Stockholder's Equity

6 Months Ended

Jun. 30, 2022

Stockholder's Equity

Stockholder's Equity

Note 5. Stockholder’s Equity

The Company entered into a Merger Agreement with BioPharmX and effective May 18, 2020, the Company converted its common and preferred units into shares of common and preferred stock (see Note 1).

Series B Warrants

During the six months ended June 30, 2021, the remaining Series B Warrants outstanding totaling 7,474,033 were exercised on a cashless basis, and the Company issued 7,467,652 shares of its common stock.  

	Shares	Weighted		Aggregate
	Underlying	Average		Intrinsic
	Warrants	Exercise Price		Value
Outstanding as of January 1, 2020	7,474,033	$	0.001	$	7,474
Exercised	(7,474,033)	$	0.001		—
Outstanding and exercisable as of June 30, 2021	—	$	—	$	—

Series A Warrants

During the six months ended June 30, 2021, 3,476,390 Series A Warrants were exercised on a cashless basis, and the Company issued 2,059,613 shares of its common stock. The following is a summary of Series A Warrants outstanding as of June 30, 2022:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2021	20,178,214	$	1.16	3.4		—
Outstanding and exercisable as of June 30, 2022	20,178,214	$	1.16	2.9	$	—

Bridge Warrants

The following table summarizes the Company’s Bridge Warrants for the six months ended June 30, 2022:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2021	413,751	$	0.31	3.4	$	28,963
Outstanding and exercisable as of June 30, 2022	413,751	$	0.31	3.1	$	2,069

November 2021 Warrants

No warrants have been exercised as of June 30, 2022, or December 31, 2021 (See Note 1).

The following table summarizes the Company’s November Warrants for the six months ended June 30, 2022:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2021	26,953,125	$	0.70	4.8	$	—

Outstanding and exercisable as of June 30, 2022 26,953,125 $ 0.70 4.4 $ —

Redeemable Series A Preferred Stock

In connection with the Merger, on May 18, 2020, the Company filed a Certificate of Designation of Preferences, Rights and Limitations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware that became effective immediately.

Pursuant to the Certificate of Designations, the Company designated 2,500 shares of the Company’s previously undesignated preferred stock as Series A Preferred Stock. The shares of Series A Preferred Stock have no voting rights. The holders of the Series A Preferred Stock are entitled to cumulative dividends from an after the date of issuance at a per annum of eight percent (8.0%) of the stated value. Dividends will be payable as and if declared by the Board out of amounts legally available therefore or upon a liquidation or redemption. Each share of Series A Preferred Stock is convertible at any time at the holder’s option into a number of shares of common stock (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions as specified in the Certificate of Designations) at a conversion price equal to the stated value of the Series A Preferred Stock of $1,000 (plus any accrued dividends) divided by the conversion price, or $18.054. Holders of the Series A Preferred Stock are entitled to a liquidation preference in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company. In addition, upon a Change of Control, the Series A Preferred Stock shall be redeemable for cash at the option of the holders, in whole or in part.

As of May 18, 2020, pursuant to the Merger Agreement, the holder of 1,819,289 preferred units of Timber Sub outstanding immediately prior to the Merger, received 1,819 shares of newly created convertible Series A Preferred Stock. The Company’s Series A Preferred Stock, as to which the holder has demanded redemption, was redeemable at December 31, 2021, subject to certain limitations under Delaware law, and was recorded at the redemption value of approximately $2.2 million at June 30, 2022, and $2.1 million at December 31, 2021, respectively.  Interest is accrued on the unredeemed balance at 8.0% annually.  

On November 23, 2021, the Company received a request for redemption by TardiMed for the Series A Preferred Stock.  The Company has asserted that such right to redemption is currently limited under Delaware corporate law.  As a result of the request, the convertible Series A Preferred Stock was reclassified as a liability, Redeemable Series A Preferred Stock under redemption.  The Series A Preferred Stock will continue to accrue dividends but as a liability, the dividends will be recorded prospectively as non-cash interest expense in the Condensed Consolidated Statement of Operations until such time as the Series A Preferred Stock is redeemed.  The Company recognized non-cash interest expense of $42,077, during the three months ended June 30, 2022, and $96,328 in non-cash interest expense for the six months ended June 30, 2022 and $36,286 and $72,173 of non-cash dividends, for the three months and six months ended June 30, 2021, respectively.  As result of the reclassification interest is now recorded in the Consolidated Statement of Operations rather than additional-paid-in-capital (see Note 9).