| Stockholders' Equity | NOTE 10: STOCKHOLDERS’ EQUITY Common Stock On June 27, 2024, the Company’s stockholders approved an amendment of the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock, par value $ 0.18 per share, from 175,000,000 to 350,000,000 . As of September 30, 2024, the Company is authorized to issue 350,000,000 shares of common stock, par value $ 0.18 per share. Share Repurchases On June 27, 2023, the Board of Directors (the Board) authorized a program to repurchase shares of common stock, par value $ 0.18 per share, up to an aggregate market value of $ 10.0 million. On December 18, 2023, the Board authorized an extension of the program through December 31, 2024. The Board may suspend, modify, or terminate the share repurchase program at any time. During the three and nine months ended September 30, 2024, no shares were repurchased. During the three and nine months ended September 30, 2023, 1,200,664 shares and 1,320,046 shares were purchased for a cost of $ 1.3 million and $ 1.5 million, respectively. Preferred Stock The Company is authorized to issue a total of 10,000,000 shares of preferred stock, par value $ 0.001 per share. The Company has designated 750,000 shares of Series A junior participating preferred stock, par value $ 0.001 per share, 4,000 shares of Series A convertible preferred stock, par value $ 0.001 per share, 25,000 shares of Series B convertible preferred stock, par value $ 0.001 per share, and 20,000 shares of Series C convertible preferred stock, par value $ 0.001 per share, through the filings of certificates of designation with the Delaware Secretary of State. No shares of Series A junior participating preferred stock, Series A convertible preferred stock, or Series C convertible preferred stock, were outstanding as of September 30, 2024 and December 31, 2023. Series B Convertible Preferred Stock Conversion. Each share of Series B convertible preferred stock is convertible at the Company’s option at any time, or at the option of the holder at any time, into the number of shares of the Company’s common stock determined by dividing the $ 1,000 stated value per share of the Series B convertible preferred stock by a conversion price of $ 3.52 per share. In addition, the conversion price per share is subject to adjustment for stock dividends, distributions, subdivisions, combinations, or reclassifications. Subject to limited exceptions, a holder of the Series B convertible preferred stock will not have the right to convert any portion of the Series B convertible preferred stock to the extent that, after giving effect to the conversion, the holder, together with its affiliates, would beneficially own in excess of 9.99 % of the number of shares of the Company's common stock outstanding immediately after giving effect to its conversion. During the three and nine months ended September 30, 2024 and 2023, there were no conversions of Series B convertible preferred stock . Fundamental Transactions. In the event the Company effects certain mergers, consolidations, sales of substantially all of its assets, tender or exchange offers, reclassifications, or share exchanges in which its common stock is effectively converted into or exchanged for other securities, cash or property, the Company consummates a business combination in which another person acquires 50 % of the outstanding shares of its common stock, or any person or group becomes the beneficial owner of 50 % of the aggregate ordinary voting power represented by its issued and outstanding common stock, then, upon any subsequent conversion of the Series B convertible preferred stock, the holders of the Series B convertible preferred stock will have the right to receive any shares of the acquiring corporation or other consideration it would have been entitled to receive if it had been a holder of the number of shares of common stock then issuable upon conversion in full of the Series B convertible preferred stock. Dividends. Holders of Series B convertible preferred stock shall be entitled to receive dividends (on an as-if-converted-to-common-stock basis) in the same form as dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of common stock. The Company’s preferred stock contractually entitles the holders of such securities to participate in dividends but do not contractually require the holders of such securities to participate in losses of the Company. Voting Rights. Except as otherwise provided in the certificate of designation or as otherwise required by law, the Series B convertible preferred stock has no voting rights. Liquidation Preference . Upon the Company’s liquidation, dissolution or winding-up, whether voluntary or involuntary, holders of Series B convertible preferred stock will be entitled to receive out of the Company’s assets, whether capital or surplus, the same amount that a holder of common stock would receive if the Series B convertible preferred stock were fully converted (disregarding for such purpose any conversion limitations under the certificate of designation) to common stock, which amounts shall be paid pari passu with all holders of common stock. Redemption Rights. The Company is not obligated to redeem or repurchase any shares of Series B convertible preferred stock. Shares of Series B convertible preferred stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous provisions. 2021 and 2020 Warrants The warrants were issued to institutional and accredited investors as a part of the financing transactions, which closed on December 11, 2020, December 21, 2020, December 28, 2020, January 8, 2021, and March 23, 2021. The terms and conditions of the warrants are as follows: Exercisability . Each warrant is exercisable at any time and will expire between 4 and 4.5 years from the date of issuance. The warrants are exercisable, at the option of each holder, in whole or in part by delivering to the Company a duly executed exercise notice and payment in full for the number of shares of the Company’s common stock purchased upon such exercise, except in the case of a cashless exercise as discussed below. The number of shares of common stock issuable upon exercise of the warrants is subject to adjustment in certain circumstances, including a stock split or, stock dividend on, or a subdivision, combination or recapitalization of the common stock. Upon the merger, consolidation, sale of substantially all of the Company’s assets, or other similar transaction, the holders of warrants shall, at the option of the Company, be required to exercise the warrants immediately prior to the closing of the transaction, or such warrants shall automatically expire. Upon such exercise, the holders of warrants shall participate on the same basis as the holders of common stock in connection with the transaction. Cashless Exercise . If at any time there is no effective registration statement registering, or the prospectus contained therein is not available for issuance of, the shares issuable upon exercise of the warrant, the holder may exercise the warrant on a cashless basis. When exercised on a cashless basis, a portion of the warrant is cancelled in payment of the purchase price payable in respect of the number of shares of the Company’s common stock purchasable upon such exercise. Exercise Price . Each warrant represents the right to purchase one share of common stock. In addition, the exercise price per share is subject to adjustment for stock dividends, distributions, subdivisions, combinations or reclassifications, and for certain dilutive issuances. Subject to limited exceptions, a holder of warrants will not have the right to exercise any portion of the warrant to the extent that, after giving effect to the exercise, the holder, together with its affiliates, and any other person acting as a group together with the holder or any of its affiliates, would beneficially own in excess of 4.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to its exercise. The holder, upon notice to the Company, may increase or decrease the beneficial ownership limitation provisions of the warrant, provided that in no event shall the limitation exceed 9.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to the exercise of the warrant. Transferability . Subject to applicable laws and restrictions, a holder may transfer a warrant upon surrender of the warrant to us with a completed and signed assignment in the form attached to the warrant. The transferring holder will be responsible for any tax liability that may arise as a result of the transfer. Exchange Listing . The Company does not intend to apply to list the warrants on any securities exchange or recognized trading system. Rights as Stockholder . Except as set forth in the warrant, the holder of a warrant, solely in such holder’s capacity as a holder of a warrant, will not be entitled to vote, to receive dividends or to any of the other rights of the Company's stockholders. The Company’s warrants contractually entitle the holders of such securities to participate in dividends but do not contractually require the holders of such securities to participate in losses of the Company. Warrants Outstanding As of September 30, 2024, the following warrants to purchase shares of the Company’s common stock were outstanding:
Outstanding Exercise Price Per Warrant Expiration Date
December 2020 warrants 6,185,750 $ 1.00 December 11, 2024 - June 21, 2025
January 2021 warrants 4,500,000 $ 1.055 July 8, 2025
March 2021 warrants 10,525,000 $ 2.88 September 22, 2025
21,210,750 Warrant Activity During the nine months ended September 30, 2024, the Company received approximately $ 0.3 million from the exercises of warrants resulting in the issuance of 303,750 shares of common stock. There were no warrant exercises during the nine months ended September 30, 2023. |
