Stockholders' Equity (Deficit)

6 Months Ended

Jun. 30, 2022

Stockholders' Equity (Deficit)

Stockholders' Equity (Deficit)

11. Stockholders’ Equity (Deficit)

April 2022 Private Placements

On April 29, 2022, the Company entered into the RJB April 2022 Purchase Agreement, which provided for, among other things, 3,333,333 shares of Class A common stock for an aggregate purchase price of $40.0 million (or $12.00 per share). Long Live Bruce, LLC, an affiliate of Joseph N. Sanberg, was assigned RJB’s rights to 1,666,667 shares of Class A common stock for an aggregate purchase price of $20.0 million under the RJB April 2022 Private Placement Agreement, which was issued and sold concurrently with the execution of the purchase agreement (the “first closing”). The remainder of the Class A common shares under the RJB April 2022 Private Placement Agreement were to be issued and sold under a second closing, initially expected to close by May 30, 2022 or such other date as agreed to by the parties.

In addition, on April 29, 2022, the Company entered into a purchase agreement with Linda Findley (the “Findley April 2022 Private Placement”), a director of the Company and its President and Chief Executive Officer, under which the Company agreed to issue and sell to Ms. Findley in a separate private placement, which closed concurrently with the execution of the first closing, 41,666 shares of Class A common stock for an aggregate purchase price of $0.5 million (or $12.00 per share).

The first closing of the RJB April 2022 Private Placement and the Findley April 2022 Private Placement (collectively, the “April 2022 Private Placements”) resulted in $20.1 million of proceeds, net of issuance costs.

On August 7, 2022, the Company amended the RJB April 2022 Purchase Agreement, pursuant to which RJB agreed to purchase, in lieu of the remaining shares to be issued under the second closing, 10,000,000 shares of Class A common stock for an aggregate purchase price of $50.0 million (or $5.00 per share), as well as agreeing to extend the date of the second closing to on or before August 31, 2022. The Company expects to invest these proceeds in its long-term growth plan, or for general corporate purposes. The Company may use up to $25.0 million for strategic purposes aimed at enhancing shareholder value, including exploring share buybacks. RJB’s obligation to complete the second closing is not subject to closing conditions, and Joseph N. Sanberg has personally guaranteed fulfillment of RJB’s obligation to complete the second closing.

February 2022 Private Placement

On February 14, 2022, the Company entered into a purchase agreement with RJB, an affiliate of Joseph N. Sanberg, under which the Company agreed to issue and sell to RJB units consisting of Class A common stock and warrants to purchase shares of Class A common stock in a private placement (the “February 2022 Private Placement”) which closed concurrently with the execution of the purchase agreement for an aggregate purchase price of $5.0 million (or $14.00 per unit). In the aggregate, RJB received (i) 357,143 shares of Class A common stock, and (ii) warrants to purchase 500,000 shares of Class A common stock at exercise prices of $15.00 per share, $18.00 per share, and $20.00 per share, resulting in $4.8 million of proceeds, net of issuance costs.

The shares of Class A common stock and warrants were issued separately and constitute separate securities. The Company conducted an assessment of the classification of the warrants issued in the February 2022 Private Placement and, based on their terms, concluded the warrants were equity-classified. Accordingly, the net proceeds were recorded within Additional paid-in capital.

Each equity-classified warrant issued by the Company has a term of seven years from the date of issuance. Each such warrant may only be exercised for cash, except in connection with certain fundamental transactions, and no fractional shares will be issued upon exercise of the warrants. The warrants are non-transferable, except in limited circumstances, and have not been and will not be listed or otherwise trade on any stock exchange. The number of shares issuable upon exercise of the warrants and the applicable exercise prices is subject to adjustment upon the occurrence of certain events.

As of June 30, 2022, the equity-classified warrants issued by the Company were as follows:

	Exercise Price	Issued	Exercised	Outstanding as of June 30, 2022
$	15.00	6,525,714	—	6,525,714
$	18.00	3,262,857	—	3,262,857
$	20.00	1,631,429	—	1,631,429