Stockholders' Equity | 7 Stockholders’ equity Preferred stock Series C Preferred Stock Series C Preferred Stock Number $ Balance – June 30, 2023 14,208 10,366 Conversion of Series C Preferred stock to common stock ( 540 ) ( 393 ) Balance – March 31, 2024 13,668 9,973 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 12th, 24th, 36th and 48th month, anniversary of the initial closing of the private placement. The Company paid the 12th, 24th, and 36th month anniversary dividends of 10 %, 15 %, and 20 % common stock dividends on August 19, 2021, 2022, and 2023, 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, 2023, was determined by multiplying the dividends paid of 49 shares of common stock by the Company’s closing share price on August 18, 2023, of $ 3.53 per share for a total fair value of $ 173 . 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 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 e xpressly 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 March 31, 2024, is the stated value of $ 9,973 (J une 30, 2023 - $ 10,366 ). The Company’s Series C Preferred Stock outstanding, conversion shares, and aggregate dividends as of March 31, 2024, are as follows: Series Number Conversion Number of Dividend Shares (in thousands) Series 1 10,925 58.00 188 151 Series 2 898 60.70 15 10 Series 3 1,845 57.50 32 24 13,668 235 185 Series C Dividends Dividend Shares 10% - August 19, 2021 (actual) 34 15% - August 19, 2022 (actual) 43 20% - August 19, 2023 (actual) 49 25% - August 19, 2024 (estimated) 59 185 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 6). 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 March 31, 2024, is its stated value of $ 279 (Jun e 30, 2023 - $ 279 ). There was no change to the Series A Preferred stock for the nine months ended March 31, 2024, or 2023. Common stock Common stock issuances during the nine months ended March 31, 2024 On September 19, 2023, the Company entered into a Sales Agreement, (the “Sales Agreement”) with A.G.P./Alliance Global Partners (the “Agent”) pursuant to which the Company may offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares of common stock having an aggregate offering price of up to $ 2,850 (the “ATM Facility”), subsequently increased to $ 10,900 on December 18, 2023. From October 31, 2023, until March 31, 2024, the Company raised $ 10,471 in net proceeds, after deducting share issuance costs of $ 435 , from the sale of 53,151 shares of its common stock at a weighted average price of $ 0.21 per share under the ATM Facility. On February 22, 2024, the Company determined that it had concluded utilization of the ATM Facility. Sales of the shares of common stock made under the ATM Facility may be made in negotiated transactions, or by any method permitted by law that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on The Nasdaq Capital Market or sales made to or through a market maker other than on an exchange. Pursuant to the Sales Agreement, the Company has the right, in its sole discretion, to present the Agent with a placement notice directing the Agent to purchase a number of shares of common stock under the ATM Facility, subject to the terms and conditions of the Sales Agreement. The purchase price per share under the ATM Facility will be based on market prices of the common stock on the applicable purchase date for such purchases. The Agent is entitled to a commission rate of 3.0 % of the gross sales price per share sold under the Sales Agreement. During the nine months ended March 31, 2024, the Company sold 400 shares of common stock at a weighted average price of $ 0.23 per share for total net proceeds of approximately $ 105 under the Purchase Agreemen t with Lincoln Park (as defined below). During the nine months ended March 31, 2024, the Company issued 4 shares of common stock on vesting of restricted stock units during the period. On February 22, 2024, the Company determined that it had concluded utilization of the equity facility pursuant to the terms of the Purchase Agreement with Lincoln Park. Common stock issuances during the nine months ended March 31, 2023 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. During the nine months ended March 31, 2024, the Company received stockholder approval to issue 20 % or more of its outstanding shares as of the date the Company entered into the Purchase Agreement with Lincoln Park. 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 nine months ended March 31, 2023, the Company sold 229 shares of common stock for total net proceeds of approximately $ 1,860 under this Purchase Agreemen t. 2017 Omnibus Incentive Plan As subsequently approved by the Company’s stockholders at an annual meeting of stockholders, on April 11, 2018, the Company’s board of directors approved the adoption of the Company’s 2017 Omnibus Equity Incentive Plan (the “2017 Plan”), as amended. The board of directors also approved a form of Performance Stock Unit Award Agreement to be used in connection with grants of performance stock units (“PSUs”) as well as a Restricted Stock Unit ("RSU") award under the 2017 Plan. As approved by the Company’s stockholders on June 21, 2022, the number of common shares available under the 2017 Plan as of March 31, 2024, is 440 shares, less the numbe r of shares of common stock issued under the Del Mar (BC) 2013 Amended and Restated Stock Option Plan (the “Legacy Plan”), or that are subject to grants of stock options made, or that may be made, under the Legacy Plan, or that have been previously exercised. The following table sets forth the aggregate information on all equity compensation plans as of March 31, 2024: Plan (in thousands, except per share amounts) Number of shares of common stock to be issued upon exercise of outstanding stock options and rights Weighted-average exercise price of stock options and rights Number of shares of common stock remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (2) Equity compensation plans approved by security holders - 2017 Plan (1) 222 21.40 144 Equity compensation plans not approved by security holders - Del Mar (BC) 2013 Amended and Restated Stock Option Plan — 2,060.08 — Totals 222 32.92 144 (1) The Del Mar (BC) 2013 Amended and Restated Stock Option Plan refers to the Company’s previous equity compensation plan. (2) The balance of 144 shares of common stock available for issuance under the 2017 Plan as of March 31, 2024, 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. Stock options During the nine months ended March 31, 2024, a total of 89 stock options to purchase shares of common stock at an exercise price of $ 4.655 per share were granted to directors and officers of the Company. The 26 options granted to non-employee directors vest pro rata monthly over 12 months commencing on March 31, 2024. The remaining 63 options granted to executive officers, employees and consultants vest as to 25 % on the first anniversary of grant with the remaining portion vesting pro rata monthly thereafter over 36 months. 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, 2023 198 51.71 Granted 89 4.66 Expired ( 34 ) 107.69 Forfeited ( 31 ) 8.26 Balance – March 31, 2024 222 30.70 The following table summarizes stock options outstanding and exercisable under all plans at March 31, 2024: Exercise price Number Weighted Number 4.66 79 9.42 15 6.04 9 8.89 2 8.79 34 8.34 14 12.75 to 16.25 6 8.53 6 30.50 to 48.00 73 7.56 44 62.00 to 68.50 13 7.06 13 85.00 7 6.46 7 304.95 to 2,660.00 1 2.11 1 222 102 Stock options granted during the nine months ended March 31, 2024, have been valued using a Black-Scholes pricing model with the following assumptions: March 31, 2024 Dividend rate — % Estimated volatility 91.40 % Risk-free interest rate 4.24 % 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 Nine months ended 2024 2023 2024 2023 Research and development 50 94 143 368 General and administrative 106 196 338 876 156 290 481 1,244 All of the stock option expense for the periods ended March 31, 2024, and 2023, 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 March 31, 2024, and 2023, respectively. As of March 31, 2024, there was $ 447 in unrecognized compensation expense that will be recognized over the next 2.2 years. The following table sets forth changes in unvested stock options under all plans: Number of Weighted Unvested at June 30, 2023 118 24.12 Granted 89 4.66 Vested ( 56 ) 19.31 Forfeited ( 31 ) 8.26 Unvested at March 31, 2024 120 16.07 The aggregate intrinsic value of unvested stock options at March 31, 2024, was nil (2023 - nil ). The unvested stock options have a remaining weighted average contractual term of 8.76 years (2023 – 9.03 ). Restricted stock units During the nine months ended March 31, 2024, the Company recognized a total of $ 136 (2023 - 54 ) in compensation expense related to RSUs. Number of Balance – June 30, 2023 78 Issuance of restricted stock units — Vesting of restricted stock units ( 4 ) Forfeiture of restricted stock units ( 8 ) Balance – March 31, 2024 66 Common stock warrants The following table sets forth changes in outstanding common stock warrants: Number of Weighted Balance – June 30, 2023 713 43.55 Expiry of warrants issued for services ( 20 ) 57.14 Balance – March 31, 2024 693 43.12 The following table summarizes the Company’s outstanding common stock warrants as of March 31, 2024: 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 3 54.50 June 19, 2025 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 693 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 March 31, 2024: 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 |