Note 7 - Stockholders' Equity

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

7. Stockholders’ Equity

Convertible Preferred Stock

As of June 30, 2022 and December 31, 2021, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 5,000,000 shares of convertible preferred stock with $0.001 par value per share. As of both June 30, 2022 and December 31, 2021, 56,451 shares were issued and outstanding.

Series A Convertible Preferred Stock

The holders of Series A preferred stock are entitled to receive annual accruing dividends at a rate of 8%, payable in additional shares of Series A preferred stock or cash, at the Company’s option. The shares of Series A preferred stock have a liquidation preference of $1,000 per share, no voting rights and rank senior to all other classes and series of the Company’s equity in terms of repayment and certain other rights. During the year ended December 31, 2021, 4,175 additional shares were issued to CRG as payment of dividends. As of June 30, 2022 and December 31, 2021, 56,366 shares of Series A preferred stock were outstanding, which are currently convertible into shares of the Company’s common stock at $400 per share. The Series A preferred stock accrued additional dividends of approximately $1.1 million and $1.0 million during the quarters ended June 30, 2022 and 2021, respectively and approximately $2.3 million and $2.1 million during the six months ended June 30, 2022 and 2021, respectively.

Series B Convertible Preferred Stock

The Series B preferred stock has a liquidation preference of $0.001 per share, full ratchet price based anti-dilution protection, has no voting rights and is subject to certain ownership limitations. The Series B preferred stock is immediately convertible at the option of the holder, has no stated maturity, and does not pay regularly stated dividends or interest. During the year ended December 31, 2021, 93 of these shares converted into 18,600 shares of common stock. As of June 30, 2022 and December 31, 2021, 85 shares of Series B preferred stock remained outstanding, which are currently convertible into shares of the Company’s common stock at $5 per share.

Series D Convertible Preferred Stock

On January 14, 2022, the Company entered into a security purchase agreement with several institutional investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering ( “January 2022 Offering”), an aggregate of 7,600 shares of the Company’s Series D convertible preferred stock, par value $0.001 per share at an offering price of $1,000 per share. Concurrently, the Company agreed to issue to these investors warrants to purchase up to an aggregate of 807,500 shares of the Company’s common stock (the “Common Warrants”). The shares of Series D preferred stock had a stated value of $1,000 per share and were convertible into an aggregate of 950,000 shares of common stock at a conversion price of $8.00 per share. During the three months ended June 30, 2022, 2,400 of these shares converted into 300,000 shares of common stock. During the six months ended June 30, 2022, all 7,600 shares of Series D preferred stock were converted into a total of 950,000 shares of common stock. Consequently, there were no shares of Series D preferred stock outstanding as of June 30, 2022.

At the time of issuance, the Company evaluated the classification of the Series D preferred stock and determined equity classification was appropriate due to no mandatory or contingently redeemable redemption features. The warrants issued to the investors were considered freestanding equity classified instruments. The Company first allocated gross proceeds from the registered direct offering between the preferred stock and the warrants issued to investors using a relative fair value approach, resulting in an initial allocation to each instrument of $4,009 and $3,591, respectively. On the issuance date, the Company estimated the fair value of the Common Warrants issued to investors and warrants issued to the placement agent designees using a Black-Scholes option pricing model using the following assumptions: (i) contractual term of 5.5 years, (ii) expected volatility rate of 136.61%, (iii) risk-free interest rate of 1.51%, (iv) expected dividend rate of 0%, and (v) closing price of the Company’s common stock of the day immediately preceding the registered direct offering. The fair value of preferred stock was estimated based upon equivalent common shares that preferred stock could have been converted into at the closing price of the day immediately preceding the purchase date.

The embedded conversion feature was evaluated and bifurcation from the preferred stock equity host was not considered necessary. The issuance of the Series D convertible preferred stock generated a beneficial conversion feature (“BCF”) which arose as the equity security was issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective conversion price that is less than the market price of the underlying stock at the commitment date. The Company recorded the BCF as a discount to the preferred stock resulting in the amount of $5,111 based on the intrinsic value of the beneficial conversion. As the preferred stock was immediately convertible into common stock subject to the consummation of the reverse stock split on March 14, 2022, a deemed dividend related to the discount associated with the beneficial conversion feature was recorded on that date. This one-time, non-cash charge impacted net loss applicable to common stockholders and net loss per share attributable to common stockholders for the six months ended June 30, 2022.

Common Stock

As of June 30, 2022, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 100,000,000 shares of common stock with $0.001 par value per share, of which 6,081,333 shares were issued and outstanding.

Common Stock Warrants

As of June 30, 2022 and December 31, 2021, the Company had outstanding warrants to purchase common stock as follows:

	Total Outstanding and Exercisable		Underlying Shares of Common Stock		Exercise Price per Share		Expiration Date
Series 1 Warrants issued in the February 2018 Series B financing		8,979,000		44,895	$	400.00	February 2025
Series 2 Warrants issued in the February 2018 Series B financing		8,709,500		43,548	$	400.00	February 2025
Warrants issued in the November 2018 financing		8,768,395		43,842	$	80.00	November 2023
Total as of December 31, 2021		26,456,895		132,265
Placement agent warrants issued in the January 2022 financing		1,330,000		66,500	$	10.00	January 2027
Warrants issued in the January 2022 financing		16,150,000		807,500	$	9.60	July 2027
Total as of June 30, 2022		43,936,895		1,006,285

Pursuant to the purchase agreement entered into on January 14, 2022, the Company issued the Common Warrants to purchase up to an aggregate of 807,500 shares of the Company’s common stock at an exercise price of $9.60 per share and which became exercisable beginning July 14, 2022. The Common Warrants will expire five years following the time they become exercisable, or July 14, 2027. The exercise price and the number of shares of common stock issuable upon exercise of each common warrant is subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. In addition, in certain circumstances, upon a fundamental transaction, a holder of Common Warrants will be entitled to receive, upon exercise, the kind and amount of securities, cash or other property that such holder would have received had they exercised the Common Warrants immediately prior to the fundamental transaction.

The Common Warrants can be exercised at the option of the holders at any time after they become exercisable provided that shares of the Common Warrants cannot be exercised into common stock if the applicable holder would beneficially own in excess of 4.99% (or, upon election by such holder prior to the issuance of any shares of Common Warrants, 9.99%) of the Company’s outstanding common stock immediately after giving effect to the exercise. A holder of the Common Warrants may, upon notice to the Company, increase or decrease such beneficial ownership limitation, but not in excess of 9.99%.

The Company also issued to the placement agent of the January 2022 Offering warrants to purchase up to an aggregate of 66,500 shares of common stock (the “Placement Agent Warrants”). The Placement Agent Warrants are subject to the same terms as the Common Warrants, except that the Placement Agent Warrants have an exercise price of $10.00 per share and a term of five years from the commencement of the sales pursuant to the January 2022 Offering, or January 12, 2027.

As of June 30, 2022 and December 31, 2021, warrants to purchase an aggregate of 1,006,285 and 132,265 shares of common stock were outstanding, respectively.

Stock Plans

In January 2015, the Board of Directors adopted, and the Company’s stockholders approved the 2015 Equity Incentive Plan (“2015 Plan”). As of June 30, 2022, 9,482 shares were available for grant under the 2015 Plan.

The Company’s RSUs generally vest annually over three years in equal increments. The Company measures the fair value of RSUs using the closing stock price of a share of the Company’s common stock on the grant date and is recognized as expense on a straight-line basis over the vesting period of the award. A summary of all RSU activity is presented below:

	Number of Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term
Awards outstanding at December 31, 2021		10,060		$	24.39		0.72
Awarded		—		$	—		—
Released		(435	)	$	15.32		—
Forfeited		(969	)	$	24.36		—
Awards outstanding at June 30, 2022		8,656		$	24.84		0.25

As of  June 30, 2022, there was less than $0.1 million of remaining unamortized stock-based compensation expense associated with RSUs, which will be expensed over a weighted average remaining service period of approximately 0.3 years. The outstanding non-vested and expected to vest RSUs have an aggregate fair value of less than $0.1 million. The Company used the closing market price of $1.46 per share at June 30, 2022, to determine the aggregate fair value for the RSUs outstanding at that date. For the six months ended June 30, 2022 and 2021, the fair value of RSUs vested was approximately $3,000 and $88,000, respectively. Stock-based compensation expense recognized associated with RSUs vested for the three months ended June 30, 2022 and 2021, was $36,000 and $0.3 million, respectively. Stock-based compensation expense recognized associated with RSUs vested for the six months ended June 30, 2022 and 2021 was $0.1 million and $0.7 million, respectively.

2018 Officer and Director Share Purchase Plan

There was no common stock issued under the Company’s Officer and Director Share Purchase Plan (“ODPP”) during either the six months ended June 30, 2022 or 2021. On May 16, 2022, the Board of Directors of the Company terminated the Amended and Restated Officer and Director Share Purchase Plan due to the administrative costs of maintaining such plan and the limited amount of remaining shares. Consequently, there are no longer any shares reserved for issuance under this plan.