Stockholders' Equity | Note 14. Stock holders’ Equity Reverse Stock Split On December 20, 2022, the Company completed a reverse stock split of its outstanding shares of common stock pursuant to which every 12 shares of issued and outstanding common stock were exchanged for one share of common stock. No fractional shares were issued in the reverse stock split. Instead, fractional shares that would have otherwise resulted from the stock split were purchased by us at the applicable percentage of $ 8.20 per share. All share and per share amounts included within these consolidated financial statements have been retrospectively adjusted to reflect the reverse stock split. Equity Offerings September 2019 Securities Purchase Agreement In September 2019, concurrently with the closing of an underwritten public offering, the Company entered into a Securities Purchase Agreement (the "September 2019 Securities Purchase Agreement") with certain institutional accredited investors (the "Purchasers"), pursuant to which the Company sold the Purchasers, in a private placement transaction, warrants to purchase up to an aggregate of 30,064 shares of its common stock ("Warrant Shares"), at a price of $ 115.20 per warrant (which $ 115.20 price related to the pre-funded portion of the total $ 117.00 exercise price per share). Each pre-funded warrant had a remaining exercise price of $ 1.80 per share and became immediately exercisable upon issuance, subject to certain beneficial ownership limitations. In June 2021, the remaining 12,416 pre-funded warrants were exercised on a cashless, net exercise basis, resulting in the issuance of 12,073 shares of common stock. ATM Offering In November 2019, the Company entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. ("Cantor") as sales agent, pursuant to which the Company was able to offer and sell, from time to time, through Cantor, shares of its common stock, par value $ 0.001 per share, by any method deemed to be an "at the market offering" as defined by rule 415(a)(4) under the Securities Act (the "ATM Offering"). During the year ended December 31, 2021, the Company sold 170,907 shares of common stock under the ATM Offering at then-market prices for net proceeds of approximately $ 10.7 million after paying sales commissions of approximately $ 0.3 million. LP Purchase Agreement In March 2020, the Company entered into a purchase agreement ("LP Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), pursuant to which, upon the terms and subject to the conditions and limitations set forth therein, the Company had the right to sell to Lincoln Park up to $ 20.0 million of shares of its common stock ("Purchase Shares") from time to time over the 36-month term of the LP Purchase Agreement. During the year ended December 31, 2021, the Company sold 12,864 shares of common stock under the LP Purchase Agreement at a weighted average price of $ 69.96 per share for total gross proceeds of approximately $ 0.9 million. The LP Purchase Agreement is no longer in effect. Exchange and Private Placement In February 2020, the Company entered into an Exchange and Purchase Agreement with certain accredited investors pursuant to which the Company agreed to (i) issue the investors an aggregate of 41,100 shares of its newly designated Series A Convertible Preferred Stock, par value $ 0.001 per share ("Series A Preferred"), in exchange for the investors surrendering to the Company for cancellation an aggregate of 22,833 shares of its common stock and (ii) sell and issue to the investors an aggregate of 10,170 shares of Series A Preferred for an aggregate purchase price of $ 0.6 million, or $ 59.00 per share. In March 2022, the remaining 23,770 shares of Series A Preferred were converted by the investors into an aggregate of 13,206 shares of common stock. Accordingly, no shares of Series A Preferred are outstanding as of December 31, 2022. All of the previously designated Series A Preferred have resumed the status of authorized, unissued and undesignated preferred stock, which may be designated from time to time by the Company's Board of Directors. March 2022 Securities Purchase Agreement In March 2022, the Company entered into a Securities Purchase Agreement (the “March 2022 Securities Purchase Agreement”) with a single investor pursuant to which it agreed to issue to the investor 270,415 units at a price of $ 27.744 per unit (less $ 0.012 for each pre-funded warrant purchased in lieu of a share of common stock) for net proceeds, after deducting the placement agent fees and other estimated fees and expenses, of approximately $ 7.0 million. Each unit consists of one share of common stock (or one pre-funded warrant in lieu thereof), a common warrant to purchase one share of common stock with a term of 24 months from the issuance date, and a common warrant to purchase one share of common stock with a term of 66 months from the issuance date. Each of the common warrants became exercisable commencing on September 21, 2022 and has an exercise price of $ 24.744 per share. Each pre-funded warrant has an exercise price of $ 0.012 per share and does not expire until exercised in full. The pre-funded warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 9.99 % immediately after exercise thereof. In May 2022, the 200,911 pre-funded warrants were exercised for proceeds of $ 2,411 . The common warrants issued in this transaction may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99 % immediately after exercise thereof, which ownership cap may be increased by the holder up to 9.99 % upon 61 days’ prior notice. Cantor served as the placement agent in connection with the March 2022 Securities Purchase Agreement. The Company paid Cantor a fee of approximately $ 0.3 million plus reimbursement for certain out-of-pocket expenses for its role as placement agent and has incurred approximately $ 0.2 million of additional transaction costs. December 2022 Securities Purchase Agreement In December 2022, in connection with a best-efforts public offering, the Company entered into a Securities Purchase Agreement (the "December 2022 Securities Purchase Agreement") with a certain institutional investor, pursuant to which the Company sold the investor 1,290,322 units at a combined public offering price of $ 7.75 per share (less $ 0.001 for each pre-funded warrant purchased in lieu of a share of common stock) for net proceeds, after deducting the Placement Agent fees and expenses and other estimated fees and expenses, of approximately $ 8.7 million. Each unit consisted of one share of common stock (or one pre-funded warrant in lieu thereof), a common warrant to purchase one share of common stock with a term of 24 months from the issuance date, and a common warrant to purchase one share of common stock with a term of 60 months from the issuance date. The common warrants issued in this transaction may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99 % immediately after exercise thereof, which ownership cap may be increased by the holder up to 9.99 % upon 61 days’ prior notice. Each pre-funded warrant had an exercise price of $ 0.001 per share and did not expire until exercised in full. In December 2022, the 1,188,322 pre-funded warrants were exercised for proceeds of $ 1,188 . Each of the common warrants became immediately exercisable upon issuance and has an exercise price of $ 7.50 per share. The exercise price of the warrants issued in this agreement is subject to adjustment for stock split, reverse splits and similar capital transactions as described in the warrants. H.C. Wainwright & Co., LLC (the "Placement Agent") served as the exclusive placement agent in connection with the December 2022 Securities Purchase Agreement. The Company paid the Placement Agent a cash fee of 6.5 % of the aggregate gross proceeds raised at the closing of the December 2022 Securities Purchase Agreement, plus a management fee equal to 0.5 % of the gross proceeds raised at the closing, and reimbursement of certain expenses and legal fees in the amount of $ 125,000 . The Company also issued to designees of the Placement Agent warrants to purchase up to an aggregate of 38,709 shares of common stock (the “Placement Agent warrants”). The Placement Agent warrants have substantially the same terms as the warrants issued under the December 2022 Securities Purchase Agreement, except the Placement Agent warrants have an exercise price of $ 9.6875 per share and expire on December 21, 2027. Common Stock Pursuant to its amended and restated certificate of incorporation, the Company is authorized to issue 26,666,667 shares of common stock at a par value of $ 0.001 per share. Each share of common stock is entitled to one vote. The shares of common stock have no preemptive or conversion rights, no redemption or sinking fund provisions, no liability for further call or assessment, and are not entitled to cumulative voting rights. Preferred Stock Pursuant to its amended and restated certificate of incorporation, the Company has been authorized to issue 10,000,000 shares of preferred stock, each having a par value of $ 0.001 . The preferred stock may be issued from time to time in one or more series with the authorization of the Company’s Board of Directors. The Board of Directors can determine voting power for each series issued, as well as designation, preferences, and relative, participating, optional or other rights and such qualifications, limitations or restrictions thereof. Series A Preferred Stock In October 2022, the Company entered into a Purchase Agreement (the "Purchase Agreement" with Ann Hanham, Ph.D., the Chair of the Company's Board of Directors (the "Purchaser"), pursuant to which the Company agreed to issue and sell one share of the Company's newly designated Series A Preferred Stock, par value $ 0.001 per share (the "Series A Preferred Stock"), to the Purchaser for a purchase price of $ 100.00 . The Series A Preferred Stock was non-convertible, generally had voting rights only with respect to a proposal to authorize a reverse split of our common stock, and was automatically redeemed in an event certain to occur. On November 29, 2022, the one share of Series A Preferred Stock was redeemed for $ 100.00 upon stockholder approval of a reverse stock split. Stock-based Compensation The Company incurs stock-based compensation expense relating to the grants of RSUs and stock options to employees, non-employee directors and consultants under its equity incentive plans and through stock purchase rights granted under the ESPP. Equity Incentive Plans In August 2020, the Company’s stockholders, upon the recommendation of the Company’s Board of Directors, approved the 2020 Equity Incentive Plan (the “2020 Plan”) as a successor to and continuation of the previous 2001 Stock Option Plan, 2011 Equity Incentive Plan and 2014 Equity Incentive Plan (the "2014 Plan"). Upon approval of the 2020 Plan, 62,057 shares, including 5,712 remaining shares reserved for issuance under the 2014 Plan (excluding shares available for the granting of inducement awards under the 2014 Plan’s inducement share pool), were reserved for issuance under the 2020 Plan. No new awards may be granted under the 2001, 2011 or 2014 equity plans. There were 16,668 shares of the Company’s common stock available for issuance under the 2020 Plan as of December 31, 2022 in addition to shares that may become available from time to time as shares of our common stock subject to outstanding awards granted under the 2014 Plan (excluding Inducement Awards) or the 2011 Plan that, following the effective date of the 2020 Plan (i) are not issued because such award or any portion thereof expires or otherwise terminates without all of the shares covered by such award having been issued; (ii) are not issued because such award or any portion thereof is settled in cash; or (iii) are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such shares. The 2020 Plan does not contain an evergreen provision. In July 2021, the Company’s Board of Directors adopted the Company’s 2021 Inducement Plan (the “2021 Inducement Plan”), pursuant to which 25,000 shares were initially authorized and reserved for issuance exclusively for the grant of awards to individuals who were not previously employees or non-employee directors of the Company, as inducement material to the individuals’ entering into employment with the Company (“Inducement Awards”). There were 13,961 shares of the Company’s stock available for issuance under the 2021 Inducement Plan as of December 31, 2022, in addition to shares that may become available from time to time as shares of the Company’s common stock subject to outstanding awards granted under the 2021 Inducement Plan are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such shares. The Company’s Board of Directors determines the grant date for all awards granted under the equity plans. The exercise price of stock options granted is generally equal to the closing price of the Company’s common stock on the date of grant. All stock options granted have a ten-year term. The vesting period of stock options and RSUs is established by the Company’s Board of Directors but typically ranges between one and four years . Amounts recognized in the consolidated statements of operations with respect to the Company’s equity incentive plans were as follows: Years Ended December 31, 2022 2021 Selling, general and administrative $ 559,226 $ 1,154,000 Research and development 197,705 141,281 Cost of product and product-related services revenue 17,229 22,074 $ 774,160 $ 1,317,355 The following table summarizes stock option activity (including Inducement Award activity) during the two-year period ended December 31, 2022: Number of Weighted- Weighted- Aggregate Balance at January 1, 2021 40,602 $ 201.36 8.6 $ 1,536 Granted 12,819 65.40 Exercised ( 6 ) 52.20 $ 107 Forfeited ( 4,406 ) 143.76 Expired/Cancelled ( 2,398 ) 244.68 Balance at December 31, 2021 46,611 $ 167.16 8.2 $ 30,267 Granted 39,667 12.91 Exercised — — Forfeited ( 4,944 ) 66.58 Expired/Cancelled ( 5,235 ) 292.56 Balance at December 31, 2022 76,099 $ 84.73 8.3 $ - Exercisable at December 31, 2021 24,915 $ 241.68 7.4 $ 6,269 Exercisable at December 31, 2022 38,096 $ 142.34 7.6 $ - The weighted-average fair value of stock options granted was $ 10.50 and $ 52.56 for the years ended December 31, 2022 and 2021 , respectively. Stock option activity includes 8,748 Inducement Awards outstanding as of December 31, 2022, including 3,332 Inducement Awards granted and 3,750 Inducement Awards cancelled or forfeited during the year ended December 31, 2022 and 9,166 Inducement Awards granted during the year ended December 31, 2021. As of December 31, 2022, total unrecognized compensation cost related to non-vested stock options was approximately $ 0.8 million, which is expected to be recognized over approximately 1.87 years . The fair value of each stock option granted has been determined using the Black-Scholes option pricing model. The material factors incorporated in the Black-Scholes model in estimating the fair value of the stock options granted for the periods presented were as follows: 2022 2021 Fair value of common stock on grant date $ 8.28 - 49.27 $ 48.84 - 75.00 Risk-free interest rate 1.53 % - 3.64 % 0.85 % - 1.20 % Expected volatility 89.6 % - 110.7 % 104.2 % - 107.3 % Expected term 5.5 to 5.8 years 5.2 to 6.1 years Expected dividend yield 0 % 0 % • Expected stock price volatility . The expected volatility assumption is derived from the volatility of the Company’s common stock during the years ended December 31, 2022 and 2021. • Risk-free interest rate . The risk-free interest rate assumption is based on observed interest rates on the date of grant with maturities approximately equal to the expected term. • Expected term . The expected term represents the period that the stock-based awards are expected to be outstanding. The Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, the Company estimates the expected term by using the simplified method provided by the SEC. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the stock options. • Expected dividend yield . The expected dividend is assumed to be zero as the Company has never paid dividends and does not anticipate paying any dividends on its common stock. In preparing its Black-Scholes option-pricing model fair value calculations, the Company does not estimate a forfeiture rate to calculate stock-based compensation. The Company uses judgment in evaluating the expected volatility and expected terms utilized for the Company’s stock-based compensation calculations on a prospective basis. The following table summarizes RSU activity (including Inducement Award activity) during the two-year period ended December 31, 2022: Number of Weighted- Balance at January 1, 2021 1,017 $ 343.32 Granted 2,500 62.40 Released ( 377 ) 349.56 Forfeited ( 542 ) 290.16 Balance at December 31, 2021 2,598 $ 83.16 Granted 416 8.29 Released ( 1,139 ) 110.47 Forfeited ( 626 ) 62.50 Balance at December 31, 2022 1,249 $ 44.40 Vested and unissued at December 31, 2022 208 $ 62.42 The weighted-average fair value of RSUs granted was $ 8.29 and $ 62.40 for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, total unrecognized compensation cost related to non-vested RSUs was approximately $ 41,600 , which is expected to be recognized over approximately 0.91 years . RSU activity includes 1,249 Inducement Awards outstanding as of December 31, 2022, including 416 Inducement Awards granted, 1,041 Inducement Awards released and 626 Inducement Awards forfeited during the year ended December 31, 2022 and 2,500 Inducement Awards granted in the year ended December 31, 2021. Vested and unissued awards at December 31, 2022 represents RSU awards granted in November 2021 for which a portion of the awards vested on December 31, 2022 , but for which issuance of shares occurred in January 2023. 2014 Employee Stock Purchase Plan In April 2015, the Company’s stockholders approved the 2014 Employee Stock Purchase Plan (the “2014 ESPP"), which became effective in May 2015. Under the 2014 ESPP, the number of shares of common stock reserved for issuance automatically increased on January 1 of each calendar year, from January 1, 2016 to January 1, 2021 by the lesser of (i) 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (ii) 1,083 shares, or (iii) a number determined by the Company’s Board of Directors that is less than (i) and (ii) . The 2014 ESPP enables participants to contribute up to 15 % of such participant’s eligible compensation during a defined period (not to exceed 27 months) to purchase common stock of the Company. The purchase price of common stock under the 2014 ESPP is the lesser of: (i) 85 % of the fair market value of a share of the Company’s common stock on the first day of an offering or (ii) 85 % of the fair market value of the Company’s common stock at the applicable purchase date. In August 2021, the Company’s stockholders, upon the recommendation of the Company’s Board of Directors, approved the Amended and Restated 2014 Employee Stock Purchase Plan (the “Amended 2014 ESPP”). Upon approval of the Amended 2014 ESPP, 41,666 shares of the Company’s common stock were reserved for issuance under the Amended 2014 ESPP in addition to 2,023 shares of the Company’s common stock reserved for issuance under the original 2014 ESPP. The Amended 2014 ESPP does not contain an evergreen provision; all other provisions of the 2014 ESPP remained unchanged. Amounts recognized in the consolidated statements of operations with respect to the Amended 2014 ESPP were as follows: Years Ended December 31, 2022 2021 Selling, general and administrative $ 22,187 $ 34,219 Research and development 11,046 11,643 Cost of product and product-related services revenue 7,114 11,807 $ 40,347 $ 57,669 During the year ended December 31, 2022, employees purchased the following shares at the end of each of the six-month purchase periods: June 2022 December 2022 Number of Price Number of Price Total number of shares purchased 4,083 $ 5.71 2,792 $ 5.10 During the year ended December 31, 2021, employees entering the plan at various times throughout the offering period purchased the following shares at the end of each of the six-month purchase periods: June 2021 December 2021 Number of Price Number of Price Total number of shares purchased 1,136 $ 47.04 1,693 $ 42.72 As of December 31, 2022, approximately 35,120 shares of the Company’s common stock were reserved for future issuance under the Amended 2014 ESPP. The Company recognizes employee stock purchase plan expense based on the fair value of stock purchase rights, estimated for each six-month purchase period using the Black-Scholes option pricing model. The model requires the Company to make subjective assumptions, including expected stock price volatility, risk free rate of return and estimated life. The fair value of equity-based awards is amortized straight-line over the vesting period of the award. The material factors incorporated in the Black-Scholes model in estimating the fair value of employee stock purchase plan stock purchase rights for the periods presented were as follows: 2022 2021 Fair value of common stock $ 6.00 - 49.80 $ 56.04 - 70.20 Risk-free interest rate 0.11 % - 2.25 % 0.04 % - 0.08 % Expected volatility 64.9 % - 96.7 % 71.9 % - 89.2 % Expected term 0.5 years 0.5 years Expected dividend yield 0 % 0 % • Fair value of common stock . Estimated as the price of the Company’s common stock on the first day of each offering period. • Expected stock price volatility . The expected volatility assumption is derived from the volatility of the Company’s common stock in recent periods for the years ended December 31, 2022 and 2021. • Risk-free interest rate . The risk-free interest rate assumption is based on observed interest rates on the first day of the purchase period with maturities approximately equal to the expected term. • Expected term . The expected term represents the length of a purchase period under the Amended 2014 ESPP. • Expected dividend yield . The expected dividend is assumed to be zero as the Company has never paid dividends and does not anticipate paying any dividends on its common stock. |