In February 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Craig-Hallum Capital Group LLC and Laidlaw & Company (UK) Ltd. (collectively, the “Underwriters”), relating to the issuance and sale of 427,886 common stock units (the “Common Stock Units”) at a public offering price of $8.16 per Common Stock Unit and, to certain investors, 491,221 pre-funded warrant units (the “PFW Units”) at a public offering price of $8.1588 per PFW Unit (the “February 2024 Offering”). Each Common Stock Unit consisted of (i) one share of common stock, (ii) a Series A Warrant to purchase one share of common stock (the “Series A Warrant”), (iii) a Series B Warrant to purchase one share of common stock (the “Series B Warrant”), and (iv) a Series C Warrant to purchase one share of common stock (the “Series C Warrant”). Each PFW Unit consisted of (i) a pre-funded warrant to purchase one share of common stock (the “Pre-Funded Warrants”), (ii) a Series A Warrant, (iii) a Series B Warrant, and (iv) a Series C Warrant. The Company also issued warrants to the Underwriters to purchase up to 45,955 shares of common stock, equal to 5% of the securities sold in the February 2024 Offering (the “Representatives’ Warrants”). The Series A Warrants are fully exercisable and recognized as a freestanding instrument. In accordance with the terms and provisions of the Series C Warrants, the Series C Warrants are not exercisable, in part or in whole, at any time unless the Series B Warrants have been exercised. If Series B Warrants are not exercised before November 13, 2024, the corresponding Series C Warrants are no longer deemed outstanding and cannot be exercised. Furthermore, the Series B Warrants and Series C Warrants cannot be transferred by the holder without the consent of the Company, and, therefore the Series B Warrants and Series C Warrants are accounted for as a single unit of account.

Net cash proceeds from the February 2024 Offering was $6.2 million after deducting underwriter and offering expenses. The Pre-Funded Warrants, Series A Warrants, Series B Warrants, and Series C Warrants are equity classified and were recognized as additional paid-in capital in the condensed balance sheets. The Representatives’ Warrants were accounted for under ASC 718, Compensation — Stock Compensation, and were recognized as an equity issuance cost at their grant date fair value within additional paid-in capital in the condensed balance sheets.

In March and June 2024, the Company entered into identical amendments with certain holders (each, a “Holder”) of its Series B Warrants and Series C Warrants (the “March Warrant Amendment” and “June Warrant Amendment”, respectively, and collectively, the “Warrant Amendments”). Pursuant to the March Warrant Amendment and June Warrant Amendment, to the extent a Holder exercised its Series B Warrants before 5:00 p.m. Pacific time on March 27, 2024 (the “March Amendment Exercise Deadline”) and

June 21, 2024 (the “June Amendment Exercise Deadline” and together with the March Amendment Exercise Deadline, the "Amendment Exercise Deadlines"), respectively, the Holder’s corresponding Series C Warrants vested and were exercisable for the lesser of (i) three times the number of Series B Warrants exercised by the Holder and (ii) the total number of Series C Warrants outstanding to the Holder. Following the Amendment Exercise Deadlines, if such Holder exercised any remaining Series B Warrants, the remaining Series C Warrants, if any, vested and became exercisable on a one-for-one basis as to the same number of Series B Warrants exercised.

The Warrant Amendments also allowed a Holder to elect to receive Pre-Funded Warrants upon exercise of Series B Warrants and Series C Warrants in lieu of shares of the Company’s common stock, at a purchase price of $8.1588 per warrant exercised and an exercise price of $0.0012 per Pre-Funded Warrant.

Net cash proceeds from the March Warrant Amendment and June Warrant Amendment were $1.2 million and $0.3 million, respectively, after deducting underwriter and offering expenses. The Warrant Amendments were entered into to encourage the exercise of Series B Warrants in order to obtain capital to meet the Minimum Stockholders’ Equity Requirement. The Warrant Amendments neither changed the number of shares of common stock underlying each series of warrants nor its equity classification. The incremental change in fair value from the Warrant Amendments were equity issuance costs and recognized within additional paid-in capital in the condensed balance sheets.

The following table is a summary of the Company’s warrants outstanding as of June 30, 2024:


					Shares of
	Number of		Number of		Common Stock
	Warrants Outstanding		Warrants Exercisable		Underlying Warrants		Exercise Price		Initial Exercise Date	Expiration Date
Pre-Funded Warrants		665,046		665,046		665,046	$	0.0012	February 13, 2024	Until Exercised in Full
Series A Warrants		919,109		919,109		919,109	$	8.16	February 13, 2024	February 13, 2029
Series B Warrants		716,888		716,888		716,888	$	8.16	February 13, 2024	November 13, 2024
Series C Warrants(1)		919,109		919,109		919,109	$	8.16	February 13, 2024	November 13, 2024 or February 13, 2029
Representativesʼ Warrants		45,955		—		45,955	$	13.47	August 13, 2024	February 13, 2029
Total warrants		3,266,107		3,220,152		3,266,107

(1)

The Series C Warrants are subject to a vesting schedule and may only be exercised to the extent and in proportion to a holder of the Series C Warrants exercising its corresponding Series B Warrants, subject to accelerated vesting pursuant to the Warrant Amendment described above. The Series C Warrants expire on November 13, 2024, provided that to the extent and in proportion to a holder of the Series C Warrants have vested based on the exercise of the corresponding Series B Warrants, such Series C Warrants will expire on February 13, 2029.

Stock-based compensation expense includes charges related to stock option grants. The Company measures stock-based compensation expense based on the grant date fair value of any awards granted to its employees. Such expense is recognized over the period of time that employees provide service and earn rights to the awards.

During the six months ended June 30, 2024 and 2023, the Company granted stock options to purchase 6,352 and 12,810 shares of the Company’s common stock, respectively.

The estimated fair value of each stock option award granted was determined on the date of grant using the Black-Scholes option-pricing valuation model with the following assumptions:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Risk free interest rate	4.46%	3.39%	4.46%	1.34% - 3.39%
Expected option term	5.5 Years	5.5 Years	5.5 Years	5.5 - 6.0 Years
Expected volatility of common stock	107.11%	103.64%	107.11%	99.34% - 103.64%
Expected dividend yield	0.0%	0.0%	0.0%	0.0%

The Company recognized stock-based compensation expense as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	—	$	—	$	1,215	$	2,841
Selling, general and administrative		126,578		280,140		379,392		561,871
Total stock-based compensation expense	$	126,578	$	280,140	$	380,607	$	564,712

As of June 30, 2024, there was approximately $0.3 million of unrecognized compensation costs related to outstanding employee and board of director options, which are expected to be recognized over a weighted-average period of 0.69 years.