| Stockholders' Equity and Convertible Preferred Stock | Note
11. Stockholders’ Equity and Convertible Preferred Stock Common
Stock On
March 3, 2020, the Company entered into that certain Securities Purchase Agreement, by and among the Company and certain purchasers,
pursuant to which the Company agreed to issue and sell to the purchasers 3,245,745 shares of the Company’s common stock, and common
warrants (“Common Warrants”) to purchase up to 7,142,858 shares of common stock at a price of $1.05 per share of common stock
and Common Warrant. The Company also offered 3,897,113 pre-funded warrants (“Pre-Funded Warrants”) to purchase shares of
common stock with a purchase price of $1.0499 each Pre-Funded Warrant. The exercise price of each Pre-Funded Warrant was $0.0001 per
share. This
offering resulted in gross proceeds of approximately $7.5 million before deducting the placement agent’s fee and related offering
expenses of $1.0 million. On
March 9, 2020, the Company entered into that certain Securities Purchase Agreement, by and among the Company and certain purchasers,
pursuant to which the Company agreed to issue and sell, in a registered direct offering, 2,090,909 shares of the Company’s common
stock at an offering price of $2.75 per share. This offering resulted in gross proceeds to the Company of $5.8 million, before deducting
the placement agent’s fee and other related offering expenses. The
Company also issued placement agent warrants to the placement agent (the “Placement Agent Warrant”) to purchase 167,273 shares
of common stock with an exercise price of $3.4375 per share. The
Company has determined that the Placement Agent Warrant should be accounted as a component of stockholders’ equity. On the issuance
date, the Company estimated the aggregate fair value of Placement Agent Warrant at $0.2 million using the Black-Scholes option pricing
model using the following primary assumptions: fair value of common stock underlying the warrants is $1.83, expected life of 5 years,
volatility rate of 122.29%, risk-free interest rate of 0.63% and expected dividend rate of 0%. On
April 14, 2020, the Company, entered into that certain Securities Purchase Agreement, by and among the Company and certain purchasers,
pursuant to which the Company agreed to issue and sell 14,000,000 shares of the Company’s common stock at an offering price of
$1.00 per share. The registered offering resulted in gross proceeds to the Company of $14.0 million, before deducting the placement agent’s
fee and other related offering expenses. The
Company also issued placement agent warrants to the placement agent (the “Placement Agent Warrant”) to purchase 1,120,000
shares of common stock with an exercise price of $1.25 per share. Public
Offering On February 19, 2021, the Company consummated the public offering pursuant
to an amended and restated underwriting agreement (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC, as representative
to the underwriters named therein (the “Underwriter”), pursuant to which the Company agreed to issue and sell to the Underwriter
in an underwritten public offering (the “Offering”) an aggregate of 46,875,000 shares (the “Shares”) of common
stock, $0.0001 par value per share, of the Company (the “Common Stock”). The Company received gross proceeds of approximately
$75 million before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. On February
23, 2021, the Underwriter partially exercised its over-allotment option and purchased an additional 7,030,927 Shares, resulting in aggregate
proceeds of approximately $86.2 million, before deducting underwriting discounts and commissions and other expenses. The total net proceeds
received from these two offerings were approximately $78.2 million.
In
connection with the Offering, the Company issued the Underwriter warrants (the “Underwriter’s Warrants”) to purchase
up to 4,312,473 shares of Common Stock, or 8% of the Shares sold in the Offering. The Underwriter’s Warrants will be exercisable
for a period of five years from February 19, 2021 at an exercise price of $2.00 per share, subject to adjustment. Preferred
Stock Series
D Convertible Preferred Stock In
connection with the acquisition of North South’s patent portfolio in September 2013, the Company issued 1,379,685 shares of its
Series D Convertible Preferred Stock (“Series D Preferred Stock”) to the stockholders of North South. Each share of Series
D Preferred Stock has a stated value of $0.0001 per share and is convertible into ten-nineteenths of a share of Common Stock. Upon the
liquidation, dissolution or winding up of the Company’s business, each holder of Series D Preferred Stock shall be entitled to
receive, for each share of Series D Preferred Stock held, a preferential amount in cash equal to the greater of (i) the stated value
or (ii) the amount the holder would receive as a holder of Common Stock on an “as converted” basis. Each holder of Series
D Preferred Stock shall be entitled to vote on all matters submitted to its stockholders and shall be entitled to such number of votes
equal to the number of shares of Common Stock such shares of Series D Preferred Stock are convertible into at such time, taking into
account the beneficial ownership limitations set forth in the governing Certificate of Designation and the conversion limitations described
below. The conversion ratio of the Series D Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination
of shares and similar recapitalization transactions. On
December 21, 2021, the Company issued 112 shares of common stock upon the conversion of 900 shares of Series D Convertible
Preferred stock. As
of December 31, 2021 and 2020, 5,000,000 Series D Preferred Stock designated; 3,825 and 4,725 shares remained issued and outstanding,
respectively. Series
D-1 Convertible Preferred Stock The
Company’s Series D-1 Convertible Preferred Stock (“Series D-1 Preferred Stock”) was established on November 22, 2013.
Each share of Series D-1 Preferred Stock has a stated value of $0.0001 per share and is convertible into ten-nineteenths of a share of
Common Stock. Upon the liquidation, dissolution or winding up of the Company’s business, each holder of Series D-1 Preferred Stock
shall be entitled to receive, for each share of Series D-1 Preferred Stock held, a preferential amount in cash equal to the greater of
(i) the stated value or (ii) the amount the holder would receive as a holder of Common Stock on an “as converted” basis.
Each holder of Series D-1 Preferred Stock shall be entitled to vote on all matters submitted to the Company’s stockholders and
shall be entitled to such number of votes equal to the number of shares of Common Stock such shares of Series D-1 Preferred Stock are
convertible into at such time, taking into account the beneficial ownership limitations set forth in the governing Certificate of Designation.
The conversion ratio of the Series D-1 Preferred Stock is subject to adjustment in the event of stock splits, stock dividends, combination
of shares and similar recapitalization transactions. The Company commenced an exchange with holders of Series D Convertible Preferred
Stock pursuant to which the holders of the Company’s outstanding shares of Series D Preferred Stock acquired in the Merger could
exchange such shares for shares of the Company’s Series D-1 Preferred Stock on a one-for-one basis. As
of December 31, 2021 and 2020, 5,000,000 Series D-1 Preferred Stock designated; 834 shares remained issued and outstanding. Warrants A
summary of warrant activity for year ended December 31, 2021 and 2020 is presented below:
Warrants Weighted Total Weighted
Outstanding as of December 31, 2019 351,939 $ 19.96 $ 111,332 0.94
Issued 12,327,244 0.77 - 0.17
Exercised (10,758,016 ) 0.67 - -
Expired (198,147 ) - - -
Outstanding as of December 31, 2020 1,723,020 $ 3.07 57,333 1.11
Issued 4,312,473 2.00 - 4.14
Exercised (80,000 ) 1.05 - -
Expired (153,789 ) 19.67 - -
Forfeited (3 ) 16.15 - -
Outstanding as of December 31, 2021 5,801,701 $ 1.86 - 3.87 Confirmation of
Mutual Understanding “ the
Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another
Person or group of Persons whereby such other Person or group acquires more than 50% of the voting power of the Company’s outstanding
equity securities, including with respect to the election of directors (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase
agreement or other business combination) Stock
Options 2014
Plan and Option Grants On
November 17, 2020, the Board approved to amend 2014 Equity Incentive Plan to increase the number of shares of common stock authorized
to be issued pursuant to the 2014 Plan from 243,344 to 5,000,000 shares. At
December 31, 2021, there were 479,654 options outstanding and 4,520,346 shares available for grant under the AIkido Pharma Inc. 2014
Equity Incentive Plan. The
fair value of options granted in 2021 and 2020 was estimated using the following assumptions:
For the Years Ended
2021 2020
Exercise price $ 1.24 $ 0.64
Term (years) 10.00 10.00
Expected stock price volatility 124.1 % 124.0 %
Risk-free rate of interest 0.45 % 0.37 % A
summary of option activity under the Company’s stock option plan for year ended December 31, 2021 and 2020 is presented below:
Number
of Weighted
Total
Weighted
Outstanding as of December 31, 2019 88,950 $ 172.39 $ - 5.7
Employee
options granted 300,000 0.64 69,000 10.0
Employee
options expired (4,646 ) - - -
Outstanding as of December 31, 2020 384,304 $ 40.15 $ 69,000 8.9
Employee
options granted 100,000 1.24 - 9.1
Employee
options expired (4,650 ) - - -
Outstanding as of December
31, 2021 479,654 $ 32.35 $ - 8.2
Options vested and exercisable 479,654 $ 32.35 $ - 8.2 Stock-based
compensation associated with the amortization of stock option expense was $0.2 million and $84,000 for the years ended December 31, 2021
and 2020, respectively. All stock compensation was recorded as a component of general and administrative expenses. Estimated
future stock-based compensation expense relating to unvested stock options is approximately $0. Restricted
Stock Awards Pursuant
to the patent license agreement effective January 5, 2021 with Silo Parma Inc., the Company issued and delivered to Silo Pharma 625,000
shares of the Company’s restricted stock as consideration for the license of the licensed patents. This restricted stock award
vested immediately. The Company recorded approximately $0.5 million in research and development expense related with license acquired
during the year ended December 31, 2021related to this arrangement. On
July 31, 2021, the Company issued each of six directors 25,000 shares of the Company’s common stock pursuant to the Company’s
2014 Equity Incentive Plan. These shares have a total fair value of approximately $0.1 million. These restricted stock awards vested
immediately. |
