Annual report pursuant to Section 13 and 15(d)

Common Stock and Warrants

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Common Stock and Warrants
 12 Months Ended
Dec. 31, 2021
Stockholders' Equity Note [Abstract]  
COMMON STOCK AND WARRANTS
12. COMMON STOCK AND WARRANTS.

 

Warrants issued to Senior Noteholders – On December 22, 2019, in connection with an extension of the Company’s Notes, the Company issued warrants to purchase an aggregate of 5,500,000 shares of the Company’s common stock. The warrants had an exercise price of $1.00 per share and were exercisable commencing June 22, 2020 and were to expire on December 22, 2020. The Company had determined that the warrants issued in this transaction did not meet the conditions for classification in stockholders’ equity and as such, the Company recorded them as a liability at fair value. These warrants were initially valued at $977,000 as of December 31, 2019. Until they were exercised, the Company revalued them at each reporting period. In August 2020, these warrants were fully exercised for $1.00 per share. See Note 15 for the Company’s fair value assumptions.

 

Warrants issued in Equity Offering – On October 28, 2020, the Company closed an underwritten public offering of 5,075,000 shares of its common stock at a public offering price of $8.42 per share and 5-year pre-funded warrants to purchase 3,825,493 shares of common stock at a public offering price of $8.42 per pre-funded warrant. The Company had determined that the warrants issued in this transaction did not meet the conditions for classification in stockholders’ equity and as such, the Company recorded them as a liability at fair value. In November 2020, these warrants were fully exercised. For the period they were outstanding in 2020, the Company revalued them at each reporting period. See Note 15 for the Company’s fair value assumptions.

 

In addition, in a concurrent private placement, the Company also issued to the investor, for a nominal price, warrants to purchase an additional 8,900,493 shares of common stock at an exercise price of $9.757 per share. The warrants became exercisable after the six-month anniversary of the offering and will expire on the 18-month anniversary of the offering, or April 28, 2022. The Company had determined that when initially issued, these warrants did not meet the conditions for classification in stockholders’ equity, however, in November 2020, the Company amended these warrants which then met the conditions of classification in stockholders’ equity and as such, the Company recorded them initially as a liability at fair value and upon their amendment, reclassified their then fair value to equity. See Note 15 for the Company’s fair value assumptions.

 

The aggregate gross proceeds from the offerings of common stock, pre-funded warrants and warrants were approximately $75.0 million. The net offering proceeds were approximately $70.5 million after deducting underwriting discounts and commissions and other estimated offering expenses.

 

The following table summarizes warrant activity for the years ended December 31, 2021, 2020 and 2019 (number of shares in thousands):

    Number of
Shares		     Price per
Share		     Weighted
Average
Exercise Price		  
Balance at December 31, 2018    
—
     $
—
     $
—
  
Warrants issued     5,500     $ 1.00     $ 1.00  
Balance at December 31, 2019     5,500     $ 1.00     $ 1.00  
Warrants exercised     (5,500 )   $ 1.00     $ 1.00  
Pre-funded warrants issued     3,825     $ 0.00     $ 0.00  
Pre-funded warrants exercised     (3,825 )   $ 0.00     $ 0.00  
Series A warrants issued     8,900     $ 9.76     $ 9.76  
Balance at December 31, 2020     8,900     $ 9.76     $ 9.76  
Balance at December 31, 2021     8,900     $ 9.76     $ 9.76  

 

Nonvoting Common Stock – In 2015, the Company issued nonvoting common stock convertible at a holder’s election into voting common stock. As of December 31, 2021, an aggregate of 3,539,236 shares of nonvoting common stock had been converted into an equal number of shares of the Company’s voting common stock. As of December 31, 2021, 896 shares of nonvoting common stock were outstanding.

 

At-the-Market Program – In October 2018, the Company established an “at-the-market” equity distribution program under which it could offer and sell shares of common stock to, or through, sales agents by means of ordinary brokers’ transactions on The Nasdaq Stock Market, in block transactions, or as otherwise agreed between the Company and its sales agent at prices deemed appropriate. For the years ended December 31, 2020 and 2019, the Company issued 1,421,000 and 3,137,000 shares of common stock through its “at-the-market” equity program that resulted in net proceeds of $5,296,000 and $3,670,000 and fees paid to its sales agent of $171,000 and $66,000, respectively. The Company terminated its “at-the-market” program in October 2020.