Stockholder's Equity

12 Months Ended

Dec. 31, 2022

Stockholder's Equity

Temporary Equity, and Members' and Stockholder's Equity

Note 6. 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)

2022 Reverse Stock Split

On November 7, 2022, at a special meeting of stockholders (the “Special Meeting”), the holders of a majority of the Company’s outstanding shares of common stock and Series B Preferred Stock approved the reverse stock split proposal and gave the Company’s board of directors discretionary authority to select a ratio for the split from 1-for-25 to 1-for-50. The Company’s board of directors approved the reverse split at a ratio of 1-for-50 on October 27, 2022, subject to stockholder approval.

On November 8, 2022, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended , with the Secretary of State of Delaware that effected a 1-for-50 reverse stock split of its common stock, which became effective at 5:00 PM (EST) on November 8, 2022. As a result of the 2022 Reverse Stock Split, the 13,000 shares of Series B Mirroring Preferred Stock were automatically cancelled for no consideration and resume the status of authorized but unissued shares of preferred stock of the Company. The 2022 Reverse Stock Split traded on an as-adjusted basis upon market open on November 9, 2022. The purpose of the 2022 Reverse Stock Split was to enable the Company to regain compliance with the requirements of Section 1003(f)(v) of the NYSE American Company Guide.

All shares of common stock, including common stock underlying warrants, stock options, restricted stock units, and VARs, as well as all conversion ratios, exercise prices, conversion prices and per share information in these consolidated financial statements give retroactive effect to the 2022 Reverse Stock Split.

Common Stock

On May 18, 2020, immediately prior to the Merger, the Company filed an amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a Reverse Stock Split. As a result of the Reverse Stock Split,

the number of issued and outstanding shares of common stock immediately prior to the Reverse Stock Split was reduced into a smaller number of shares, such that every 12 shares of common stock held by a stockholder of the Company immediately prior to the Reverse Stock Split were combined and reclassified into one share of common stock after the Reverse Stock Split. All outstanding and unexercised warrants to purchase shares of common stock otherwise remain in effect pursuant to their terms, subject to adjustment to account for the Reverse Stock Split. Immediately following the Reverse Stock Split there were approximately 27,347 shares of common stock outstanding prior to the Merger. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares instead received cash in lieu of their fractional shares.

Under the terms of the Amended Merger Agreement, the Company issued shares of common stock to the holders of common units. The 180 common units issued to TardiMed have been converted into 113,323 shares of common stock, and the 20 common units issued to Patagonia have been converted into 12,591 shares of common stock.

On May 18, 2020, pursuant to the Merger Agreement (see Note 1), 27,347 shares of common stock were issued for the acquisition of BioPharmX (see Note 4), with a fair value of approximately $8.4 million or $6.12 per share.

On May 18, 2020, pursuant to the Merger Agreement, 83,733 shares of common stock were issued to the investors of the $20 million private placement financing (See Note 1), aggregate net proceeds received totaled $17.5 million) and to settle the $5 million Bridge Notes.

On November 2, 2021, the Company entered into an underwriting agreement with H.C. Wainwright & Co., LLC, as representative of the several underwriters named in Schedule I thereto, relating to the public offering, issuance and sale of 426,500 shares of our common stock and, to certain investors, pre-funded warrants to purchase 42,250 shares of common stock, and accompanying warrants to purchase up to an aggregate of 468,750 shares of our common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a warrant to purchase one share of common stock. The public offering price of each share of common stock and accompanying common warrant was $32.00 and $31.95 for each pre-funded warrant and accompanying common warrant. The pre-funded warrants were immediately exercisable and were exercised in full on November 5, 2021. The warrants were immediately exercisable at a price of $35.00 per share of common stock and expire five years from the date of issuance.  

H.C. Wainwright & Co., LLC also exercised its over-allotment option, pursuant to the underwriting agreement, to purchase an additional 70,313 shares of common stock and 70,313 warrants to purchase common stock at the public offering price per share and per warrant less the underwriters’ discounts and commissions. After giving effect to the sale of 70,313 additional shares pursuant to the exercise of the option that closed on November 9, 2021, the total number of shares of common stock (or common stock equivalents) sold by us in the offering increased to 539,063, together with warrants to purchase up to 539,063 shares of common stock issued at the closing on November 5, 2021.  No warrants have been exercised as of December 31, 2022 and 2021, respectively.

Series A Warrants

Pursuant to the Securities Purchase Agreement, the Company issued 167,695 Series A Warrants to purchase shares of common stock. The Series A Warrants have a 5-year term and an exercise price of $139.77 subject to the number of shares and exercise price being reset based on the Company’s stock price after the Merger. The Series A Warrants were initially exercisable into 167,695 shares of Common Stock issued to the Investors, subject to certain adjustments.

On November 19, 2020, the Company entered into a Warrant Waiver Agreement with each of the warrant holders which modified the terms of the original agreement and eliminated further resets. The aggregate number of Series A Warrants issued was fixed at 403,564 and the warrant exercise price was fixed at $58.00. As of December 31, 2022 and 2021, respectively, 334,036 shares of common stock remain issuable upon exercise of the Series A Warrants.

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2021	334,036	$	58.00	3.4		—
Outstanding and exercisable as of December 31, 2022	334,036	$	58.00	2.7	$	—

Bridge Warrants

On May 22, 2020, pursuant to the Securities Purchase Agreement, the Company issued the Bridge Warrants exercisable for 8,275 shares of common stock in the aggregate (see Note 1). The Bridge Warrants had an exercise price of $111.81 per share, were immediately exercisable upon issuance and have a term of five years from the date of issuance. As a result of the November 2021 Offering, the exercise price of the Bridge Warrants was adjusted to $15.50 per share and was subsequently adjusted to $1.00 as a result of the August 2022 Offering.  As of December 31, 2022 and December 31, 2021, respectively, 8,275 shares of common stock remain issuable upon exercise of the Bridge Warrants.

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2021	8,275	$	1.00	3.4	$	28,963
Outstanding and exercisable as of December 31, 2022	8,275	$	1.00	2.4	$	6,206

Series B Warrants

During the year ended December 31, 2021, 149,481 Series B Warrants were exercised for 149,353 shares of the Company’s common stock. The Company received no proceeds from this exercise. As of December 31, 2021, the Series B Warrants were exercised in full.

Redeemable Series A Convertible 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 (the “Series A Preferred Stock”). The shares of Series A Preferred Stock have no voting rights. The holders of the Series A Preferred Stock were entitled to cumulative dividends after the date of issuance at a per annum of eight percent (8.00%) of the stated value. Dividends were 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 was 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 $902.70 Holders of the Series A Preferred Stock were 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 were redeemable for cash at the option of the holders, in whole or in part. For the year ended December 31, 2021, the Company accrued preferred dividends of 129,992 as a component of stockholder’s equity.

On November 23, 2021, the Company received a request for redemption by TardiMed for the Series A Preferred Stock. The Company asserted that such right to redemption was 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 previously outstanding shares of Series A Preferred Stock accrued dividends but as a liability and the dividends were recorded prospectively as non-cash interest expense in the Consolidated Statement of Operations and Comprehensive Loss until the Series A Preferred Stock held by TardiMed were redeemed. The Company recognized $108,591 in non-cash interest expense for the year ended December 31, 2022, and $15,551 of non-cash interest expense for the year ended December 31, 2021 in addition to $108,858 of non-cash dividends, for the year ended December 31, 2021. As result of the reclassification, interest was recorded in the Consolidated Statement of Operations and Comprehensive Loss rather than additional-paid-in-capital.

On July 27, 2022, the Company, entered into Letter Agreement with TardiMed pursuant to which TardiMed agreed to exchange its 1,819 shares of Series A Preferred Stock plus accrued dividends for the TardiMed Warrant to purchase 181,083 shares of common stock in the Warrant Exchange. The number of shares underlying the TardiMed Warrant is based on the redemption price of the Series A Preferred Stock (which had been demanded by TardiMed) divided by $11.95, the last closing price of the Company’s common stock prior to the date the Letter Agreement was executed.

Twenty percent of the TardiMed Warrant was immediately exercisable upon issuance. Beginning on September 30, 2022, and then at the end of each subsequent calendar quarter upon written request of TardiMed, the Company has agreed to allow an additional 20% of the initial balance of the TardiMed Warrant to become exercisable, provided that only 20% of the initial balance of the TardiMed Warrant will be exercisable in any given quarter. The TardiMed Warrant’s exercise price is $0.005 and may be exercised on a cashless basis. The TardiMed Warrant will terminate when exercised in full. On August 3, 2022, 20% of the TardiMed Warrant was exercised on a cashless basis and 36,196 shares of common stock were issued to TardiMed. On October 26, 2022, 20% of the TardiMed Warrant was exercised on a cashless basis and 36,166 shares of common stock were issued to TardiMed.

Pursuant to the Letter Agreement, TardiMed released and discharged the Company and its affiliates from any and all claims, rights, demands, actions, suits, causes of action, liabilities, obligations, damages and costs of any nature whatsoever that TardiMed has, had or may have against the Company or related parties in any way arising from or related to the Series A Preferred Stock.

The following table summarizes the TardiMed Warrant for the year ended December 31, 2022:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	TardiMed Warrant	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2021	—	$	—	*	$	—
Issued	181,083	$	0.005	*	$
Exercised	(72,433)	$	0.005	*	$
Outstanding and exercisable as of December 31, 2022	108,650	$	0.005	*	$	189,595
* Options expire once fully exercised; until exercised there is no expiration term

August 2022 Common Stock Warrants

On August 4, 2022, the Company announced the pricing of the public offering (the “August 2022 Offering”) of (i) 931,667 shares (the “Shares”) of common stock, (ii) pre-funded warrants to purchase up to an aggregate of 401,667 shares of common stock and (iii) August Warrants to purchase up to an aggregate of 1,333,333 shares of common stock.

Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with an August Warrant to purchase one share of common stock. All pre-funded warrants were exercised.

The following table summarizes the August Warrants for the year ended December 31, 2022:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2021	—	$	—	—	$	—
Granted	1,333,333	$	6.00	4.9	$	4,933,333
Exercised	(24,000)	$	6.00	—	$	(88,800)
Outstanding and exercisable as of December 31, 2022	1,309,333	$	6.00	4.9	$	4,844,533

October 2022 Common Stock Warrants

On October 3, 2022, the Company entered into the October Securities Purchase Agreement (with the “October Investors”) to sell, in the “Registered Offering”) (i) 260,000 shares of common stock, and (ii) Series 1 Warrants to purchase up to an aggregate of 260,000 shares of common stock. The Series 1 Warrants are immediately exercisable at an exercise price of $5.00 per share and will expire two and one-half years following the initial exercise date. The October Purchase Agreement contains customary representations and warranties and agreements of the Company and the October Investors, and customary indemnification rights and obligations of the parties. Total gross proceeds from the Registered Offering, before deducting the placement agent's fees and other estimated offering expenses, was $1.3 million. The Registered Offering closed on October 3, 2022.

In the “Concurrent Private Placement Offering” the Company issued (i) Series 2 Warrants to purchase up to an aggregate of 260,000 shares of “Series 2 Warrant Shares”, and (ii) 13,000 shares of Series B Preferred Stock.

Each share of Series B Preferred Stock has a stated value of $0.001 per share. The Series B Preferred Stock had super voting rights on the approval of the 2022 Reverse Stock Split (as defined herein) equal to 10,000,000 votes per share of Series B Preferred Stock. The voting rights of the Series B Preferred Stock were established in order to maintain the Company’s NYSE American listing by raising the average minimum bid price of the common stock to over $0.20 for 30 consecutive trading days. Upon the effectiveness of the Certificate of Amendment, the outstanding shares of Series B Preferred Stock were automatically transferred to the Company and cancelled for no consideration with no action on behalf of the holders thereof and such shares resumed the status of authorized but unissued shares of preferred stock and were no longer designated as shares of Series B Stock.

The Series 2 Warrants are exercisable on the date six (6) months following the date of issuance at an exercise price of $6.00 per share and will expire two and one-half years following the initial exercise date. The Series B Preferred Stock, was not, and the Series 2 Warrants and Series 2 Warrant Shares issuable upon exercise of the Series 2 Warrants have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated thereunder.

The following tables summarizes the October Warrants for the year ended December 31, 2022:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2021	—	$	—	—	$	—
Granted	520,000	$	5.50	2.5		5,200
Outstanding and exercisable as of December 31, 2022	520,000	$	5.50	2.5	$	5,200