Item 2. Unregistered Sales of Equity Securities
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On April 11, 2025, the Company entered into inducement letter agreements with certain holders of certain of its existing warrants to purchase an aggregate of 595,188 shares of the Company’s common stock, of which warrants to purchase 121,500 shares were originally issued to the holders on September 4, 2024 with an original exercise price of $5.00 per share, and warrants to purchase 473,688 shares were originally issued to the holders on September 24, 2024 with an original exercise price of $9.50 per share.
Pursuant to the inducement letter agreements, the holders agreed to exercise the existing warrants for cash at a reduced exercise price of $2.60 per share in consideration of the Company’s agreement to issue new unregistered Series G warrants to purchase up to an aggregate of 218,646 shares of common stock and new unregistered Series H warrants to purchase up to an aggregate of 1,724,814 shares of common stock, each at a purchase price of $0.125 per warrant. The Series G Warrants have an exercise price of $2.60 per share, are exercisable immediately upon issuance, and have a term of exercise equal to five and one-half years following the effective date of the Resale Registration Statement (as defined below). The Series H Warrants have an exercise price of $2.60 per share, are exercisable immediately upon issuance, and have a term of exercise equal to eighteen months following the effective date of the Resale Registration Statement.
The Company has agreed to file a registration statement providing for the resale of the shares issuable upon the exercise of the Series G and Series H warrants (the “Resale Registration Statement”) as soon as reasonably practicable (and in any event within 30 calendar days) after the date of the inducement letter agreements, and to use commercially reasonable efforts to have such Resale Registration Statement declared effective by the SEC within 60 calendar days following the date of the inducement letter agreements (or within 90 calendar days following the date of the inducement letter agreements in the case of a “full review” of such registration statement by the SEC) and to keep the Resale Registration Statement effective at all times until no holder of the Series G and Series H warrants owns any such warrants or shares.
Pursuant to the inducement letter agreements, the Company agreed not to issue, enter into any agreement to issue, or announce the issuance or proposed issuance of any common stock or common stock equivalents or file any registration statement or any amendment or supplement to any existing registration statement (in each case, subject to certain exceptions) until 30 calendar days after the closing of this transaction. The Company also agreed not to effect or agree to effect any Variable Rate Transaction (as defined in the inducement letter agreements) until one year after the closing of this transaction (subject to an exception).
This transaction closed on April 14, 2025, and the gross proceeds to the Company were approximately $1.8 million prior to deducting placement agent fees and offering expenses. The Company intends to use the net proceeds from this transaction for working capital and general corporate purposes.
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H.C. Wainwright & Co., LLC (“HCW”) acted as the exclusive placement agent for the offering. As compensation for such placement agent services, the Company agreed to pay HCW an aggregate cash fee equal to 7.5% of the gross proceeds received by the Company from this transaction, plus a management fee equal to 1.0% of the gross proceeds received by the Company, accountable expenses of $50,000, non-accountable expenses of $25,000, and $15,950 for clearing expenses. The Company also agreed to issue to HCW or its designees warrants to purchase up to 44,639 shares of common stock (“PA Warrants”). The PA Warrants are immediately exercisable, have a term of five and one-half years following the effective date of the Resale Registration Statement, and have an exercise price of $3.25 per share.
The aforementioned Series G and Series H warrants, the PA Warrants, and the shares issuable upon the exercise of such warrants were sold and issued without registration under the Securities Act, in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering and Rule 506 promulgated under the Securities Act as sales to accredited investors, and in reliance on similar exemptions under applicable state laws.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
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