Note 6 - Stockholders' Equity

9 Months Ended

Sep. 30, 2022

Disclosure Text Block [Abstract]

Stockholders' Equity

. Stockholders’ Equity

Classes of Stock

Prior to the completion of the Merger, LBS was authorized to issue 6,797,500 shares of $0.01 par value common stock and 33,594,625 shares of $0.001 par value Series C Convertible Preferred Stock. In connection with the Merger, the issued and outstanding Series C Convertible Preferred Stock shares in the amount of 11,674,131 were converted to 317,420 shares of the Company's common stock.

Common Stock

As of September 30, 2022 and December 31, 2021, the Company was authorized to issue 300,000,000 shares of $0.01 par value common stock. Each share of common stock shall entitle the holder thereof to one (1) vote on each matter submitted to a vote at a meeting of stockholders.

On October 6, 2022, the shareholders of the Company approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to decrease the number of authorized shares of common stock of the Company from 300,000,000 to 280,000,000, which will take effect upon the filing of an amendment to the Company's Certificate of Incorporation, which has not yet occurred.

Preferred Stock

As of September 30, 2022 and December 31, 2021, the Company was authorized to issue 7,000,000 shares of $0.01 par value preferred stock of which 1,000,000 shares have been designated as Series A 4.5% Convertible Preferred Stock ("Series A Convertible Preferred Stock") and 200,000 of which are issued and outstanding.

In connection with the August 2022 Public Offering (see below), the Company's Board of Directors designated 1,460 shares of the Company's preferred stock as $0.01 par value Series B Convertible Preferred Stock. Each share of Series B Convertible Preferred Stock will be convertible at any time at the holder’s option into one share of the Company's common stock, which conversion ratio will be subject to adjustment for stock splits, stock dividends, distributions, subdivisions and combinations. Subject to certain limitations, if the volume weighted average price of the Company's stock during any 30 consecutive trading day period exceeds 300% of the conversion price, the average daily dollar trading volume for such 30 consecutive trading period $500,000 per trading day and the holder is not in possession of any material non-public information, the Company may force each holder of Series B Convertible Preferred Stock to convert all of their shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock carries no voting rights and is not eligible for any dividends paid by the Company on shares of the Company's common stock, other than dividends in the form of the Company's common stock. The Series B Convertible Preferred Stock was classified as permanent equity as of the date of issuance, in accordance with authoritative guidance of ASC 480-10-S99 for the classification and measurement of potentially redeemable securities. As of September 30, 2022, all of the shares of the Series B Convertible Preferred stock issued in connection with the August 2022 Public Offering (see below) has been converted into shares of the Company's common stock and there were no shares issued or outstanding.

As of September 30, 2022, the Company's Series A Convertible Preferred Stock issued in the amount of 200,000 is convertible into 6,479 shares of common stock.

Reverse Stock Split

On October 4, 2022, the shareholders of the Company approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect, at the discretion of the Company’s Board of Directors, a reverse split

of the Company’s common stock, at a ratio not less than 1-for-10 and not greater than 1-for-50, with the exact ratio to be set within that range at the discretion of the Board of Directors and to be effected before the day prior to the 2023 annual meeting of shareholders, without further approval or authorization of the Company's shareholders. The Company's Board of Directors has not yet effected this reverse stock split.

May 2022 Registered Direct Offering

On May 6, 2022, the Company entered into securities purchase agreements with certain investors pursuant to which it agreed to sell and issue, in a registered direct offering (the “May 2022 Registered Direct Offering”), an aggregate of 3,646,690 shares of its common stock, par value $0.01 per share, at a purchase price per share of $0.55 and, in a concurrent private placement, also agreed to sell and issue to such purchasers warrants (the “May 2022 Purchase Warrants”) to purchase up to 3,646,690 shares of common stock at an exercise price of $0.7105 per share.

In connection with the May 2022 Registered Direct Offering and concurrent private placement transaction, the Company engaged a placement agent. The Company issued placement agent warrants (“May 2022 Placement Agent Warrants”) to purchase an aggregate of 218,801 shares of its common stock. The May 2022 Placement Agent Warrants have an exercise price of $0.7105 per share. The May 2022 Placement Agent Warrants and the May 2022 Purchase Warrants are referred to collectively as the May 2022 Warrants.

The aggregate net proceeds from the May 2022 Registered Direct Offering of $1.4 million consisted of aggregate consideration of $2.0 million less equity issuance costs of approximately $0.6 million. The fair value of the May 2022 Placement Agent Warrants was recognized as an equity issuance cost.

The shares of common stock (but not the warrants or the shares of common stock underlying such warrants) offered in the Registered Offering were offered and sold by the Company pursuant to a "shelf" registration statement on Form S-3, including a base prospectus, previously filed with and declared effective by the SEC on April 26, 2022. The May 2022 Warrants and shares of common stock underlying such warrants were later registered for resale on a separate registration statement on Form S-1.

August 2022 Public Offering

On August 12, 2022, Company, entered into an Underwriting Agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Underwriter”), pursuant to which the Company agreed to issue and sell, in a registered public offering by the Company (the "August 2022 Public Offering"), (a) 42,160,000 Class A Units, with each Class A Unit consisting of one share of the Company’s common stock, par value $0.01 per share, a Series 1 warrant with a term of one year from the date of issuance (a “Series 1 Warrant”) to purchase one share of the Company's common stock at an exercise price per share of $0.25, and a Series 2 warrant with a term of five years from the date of issuance (a “Series 2 Warrant”) to purchase one share of the Company's common stock at an exercise price per share of $0.25, with each Class A Unit to be offered to the public at an offering price of $0.25 per Class A Unit and (b) 1,460 Class B Units (the “Class B Units”, and collectively with the Class A Units, the “Units”), with each Class B Unit consisting of one share of Series B Convertible Preferred Stock, convertible into 4,000 shares of the Company's common stock, a Series 1 Warrant to purchase 4,000 shares of the Company's common stock, and a Series 2 Warrant to purchase 4,000 shares of common stock, with each Class B Unit offered to the public at an offering price of $1,000 per Class B Unit. Each Series 1 Warrant and Series 2 Warrant included in the Class B Units entitles its holder to purchase 4,000 shares of Common Stock at an exercise price per share of $0.25. All shares of the Series B Convertible Preferred Stock have been converted into shares of the Company's common stock as of September 30, 2022.

In addition, pursuant to the Underwriting Agreement, the Company granted the Underwriter a 45-day option (the “Overallotment Option”) to purchase up to (i) 7,200,000 additional shares of the Company's common stock, (ii) 7,200,000 additional Series 1 Warrants and/or (iii) 7,200,000 additional Series 2 Warrants, solely to cover over-allotments. The Underwriter fully exercised the Overallotment Option on August 12, 2022.

On August 16, 2022, the Company closed on the August 2022 Public Offering, pursuant to which the Company agreed to issue and sell (i) 49,360,000 shares of common stock (which includes 7,200,000 shares of Common Stock sold pursuant to the exercise of the Overallotment Option), (ii) 1,460 shares of Series B convertible preferred stock, (iii) 55,200,000 Series 1 Warrants (which includes 7,200,000 Series 1 Warrants sold pursuant to the exercise of the Overallotment Option), and (iv) 55,200,000 Series 2 Warrants (which includes 7,200,000 Series 2 Warrants sold pursuant to the exercise of the Overallotment Option). The warrants became exercisable beginning on the date of stockholder approval of the exercisability of the warrants, which was received on October 6, 2022. Gross proceeds from the August 2022 Public Offering, including the Overallotment Option, were $13.8 million and net proceeds were

approximately $11.5 million after deducting equity issuance costs of $2.3 million, which includes the underwriter discount, professional fees, and the fair value of the Underwriter Warrants (see Note 7).