Stockholders’ Equity

12 Months Ended

Dec. 31, 2023

Stockholders’ Equity [Abstract]

Stockholders’ Equity

7. Stockholders’ Equity 

Class A Common Stock

RSUs are taxable upon vesting based on the market value on the date of vesting. The Company is required to make mandatory tax withholding for the payment and satisfaction of income tax, social security tax, payroll tax, or payment on account of other tax related to withholding obligations that arise by reason of vesting of an RSU. The taxable income is calculated by multiplying the number of vested RSUs for each individual by the closing share price as of the vesting date and a tax liability is calculated based on each individual’s tax bracket. During the year ended December 31, 2023, a total of 253,084 RSUs vested for Class A common stock shares. Of that amount, the Company withheld 52,227 Class A common stock shares to satisfy employee tax liabilities. During the year ended December 31, 2022, a total of 172,274 RSUs vested for Class A common stock shares. Of that amount, the Company withheld 32,438 Class A common stock shares to satisfy employee tax liabilities. The shares withheld are available for reissuance pursuant to the Company’s 2021 Incentive Award Plan.

On November 16, 2022, the Company accounted for but had not issued 48,140 RSUs convertible to unregistered shares of Class A common stock, with an aggregate value of $207,000 as payment for accrued expenses under a consulting agreement with Dr. Hare. On May 24, 2023, these shares were issued to Dr. Hare.

On June 22, 2022, a total of 27,854 RSUs were granted to the Company’s former Chief Executive Officer, Geoff Green, in exchange for $170,000 of compensation, as agreed upon in connection with his separation.

On April 18, 2023, the Company finalized the Separation Agreement dated March 31, 2023, for Dr. Christopher Min, the Company’s former interim Chief Executive Office and Chief Medical Officer. In part for his agreement to a general release the Company agreed to pay Dr. Min: $112,000 as severance compensation and allowed for the immediate acceleration and vesting of 40,000 RSUs that were previously granted.

On April 19, 2023, the Company finalized the Separation Agreement effective June 9, 2023, for James Clavijo, the Company’s former Chief Financial Officer (“CFO”). In part for his agreement to a general release the Company agreed to pay Mr. Clavijo $275,000 as severance compensation, three months of payment for COBRA insurance coverage and the immediate acceleration and vesting of 6,690 RSUs that were previously granted. Mr. Clavijo entered into a concurrent consulting agreement with the Company to continue as interim CFO until a permanent successor joined the Company. The consulting agreement has since expired.

On June 27, 2023, the Company filed a registration statement with the SEC to conduct a tradeable subscription rights offering for up to $30.0 million of shares of Class A common stock to its stockholders and holders of certain warrants to purchase common stock. On July 28, 2023, the Company filed a first amendment to the registration statement. On August 16, 2023, the registration statement was declared effective by the SEC, and on August 22, 2023, the Company launched the subscription rights offering at a subscription price of $3.00 per share of Class A common stock. On September 21, 2023, the subscription period for the rights offering of the Company expired. At the end of the subscription period, the Company sold 108,497 shares of its Class A common stock at a price of $3.00 per share. There were no net proceeds to the Company after deducting the $0.3 million of expenses associated with the rights offering.

On October 11, 2023, the Company entered into a securities purchase agreement with an institutional and accredited investor (the “Purchaser”) relating to the registered direct offering and sale of an aggregate of 2,365,000 shares of the Company’s Class A common stock, par value $0.001 per share and pre-funded warrants to purchase up to 59,243 shares of Class A common stock at an exercise price of $0.001 per share, at a purchase price of $1.65 per share and $1.649 per pre-funded Warrant (the “October 2023 Registered Direct Offering”), which Offering closed and was funded October 13, 2023.

In a concurrent private placement, the Company also sold to the Purchaser unregistered Series A warrants to purchase up to an aggregate of 2,424,243 shares of its Class A common stock and unregistered Series B warrants to purchase up to an aggregate of 2,424,243 shares of its Class A common stock (the “Warrants”)( the “October 2023 Private Placement” and collectively, with the October 2023 Registered Direct Offering, the “October 2023 Offering”). The unregistered Series A Warrants have an exercise price of $1.65 per share, became exercisable December 26, 2023, and have a term of five and one-half years from the date of issuance. The unregistered Series B Warrants have an exercise price of $1.65 per share, became exercisable December 26, 2023, and have a term of eighteen months from the date of issuance. The Series A and B warrants became exercisable upon stockholder approval on December 26, 2023, and each Warrant is exercisable for one share of Class A common stock. The net proceeds to the Company from the October 2023 Offering was approximately $3.4 million, after deducting placement agent fees and other offering expenses paid by the Company.

On December 20, 2023 the Company entered into a securities purchase agreement with an institutional and accredited investor (the “Purchaser”) relating to the registered direct offering and sale of an aggregate of 1,355,301 shares of the Company’s Class A common stock, par value $0.001 per share, at a purchase price of $1.745 per share of common stock (the “December 2023 Registered Direct Offering”), which Offering closed and was funded on December 22, 2023.

In a concurrent private placement on December 22, 2023, concurrent with the December 2023 Registered Direct Offering, the Company also sold to the Purchaser unregistered long-term warrants to purchase up to an aggregate of 1,355,301 shares of its Class A common stock (the “December 2023 Private Placement”, and together with the December 2023 Registered Direct Offering, the “December 2023 Offering”). The unregistered December 2023 Private Placement warrants have an exercise price of $1.62 per share, became immediately exercisable upon issuance, expire on June 20, 2029, and have a term of five and one-half years from the date of issuance. The net proceeds to the Company from the December 2023 Offering was approximately $2.0 million, after deducting placement agent fees and other offering expenses paid by the Company. 

During the year ended December 31, 2023, no stock options were exercised for shares of Class A common stock. During the year ended December 31, 2022, 374 stock options were exercised for shares of Class A common stock at an average exercise price of $5.73 for $2,143.

Class B Common Stock

In connection with the Corporate Conversion, 2,000,000 outstanding Series A and B units were converted into 15,702,834 shares of our unregistered Class B common stock.

Holders of Class A common stock generally have rights identical to holders of Class B common stock, except that holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to five (5) votes per share. The holders of Class B common stock may convert each share of Class B common stock into one share of Class A common stock at any time at the holder’s option. Class B common stock is not publicly tradable.

During the year ended December 31, 2023, shareholders exchanged 35,546 shares of Class B common stock for 35,546 shares of Class A common stock. During the year ended December 31, 2022, shareholders exchanged 811,749 shares of Class B common stock for 811,749 shares of Class A common stock.

Warrants

As part of the IPO, the underwriter received warrants to purchase 106,400 shares of Class A common stock. The warrants are exercisable at any time and from time to time, in whole or in part, during the four and a half-year period commencing August 12, 2021, at a price of $12.00 per share. Total grant date fair value of warrants as of December 31, 2021 was approximately $0.5 million. During 2021, the underwriters assigned 95,760 of the warrants to its employees. As of December 31, 2023, 51,061 warrants have been exercised for Class A common stock shares at an exercise price of $12.00 for $612,732.

As part of the December 2021 PIPE Offering, the Company issued 1,169,288 warrants to investors (“Purchaser Warrants”) to purchase up to a number of shares of Class A common stock equal to the number of shares of Class A common stock purchased by such investor in the offering, at an exercise price of $17.50 per share. The purchaser warrants are immediately exercisable, expire five years from the date of issuance and have certain downward pricing adjustment mechanisms, subject to a floor, as set forth in greater detail in the purchase warrants. In addition, the Company granted the underwriters warrants, under similar terms, to purchase 46,722 shares of Class A common stock, at an exercise price of $17.50 per share.

On August 16, 2023, the Company announced its Stock Rights Offering, which triggered the downward pricing mechanism on the Purchaser Warrants, at which time these warrants were adjusted downward to an exercise price of $5.25 for the period remaining through expiration. This resulted in a deemed dividend to common stockholders of approximately $0.8 million for the change in the fair value of the warrants using a Black-Scholes pricing model.

As part of the October 2023 Offering, the Company issued an aggregate of 2,424,243 Series A warrants and 2,424,243 Series B warrants to the purchaser to purchase up to a number of shares of Class A common stock. The Series A warrants have an exercise price of $1.65 per share and have a term of five and one-half years from the date of issuance. The Series B warrants have an exercise price of $1.65 per share and have a term of eighteen months from the date of issuance. Both the Series A and Series B warrants became exercisable as of December 26, 2023, following stockholder approval. In addition, the Company granted the underwriters warrants, under similar terms, to purchase 169,697 shares of Class A common stock, at an exercise price of $2.0625 per share.

As part of the December 2023 Offering, the Company sold unregistered long-term warrants to purchase an aggregate of 1,355,301 warrants to the purchase shares of Class A common stock. These unregistered warrants have an exercise price of $1.62 per share, became immediately issuable upon issuance, and expire on June 20, 2029. In addition, the Company granted the underwriters warrants, under similar terms, to purchase 94,871 shares of Class A common stock, at an exercise price of $2.1813 per share.