Stockholders' Equity | Note 12: Stockholders’ Equity On July 29, 2015, the Company amended and restated its certificate of incorporation to authorize 100,000,000 shares of Class A Common Stock, 100,000,000 shares of Class B Common Stock and 50,000,000 shares of preferred stock, par value $0.01 per share. On May 4, 2021, the Company filed an amendment to its Amended and Restated Certificate of Incorporation (the “Charter Amendment”) to increase the number of shares of Class A Common Stock that the Company is authorized to issue from F-20 which includes Class A Common Stock and Class B Common Stock, from 200,000,000 to 300,000,000 , and a corresponding increase in the total authorized capital stock, which includes Common Stock and preferred stock, from 250,000,000 shares to 350,000,000 shares. Holders of Class A Common Stock and Class B Common Stock will be entitled to one vote for each share held on all matters submitted to stockholders for their vote or approval. The holders of Class A Common Stock and Class B Common Stock will vote together as a single class on all matters submitted to stockholders for their vote or approval, except with respect to the amendment of certain provisions of the Company’s amended and restated certificate of incorporation that would alter or change the powers, preferences or special rights of the Class B Common Stock so as to affect them adversely, which amendments must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class, or as otherwise required by applicable law. The voting power of the outstanding Class B Common Stock (expressed as a percentage of the total voting power of all common stock) will be equal to the percentage of vTv Units not held by the Company. Holders of Class B Common Stock are not entitled to receive dividends and will not be entitled to receive any distributions upon the liquidation, dissolution or winding up of the Company. ATM Offering In April 2020, the Company entered into the Sales Agreement with Cantor as the sales agent, pursuant to which the Company may offer and sell, from time to time, through Cantor, shares of its Class A common stock, par value $0.01 per share, having an aggregate offering price of up to $13.0 million by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act (the “ATM Offering”). The shares are offered and sold pursuant to the Company’s shelf registration statement on Form S-3. On January 14, 2021, and June 25, 2021, the Company filed a prospectus supplement in connection with the ATM Offering to increase the size of the at-the-market offering pursuant to which the Company may offer and sell, from time to time, through or to Cantor, as sales agent or principal, shares of the Company’s Class A Common Stock, by an aggregate offering price of $5.5 million and $50.0 million, respectively. During the years ended December 31, 2021, and 2020, the Company sold 8,929,147 shares and 5,480,941 shares of Class A common stock under the ATM Offering at then-market prices for total gross proceeds of approximately $18.2 million and $13.0 million, respectively. After offering costs and sales commissions owed in connection with the ATM Offering, the Company’s aggregate net proceeds for the years ended December 31, 2021, and 2020 were approximately $17.7 million and $12.5 million, respectively. Lincoln Park Capital Transaction On November 24, 2020, the Company entered into the LPC Purchase Agreement and a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company has the right to sell to Lincoln Park shares of the Company’s Class A common stock having an aggregate value of up to $47.0 million, subject to certain limitations and conditions set forth in the LPC Purchase Agreement. The Company will control the timing and amount of any sales of shares to Lincoln Park. pursuant to the Purchase Agreement. The Company filed a registration statement to register As a result, on November 24, 2020, 425,725 newly issued shares of the Company’s common stock, equal to 1.5% percent of the $47.0 million availability, were issued to Lincoln Park as consideration for Lincoln Park’s commitment to purchase shares of the Company’s Class A common stock under the agreement. Upon effectiveness of the registration statement, 963,855 newly issued shares of Class A common stock, valued at $2.08 per share, were sold to Lincoln Park in an initial purchase for an aggregate gross purchase price of $2.0 million in 2020. During 2021, 3,941,726 shares of Class A common stock were sold to Lincoln Park for an aggregate gross purchase price of $9.1 million. Over the 36-month term of the LPC Purchase Agreement, for up to an aggregate amount of $47,000,000 of shares of Class A common stock (subject to certain limitations and conditions), the Company has the right, but not the obligation, from time to time, in its sole discretion, to direct Lincoln Park to purchase up to 250,000 shares per day (the “Regular Purchase Share Limit”) of the Class A common stock (each such purchase, a “Regular Purchase”). The Regular Purchase Share Limit will increase to 275,000 shares per day if the closing price of the Class A common stock on the applicable purchase date is not below $4.00 per share and will further increase to 300,000 shares per day if the closing price of the Class A common stock on the applicable purchase date is not below $5.00 per share. In any case, Lincoln Park’s maximum obligation under any single Regular Purchase will not exceed $2,000,000. The purchase price for shares of Class A common stock to be purchased by Lincoln Park under a Regular Purchase will be equal to the lower of (in each case, subject to the adjustments described in the LPC Purchase Agreement): (i) the lowest sale price for the Class A common stock on the applicable purchase date and (ii) the arithmetic average of the three lowest closing sales prices for the Class A common stock during the 10 consecutive trading days prior to the purchase date. F-21 If the Company directs Lincoln Park to purchase the maximum number of shares of Class A 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 LPC Purchase Agreement, the Company may direct Lincoln Park to make an “accelerated purchase” and an “additional accelerated purchase”, each of an additional number of shares of Class A common stock which may not exceed the lesser of: (i) 300% of the number of shares purchased pursuant to the corresponding Regular Purchase and (ii) 30% of the total number of shares of the Common Stock traded during a specified period on the applicable purchase date as set forth in the LPC Purchase Agreement. The purchase price for such shares will be the lesser of (i) 97% of the volume weighted average price of the Class A common stock over a certain portion of the date of sale as set forth in the LPC Purchase Agreement and (ii) the closing sale price of the Class A common Stock on the date of sale (an “Accelerated Purchase”). Under certain circumstances and in accordance with the LPC Purchase Agreement, the Company may direct Lincoln Park to purchase shares in multiple Accelerated Purchases on the same trading day. The LPC Purchase Agreement also prohibits the Company from directing Lincoln Park to purchase any shares of its Class A common stock if those shares, when aggregated with all other shares of Class A common stock then beneficially owned by Lincoln Park and its affiliates, would result in Lincoln Park and its affiliates having beneficial ownership, at any single point in time, of more than 9.99% of the then total outstanding shares of Class A common stock as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder. Under applicable rules of the Nasdaq Global Select Market, the Company may not issue or sell to Lincoln Park under the LPC Purchase Agreement more than 19.99% of the shares of the Class A common stock outstanding immediately prior to the execution of the LPC Purchase Agreement (the “Exchange Cap”) (or 14,768,682 shares, based on 73,880,351 shares outstanding immediately prior to the execution of the LPC Purchase Agreement), unless (i) stockholder approval is obtained or (ii) the issuances and sales of Class A common stock pursuant to the LPC Purchase Agreement are not deemed to be “below market” in accordance with the applicable rules of Nasdaq. The LPC Purchase Agreement does not limit the Company’s ability to raise capital from other sources at its sole discretion, except that, subject to certain exceptions, the Company may not enter into another “equity line” or similar transaction. The LPC Purchase Agreement and Registration Rights Agreement each contain customary representations, warranties, and agreements of the Company and Lincoln Park, indemnification rights and other obligations of the parties. The offering of Class A common stock pursuant to the LPC Purchase Agreement will terminate on the date that all shares offered by the LPC Purchase Agreement have been sold or, if earlier, the expiration or termination of the LPC Purchase Agreement. The Company has the right to terminate the LPC Purchase Agreement at any time, without fee, penalty or cost to the Company. The net proceeds under the LPC Purchase Agreement to the Company will depend on the frequency and prices at which shares of Class A common stock are sold to Lincoln Park. Actual sales of shares of Class A common stock to Lincoln Park under the LPC Purchase Agreement and the amount of such net proceeds will depend on a variety of factors to be determined by the Company from time to time, including (among others) market conditions, the trading price of the Class A common stock and determinations by the Company as to other available and appropriate sources of funding for the Company. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of Class A common stock. Letter Agreement Warrants The Company has entered into the Letter Agreements with MacAndrews. Under the terms of the Letter Agreements, the Company has or had the right to sell to MacAndrews shares of its Class A Common Stock at a specified price per share , and MacAndrews has or had the right (exercisable up to three times) to require the Company to sell to it shares of Class A Common Stock at the same price. The Letter Agreement Warrants were recorded as warrant liability, related party within the Company’s Consolidated Balance Sheets based on their fair value. The issuance of the Letter Agreement Warrants was considered to be a cost of equity recorded as a reduction to additional paid-in capital. During the years ended December 31, 2021, 2020, and 2019 the Company recognized income/(expense) of $1.6 million, $(0.3) million and $0.8 million, respectively, related to the change in fair value of the Letter Agreement Warrants. These amounts were recognized as a component of other income (expense), related party in the Consolidated Statements of Operations. F-22 Fair value of the Letter Agreement Warrants was calculated as of their issuance date using the methods described in Note 19 using the following assumptions: December 5, 2017 July 30, 2018 December 11, 2018 September 26, 2019 December 23, 2019 Expected volatility 90.00% 95.29% 104.46% 110.35% 110.41% Expected life of option, in years 7.0 7.0 7.0 7.0 7.0 Risk-free interest rate 2.80% 2.94% 2.77% 1.65% 1.84% Expected dividend yield 0.00% 0.00% 0.00% 0.00% 0.00% Loan Agreement Warrants On October 28, 2016, the Company entered into the Loan Agreement as discussed in Note 10. In connection with the Loan Agreement, the Company issued to the Lenders Warrants to purchase a total of 152,580 shares of the Company’s Class A Common Stock at an exercise price of $6.39 per share. Additionally, upon funding of the second tranche on March 24, 2017, the Company issued Warrants to purchase 38,006 shares of its Class A Common Stock at a per share exercise price of $5.92 per share, which aggregate exercise price represents 3.0% of the amount available under the second tranche of the Loan Agreement. The Warrants will expire seven years from their date of issuance. |