Stockholders’ Equity (Deficit) |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Equity [Abstract] | |
| Stockholders’ Equity (Deficit) |
Note 3 – Stockholders’ Equity (Deficit)
The Company’s authorized capital as of March 31, 2026 was shares of common stock, par value $ per share, and shares of preferred stock, par value $ per share.
2025 Private Placement of Equity Facility (the “Committed Equity Facility”)
On May 14, 2025, and as amended on June 10, 2025, the Company entered into a common shares purchase agreement (the “Common Shares Purchase Agreement”) with investors (collectively, the “Investors”) relating to the Committed Equity Facility. Pursuant to the Common Shares Purchase Agreement, the Company has the right from time to time at its option to sell to the Investors up to $20 million of its common stock subject to certain conditions and limitations set forth in the Common Shares Purchase Agreement.
Sales of the shares of common stock to the Investors under the Common Shares Purchase Agreement, and the timing of any sales, will be determined by the Company from time to time in its sole discretion and will depend on a variety of factors, including, among other things, market conditions, the trading price of the common stock and determinations by the Company regarding the use of proceeds from the sale of such shares of common stock. The net proceeds from any sales under the Common Shares Purchase Agreement will depend on the frequency with, and prices at, which the shares of common stock are sold to the Investors.
The purchase price of the shares of common stock that the Company elects to sell to the Investors pursuant to the Common Shares Purchase Agreement will be 93% of the volume weighted average price of the shares of common stock during the applicable purchase date on which the Company has timely delivered written notice to the Investors directing it to purchase shares of common stock under the Common Shares Purchase Agreement.
In connection with the execution of the Common Shares Purchase Agreement, the Company agreed to issue to the Investors pre-funded warrants to purchase an aggregate of 300,000 shares of common stock as consideration for their irrevocable commitment to purchase the shares of common stock upon the terms and subject to the satisfaction of the conditions set forth in the Common Shares Purchase Agreement.
2025 Warrant Inducement Transaction
On February 26, 2025, the Company received gross proceeds of $686,000 before deducting placement agent fees and other offering expenses of $70,000 in relation to a warrant exercise inducement agreement with certain holders of existing warrants. The existing warrants were exercisable into shares of the Company’s common stock at $ per share. The holders agreed to exercise these existing warrants at a reduced exercise price of $2.27 per share in exchange for the Company’s agreement to issue the holders new warrants (the “Inducement Warrants”) exercisable for an aggregate of up to 604,138 shares of common stock.
The Inducement Warrants consist of (i) new Series A Inducement Warrants, representing warrants to purchase up to 302,069 shares of Common Stock at $2.02 per share exercisable immediately upon issuance with a term of five years from the date of issuance, and (ii) new Series B Inducement Warrants, representing warrants to purchase up to 302,069 shares of common stock at $2.02 per share exercisable immediately upon issuance with a term of eighteen months from the date of issuance. In addition, the Company issued warrants to the placement agent to purchase 21,145 shares of common stock at $2.8375 per share exercisable immediately upon issuance with a term of five years from the date of issuance.
The Company determined that under ASC 815, the 2025 inducement and placement agent warrants are considered indexed to the Company’s own stock and eligible for an exception from derivative accounting. Accordingly, the fair value of the 2025 inducement and placement agent warrants are classified as equity.
The Company recognized the aggregate effect of the modification of warrants and grant of inducement warrants of $1.1 million as an equity issuance cost and the accounting effect is recognized in the Statement of Stockholders’ Equity (Deficit).
Preferred Stock
Series C Preferred Stock
As of March 31, 2026, there were shares of series C preferred stock, par value $ per share (the “Series C Preferred Stock”) issued and outstanding.
As a result of numerous reverse stock-splits in previous years and the agreement terms for adjusting the rights of the related shares, the shares of Series C Preferred Stock are convertible into an infinitesimal amount of common stock, have no voting rights, and in the event of liquidation, the holders of the Series C Preferred Stock would not participate in any distribution of the assets or surplus funds of the Company. The holders of Series C Preferred Stock also are not currently entitled to any dividends if and when declared by the Board. No dividends to holders of the Series C Preferred Stock were declared or unpaid through March 31, 2026.
Series L Preferred Stock and Warrants
The Company previously issued Series L 10% Convertible Preferred Stock (the “Series L Preferred Stock”) and related warrants (the “2025 Warrants”) pursuant to a securities purchase agreement entered into in May 2025, as more fully described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Activity During the Three Months Ended March 31, 2026
During the three months ended March 31, 2026, holders exercised certain additional purchase rights issued pursuant to the May 2025 private placement (the “Greenshoe Rights”) and purchased shares of Series L Preferred Stock with an aggregate stated value of $4,611,111 for total proceeds of $4,150,000. As a result of these issuances and the full-ratchet anti-dilution provisions, the conversion price of the Series L Preferred Stock was reduced to the contractual floor price of $0.454 per share as of March 31, 2026.
The reduction in the conversion price constituted a dilutive issuance under the terms of the 2025 Warrants. Accordingly, the exercise price of the outstanding 2025 Warrants was reduced, and the number of shares underlying the 2025 Warrants was increased, such that the aggregate exercise price of the 2025 Warrants remained unchanged.
As of March 31, 2026, the Series L Preferred Stock reflects the adjusted conversion price of $0.454 per share.
For the three months ended March 31, 2026, the incremental change in the fair value of equity classified instruments upon the reduction of conversion and exercise prices was determined to be $, and was treated as a deemed dividend.
Dividends
During the three months ended March 31, 2026, the Company declared and paid dividends of approximately $103,000 to holders of Series L Preferred Stock, which were settled through the issuance of shares of common stock.
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