| Stockholders' Equity | Stockholders’ equity Preferred stock Series C Preferred Stock
Series C Preferred Stock
Number $
Balance – June 30, 2022 16,838 12,275
Conversion of Series C Preferred stock to common stock ( 2,450 ) ( 1,778 )
Balance – December 31, 2022 14,388 10,497 In August 2020, the Company issued 25,028 shares of Series C Convertible Preferred Stock (the “Series C Preferred Stock”) in three separate closings of a private placement (Series C-1, C-2, and C-3). Each share of Series C Preferred Stock was issued at a purchase price of $ 1,000 per share and is convertible into shares of common stock based on the respective conversion prices which were determined at the closing of each round of the private placement. The conversion prices for the Series C-1 Preferred Stock, Series C-2 Preferred Stock, and the Series C-3 Preferred Stock are $ 58.00 , $ 60.70 , and $ 57.50 , respectively. Subject to ownership limitations, the owners of the Series C-1 Preferred Stock, the Series C-2 Preferred Stock, and the Series C-3 Preferred Stock are entitled to receive dividends, payable in shares of common stock at a rate of 10 %, 15 %, 20 % and 25 %, respectively, of the number of shares of common stock issuable upon conversion of the Series C Preferred Stock, on the 12 th , 24 th , 36 th and 48 th month, anniversary of the initial closing of the private placement. The Company paid the 12 th and 24 th month anniversary dividends of 10 % and 15 % common stock dividends on August 19, 2021, and 2022, respectively. The Series C Preferred Stock dividends do not require declaration by the board of directors and are accrued annually as of the date the dividend is earned in an amount equal to the fair value of the Company’s common stock on the dates the respective dividends are paid. The fair value of the Series C Preferred Stock dividend paid on August 19, 2022 was determined by multiplying the dividends paid of 43 shares of common stock by the Company’s closing share price on August 19, 2022 of $ 8.34 per share for a total fair value of $ 362 . Any outstanding shares of Series C Preferred Stock will automatically convert to shares of common stock on August 19, 2024. In addition, as part of the Series C Preferred financing, the Company issued warrants to the placement agent (“Series C Agent Warrants”). The Company’s Series C Preferred Stock outstanding, conversion shares, and aggregate dividends as of December 31, 2022, are as follows:
Series Number Conversion Number of Dividend Shares (in thousands)
Series 1 11,545 58.00 199 154
Series 2 898 60.70 15 10
Series 3 1,945 57.50 34 25
14,388 248 189
Series C Dividends Dividend Shares
10% - August 19, 2021 (actual) 34
15% - August 19, 2022 (actual) 43
20% - August 19, 2023 (estimated) 50
25% - August 19, 2024 (estimated) 62
189 The Series C Preferred Stock shall with respect to distributions of assets and rights upon the occurrence of a liquidation, rank (i) senior to the Company’s common stock and (ii) senior to any other class or series of capital stock of the Company hereafter created which does not expressly rank pari passu with, or senior to, the Series C Preferred Stock. The Series C Preferred Stock is pari passu in liquidation to the Company’s Series A Preferred Stock. The liquidation value of the Series C Preferred Stock at December 31, 2022 is the stated value of $ 14,388 (June 30, 2022 - $ 16,838 ). Series B Preferred Stock The Company previously issued Series B Preferred Stock that has since been fully converted into shares of common stock. As part of the Series B Preferred Stock financing, the Company and the Series B Preferred Stockholders entered into a royalty agreement, pursuant to which the Company will pay the holders of the Series B Preferred Stock, in aggregate, a single-digit royalty based on their pro rata ownership of the Series B Preferred Stock on VAL-083 products sold directly by the Company or sold pursuant to a licensing or partnering arrangement, should such events occur. The royalties payable on VAL-083 products sold by the Company have been earned and remain payable to the former Series B Preferred stockholders even though the Series B Preferred Stock has been fully converted to shares of common stock. Series A Preferred Stock Effective September 30, 2014, the Company filed a Certificate of Designation of Series A Preferred Stock (the “Series A Certificate of Designation”) with the Secretary of State of Nevada. Pursuant to the Series A Certificate of Designation, the Company designated 279 shares of preferred stock as Series A Preferred Stock. The shares of Series A Preferred Stock have a stated value of $ 1.00 per share (the “Series A Stated Value”) and are not convertible into common stock. The holder of the Series A Preferred Stock is entitled to dividends at the rate of 3 % of the Series A Stated Value per year, payable quarterly in arrears. Upon any liquidation of the Company, the holder of the Series A Preferred Stock will be entitled to be paid, out of any assets of the Company available for distribution to stockholders, the Series A Stated Value of the shares of Series A Preferred Stock held by such holder, plus any accrued but unpaid dividends thereon, prior to any payments being made with respect to the common stock. The Series A Preferred Stock is held by Valent (note 4). The Series A Preferred Stock shall with respect to distributions of assets and rights upon the occurrence of a liquidation, rank (i) senior to the Company’s common stock, and (ii) senior to any other class or series of capital stock of the Company hereafter created which does not expressly rank pari passu with, or senior to, the Series A Preferred Stock. The Series A Preferred Stock is pari passu in liquidation to the Company’s Series C Preferred Stock. The liquidation value of the Series A Preferred stock at December 31, 2022, is its stated value of $ 279 (June 30, 2022 - $ 279 ). There was no change to the Series A Preferred stock for the three and six months ended December 31, 2022, or 2021. Common stock Common stock issuances during the six months ended December 31, 2022 On August 2, 2022, the Company entered into a stock purchase agreement, dated as of August 2, 2022, (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase up to a maximum of $ 20,000 of shares of the Company’s common stock (the "Purchase Shares"). Concurrently with entering into the Purchase Agreement, the Company also entered into a registration rights agreement with Lincoln Park, pursuant to which it agreed to take certain actions relating to the registration of the offer and sale of the Purchase Shares available for issuance under the Purchase Agreement. Upon execution of the Purchase Agreement, the Company issued 33 shares of common stock to Lincoln Park as a commitment fee in connection with entering into the Purchase Agreement. Pursuant to the Purchase Agreement, the Company has the right, in its sole discretion, to present Lincoln Park with a purchase notice directing Lincoln Park to purchase up to 10 Purchase Shares provided that the closing sale price of the common stock on the purchase date is not below a threshold price set forth in the Purchase Agreement (a “Regular Purchase”). The Company and Lincoln Park may mutually agree to increase the Regular Purchase amount with respect to any Regular Purchase under the Purchase Agreement, provided that Lincoln Park’s maximum committed purchase obligation under any single Regular Purchase shall not exceed $ 2,000 . The purchase price per share for each Regular Purchase is based on prevailing market prices of the common stock immediately preceding the time of sale as computed in accordance with the terms set forth in the Purchase Agreement. There are no upper limits on the price per share that Lincoln Park must pay for the Purchase Shares under the Purchase Agreement. If the Company directs Lincoln Park to purchase the maximum number of shares of common stock that the Company may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park to purchase additional shares of common stock in an “accelerated purchase” (each, an “Accelerated Purchase”) and an “additional accelerated purchase” (each, an “Additional Accelerated Purchase”) (including multiple Additional Accelerated Purchases on the same trading day) as provided in the Purchase Agreement. The purchase price per share for each Accelerated Purchase and Additional Accelerated Purchase will be based on market prices of the common stock on the applicable purchase date for such Accelerated Purchases and such Additional Accelerated Purchases. The aggregate number of shares that the Company can issue or sell to Lincoln Park under the Purchase Agreement may in no case exceed 262 shares of the common stock (which is equal to approximately 19.99 % of the shares of the common stock outstanding immediately prior to the execution of the Purchase Agreement) (the “Exchange Cap”), unless (i) stockholder approval is obtained to issue Purchase Shares above the Exchange Cap, in which case the Exchange Cap will no longer apply, or (ii) the average price of all applicable sales of our common stock to Lincoln Park under the Purchase Agreement equals or exceeds $ 10.12 per share (which represents the lower of (A) the official closing price of the Company's common stock on Nasdaq on the trading day immediately preceding the date of the Purchase Agreement and (B) the average official closing price of the Company's common stock on Nasdaq for the five consecutive trading days ending on the trading day on the date of the Purchase Agreement, adjusted such that the transactions contemplated by the Purchase Agreement are exempt from the Exchange Cap limitation under applicable Nasdaq rules). The Purchase Agreement may be terminated by the Company at any time, at its sole discretion, without any cost or penalty, by giving one business day notice to Lincoln Park to terminate the Purchase Agreement. During the six months ended December 31, 2022, the Company sold 229 shares of common stock for total net proceeds of approximately $ 1,860 under the Purchase Agreement. As of December 31, 2022, the sales made under the Purchase Agreement are the maximum amounts available due to ownership limitations under Nasdaq rules. Common stock issuances during the six months ended December 31, 2021 Registered direct financing On September 28, 2021, the Company closed on the sale of (i) 144 shares of its common stock, par value $ 0.001 per share, (ii) pre-funded warrants (“PFW”) to purchase an aggregate of 96 shares of common stock and (iii) common warrants to purchase an aggregate of 240 shares of common stock (“2022 Investor Warrants”) in the Company’s registered direct offering (the “September Offering”). Each share of common stock, or PFW as applicable, was sold together with a 2022 Investor Warrant to purchase one share of common stock at a combined effective price of $62.50 per share of common stock and accompanying 2022 Investor Warrant. The 2022 Investor Warrants have been valued at $ 7,023 and have been treated as equity. They have been valued using a Black-Scholes valuation with a risk-free interest rate of 0.55 %, a contractual term of 3.5 years, a volatility of 116.7 %, and a dividend rate of 0 %. The estimated volatility of the Company’s common stock is based on the historical volatility of the Company. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the contractual life of the instrument at the valuation date. The term is based on the contractual term of the warrant. The net proceeds from the September Offering were $ 13,634 after deducting commissions and other offering expenses. The 2022 Investor Warrants are exercisable at $ 62.50 per share until their expiry on March 28, 2025 , and the PFW are exercisable at $ 0.05 per share at any time after September 28, 2021. The Company also issued 12 agent warrants that are exercisable at $ 78.125 per share commencing September 28, 2021 until their expiry on March 28, 2025 (the “2022 Agent Warrants”). The 2022 Agent Warrants have been valued at $ 333 and have been treated as non-cash issue costs of the common stock, 2022 Investor Warrants, and PFW. The 2022 Agent Warrants have been valued using a Black-Scholes valuation with a risk-free interest rate of 0.55 %, a contractual term of 3.5 years, a volatility of 116.7 %, and a dividend rate of 0 %. The estimated volatility of the Company’s common stock is based on the historical volatility of the Company. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the contractual life of the instrument at the valuation date. The term is based on the contractual term of the warrant . During the six months ended December 31, 2021, all of the 96 PFW were exercised at $ 0.05 per PFW for proceeds of $ 4.8 . Stock options 2017 Omnibus Incentive Plan The Company’s board of directors has approved the adoption of the Company’s 2017 Omnibus Equity Incentive Plan (the “2017 Plan”). The 2017 Plan, as amended, was subsequently approved at an annual meeting of stockholders on April 11, 2018. As approved by the Company’s stockholders on June 21, 2022, the number of common shares available under the 2017 Plan as of December 31, 2022 is 440 shares. The following table sets forth the aggregate information on all equity compensation plans as of December 31, 2022:
Plan (in thousands, except per share amounts) Number of shares of common stock to be issued upon exercise of outstanding stock options Weighted-average exercise price of outstanding stock options Number of stock options remaining available for future issuance under equity compensation plans (2)
Equity compensation plans approved by security holders - 2017 Plan 238 49.21 196
Equity compensation plans not approved by security holders - Del Mar (BC) 2013 Amended and Restated Stock Option Plan (1) 3 1,620.11 —
Totals 241 64.54 196 (1) The Del Mar (BC) 2013 Amended and Restated Stock Option Plan refers to the Company’s previous equity compensation plan under which 3 stock options remain outstanding as of December 31, 2022. (2) The balance of 196 shares of common stock available for issuance under the 2017 Plan as of December 31, 2022, is net of stock options previously exercised. The maximum number of shares of Company common stock with respect to which any one participant may be granted awards during any calendar year is 8 % of the Company’s fully diluted shares of common stock on the date of grant (excluding the number of shares of common stock issued under the 2017 Plan and/or the Legacy Plan or subject to outstanding awards granted under the 2017 Plan and/or the Legacy Plan). No award will be granted under the 2017 Plan on, or after, July 7, 2027. During the six months ended December 31, 2022, a total of 70 stock options to purchase shares of common stock were granted to directors and officers of the Company. Of the total stock options granted, 6 have an exercise price of $ 12.75 per share and vest in 12 equal monthly installments beginning on August 1, 2022. The remaining 64 stock options granted have an exercise price of $ 8.785 per share and vest as to 25% on August 1, 2023, with the remaining portion vesting in equal monthly installments over a period of 36 months commencing on September 1, 2023. All of the options to purchase shares of common stock granted have a 10 -year term and are subject to cancellation upon the grantees’ termination of service for the Company, with certain exceptions. The following table sets forth changes in stock options outstanding under all plans:
Number of Weighted
Balance – June 30, 2022 176 87.05
Granted 70 9.13
Expired ( 5 ) 85.00
Balance – December 31, 2022 241 64.54 The following table summarizes stock options outstanding and exercisable under all plans at December 31, 2022:
Exercise price Number Weighted Number
8.79 64 9.84 —
12.75 to 16.25 6 10.08 2
30.50 to 48.00 92 7.94 39
62.00 to 68.50 14 8.64 12
85.00 60 2.80 57
304.95 to 585.00 3 1.20 3
1,055.00 to 4,600.00 2 1.79 1
241 114 Stock options granted during the six months ended December 31, 2022, have been valued using a Black-Scholes pricing model with the following assumptions:
December 31, 2022
Dividend rate — %
Estimated volatility 91.40 %
Risk-free interest rate 2.67 %
Expected term – years 6.08 The estimated volatility of the Company’s common stock at the date of issuance of the stock options is based on the historical volatility of the Company. The risk-free interest rate is based on rates published by the government for bonds with a maturity similar to the expected remaining term of the stock options at the valuation date. The expected term of the stock options has been estimated using the plain vanilla method. The Company has recognized the following amounts as stock option expense for the periods noted (in thousands):
Three months ended Six months ended
2022 2021 2022 2021
Research and development 134 249 274 493
General and administrative 302 581 680 1,148
436 830 954 1,641 All of the stock option expense for the periods ended December 31, 2022, and 2021, has been recognized as additional paid in capital. The aggregate intrinsic value of stock options outstanding as well as stock options exercisable was $ nil as of December 31, 2022, and 2021, respectively. As of December 31, 2022, there was $ 1,322 in unrecognized compensation expense that will be recognized over the next 3.19 years. The following table sets forth changes in unvested stock options under all plans:
Number of Weighted
Unvested at June 30, 2022 84 51.23
Granted 70 9.13
Vested ( 27 ) 49.08
Unvested at December 31, 2022 127 28.37 The aggregate intrinsic value of unvested stock options at December 31, 2022, was $ nil (2021 - $ nil ). The unvested stock options have a remaining weighted average contractual term of 9.18 years (2021 – 9.36 ). Restricted stock units As of December 31, 2022, the Company has issued 18 restricted stock units ("RSU") to its officers. Subject to providing continuous service to the Company, the RSU vest in four equal annual installments commencing August 1, 2023. Common stock warrants The following table sets forth changes in outstanding common stock warrants:
Number of Weighted
Balance – June 30, 2022 720 49.36
Expiry of 2018 Investor and Agent warrants ( 6 ) 625.00
Balance – December 31, 2022 714 44.20 The following table summarizes the Company’s outstanding common stock warrants as of December 31, 2022:
Description of warrants Number Exercise Expiry date
2022 April Investor warrants 325 20.50 April 14, 2027
2022 Investor warrants 240 62.50 March 28, 2025
2020 Investor warrants 65 50.00 August 16, 2024
2019 Investor warrants 15 155.00 June 5, 2024
NBTS Warrants 2 54.50 June 19, 2025
Warrants issued for services 22 32.00 to 890.00 January 25, 2023 , to February 25, 2024
2022 April Agent warrants 32 33.12 October 14, 2026
2022 Agent warrants 12 78.12 March 28, 2025
2019 Agent warrants 1 193.75 June 3, 2024
714 Series C Preferred Stock warrants In connection with the Series C Preferred Stock private placement, the Company issued 2,504 Series C Agent Warrants. The Series C Agent Warrants have an exercise price of $ 1,000 per share, provide for a cashless exercise feature, and are exercisable for a period of four years from August 19, 2020. The Series C Preferred Stock issuable upon exercise of the Series C Agent Warrants is convertible into shares of common stock in the same manner as each respective underlying series of outstanding Series C Preferred Stock and will be entitled to the same dividend rights as each respective series. The following table sets forth changes in outstanding Series C Agent Warrants:
Balance Number of Number of Balance, Conversion
Preferred Series C-1 Agent Warrants 1,929 — — 1,929 58.00
Preferred Series C-2 Agent Warrants 219 — — 219 60.70
Preferred Series C-3 Agent Warrants 296 — — 296 57.50
2,444 — — 2,444 The following table summarizes the Company’s outstanding Series C Agent Warrants as of December 31, 2022:
Series C Agent Warrants Number Conversion Number of Cumulative
Series 1 1,929 58.00 33 23
Series 2 219 60.70 4 3
Series 3 296 57.50 5 4
2,444 42 30 |
