms utilized for the Company’s stock-based compensation calculations on a prospective basis.

The following table summarizes RSU activity during the two-year period ended December 31, 2021:

	Number of Shares			Weighted- Average Grant Date Fair Value Per Share
Balance at January 1, 2020		14,916		$	43.65
Granted		7,000			7.83
Released		(7,911	)		35.85
Forfeited		(1,791	)		41.23
Balance at December 31, 2020		12,214		$	28.61
Granted		30,000			5.20
Released		(4,529	)		29.13
Forfeited		(6,508	)		24.18
Balance at December 31, 2021		31,177		$	6.93
Vested and unissued at December 31, 2021		4,148		$	9.60

The weighted-average fair value of RSUs granted was $5.20 and $7.83 for the years ended December 31, 2021 and 2020, respectively. The 2020 RSU award activity includes no Inducement Awards granted during the year ended December 31, 2020 compared with 30,000 Inducement Awards granted during the year ended December 31, 2021. As of December 31, 2021, total unrecognized compensation cost related to non-vested RSUs was approximately $0.2 million, which is expected to be recognized over approximately 1.47 years.

Vested and unissued awards at December 31, 2021 represents RSU awards granted in August 2018 and November 2021 for which a portion of the awards vested on December 31, 2021, but for which issuance of shares occurred in  January 2022.

2014 Employee Stock Purchase Plan

In April 2015, the Company’s stockholders approved the 2014 Employee Stock Purchase Plan (the “2014 ESPP), which became effective in May 2015. Under the 2014 ESPP, the number of shares of common stock reserved for issuance automatically increased on January 1 of each calendar year, from January 1, 2016 to January 1, 2021 by the lesser of (i) 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (ii) 13,000 shares, or (iii) a number determined by the Company’s Board of Directors that is less than (i) and (ii). The 2014 ESPP enables participants to contribute up to 15% of such participant’s eligible compensation during a defined period (not to exceed 27 months) to purchase common stock of the Company. The purchase price of common stock under the 2014 ESPP is the lesser of: (i) 85% of the fair market value of a share of the Company’s common stock on the first day of an offering or (ii) 85% of the fair market value of the Company’s common stock at the applicable purchase date.

In August 2021, the Company’s stockholders, upon the recommendation of the Company’s Board of Directors, approved the Amended and Restated 2014 Employee Stock Purchase Plan (the “Amended 2014 ESPP”). Upon approval of the Amended 2014 ESPP, 500,000 shares of the Company’s common stock were reserved for issuance under the Amended 2014 ESPP in addition to 24,285 shares of the Company’s common stock reserved for issuance under the original 2014 ESPP. The Amended 2014 ESPP does not contain an evergreen provision all other provisions of the 2014 ESPP remained unchanged.

Amounts recognized in the consolidated statements of operations with respect to the Amended 2014 ESPP were as follows:

	Years Ended December 31,
	2021		2020
Selling, general and administrative	$	34,219	$	12,106
Research and development		11,643		5,248
Cost of product and product-related services revenue		11,807		3,832
	$	57,669	$	21,186

During the year ended December 31, 2021, employees purchased the following shares at the end of each of the six-month purchase periods:

	June 2021				December 2021
	Number of Shares		Price per Share		Number of Shares		Price per Share
Total number of shares purchased		13,637	$	3.92		20,326	$	3.56

During the year ended December 31, 2020, employees entering the plan at various times throughout the offering period purchased the following shares at the end of each of the six-month purchase periods:

	June 2020				December 2020
	Number of Shares		Price per Share		Number of Shares		Price per Share
ESPP Group:
Group A		3,033	$	8.29		2,857	$	4.87
Group B		-	N/A			396		4.87
Total number of shares purchased		3,033				3,253

As of December 31, 2021, approximately 503,959 shares of the Company’s common stock were reserved for future issuance under the Amended 2014 ESPP.

The Company recognizes employee stock purchase plan expense based on the fair value of stock purchase rights, estimated for each six-month purchase period using the Black-Scholes option pricing model. The model requires the Company to make subjective assumptions, including expected stock price volatility, risk free rate of return and estimated life. The fair value of equity-based awards is amortized straight-line over the vesting period of the award.

The material factors incorporated in the Black-Scholes model in estimating the fair value of employee stock purchase plan stock purchase rights for the periods presented were as follows:

	2021	2020
Fair value of common stock	$4.67 - 5.85	$8.70 - 9.75
Risk-free interest rate	0.04% - 0.08%	0.18% - 1.58%
Expected volatility	71.9% - 89.2%	65.8% - 88.9%
Expected term	0.5 years	0.5 years
Expected dividend yield	0%	0%

• Fair value of common stock. Estimated as the price of the Company’s common stock on the first day of each offering period.

• Expected stock price volatility. The expected volatility assumption is derived from the volatility of the Company’s common stock in recent periods for the years ended December 31, 2021 and 2020.

• Risk-free interest rate. The risk-free interest rate assumption is based on observed interest rates on the first day of the purchase period with maturities approximately equal to the expected term.

• Expected term. The expected term represents the length of a purchase period under the Amended 2014 ESPP.

• Expected dividend yield. The expected dividend is assumed to be zero as the Company has never paid dividends and does not anticipate paying any dividends on its common stock.

Stock Purchase Plan

In December 2015, the Board of Directors adopted a Stock Purchase Plan (the “Purchase Plan”) which allows directors, any individual deemed by the Board of Directors to be an officer for purposes of Section 16 of the Exchange Act, and anyone designated by the Board of Directors as eligible to participate in the Purchase Plan to purchase shares of the Company’s common stock from the Company at fair market value. The aggregate number of shares of common stock that may be issued under the Purchase Plan shall not exceed 16,666 shares of common stock, and a maximum of 500 shares of common stock may be purchased by any one participant on any one purchase date. The Board of Directors or an authorized committee must review and approve each individual request to purchase common stock under the Purchase Plan. No stock was sold under the Purchase Plan during the years ended December 31, 2021 and 2020. As of December 31, 2021, there were 11,658 shares available for issuance under the Purchase Plan.