Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 20, 2024 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 000-56181 | |
Entity Registrant Name | SmartKem, Inc. | |
Entity Address State Or Province | DE | |
Entity Tax Identification Number | 85-1083654 | |
Entity Address, Address Line One | Manchester Technology Centre, Hexagon Tower. | |
Entity Address, Address Line Two | Delaunays Road | |
Entity Address, Address Line Three | Blackley | |
Entity Address, City or Town | Manchester | |
Entity Incorporation, State or Country Code | X0 | |
Entity Address, Postal Zip Code | M9 8GQ | |
City Area Code | 011-44-161 | |
Local Phone Number | 721-1514 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,438,324 | |
Entity Central Index Key | 0001817760 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets | ||
Cash and cash equivalents | $ 7,251 | $ 8,836 |
Accounts receivable | 268 | |
Research and development tax credit receivable | 807 | 610 |
Prepaid expenses and other current assets | 1,082 | 811 |
Total current assets | 9,140 | 10,525 |
Property, plant and equipment, net | 388 | 455 |
Right-of-use assets, net | 223 | 285 |
Other assets, non-current | 6 | 7 |
Total assets | 9,757 | 11,272 |
Current liabilities | ||
Accounts payable and accrued expenses | 2,038 | 1,178 |
Lease liabilities, current | 174 | 230 |
Other current liabilities | 367 | 360 |
Total current liabilities | 2,579 | 1,768 |
Lease liabilities, non-current | 4 | 19 |
Warrant liability | 619 | 1,372 |
Total liabilities | 3,202 | 3,159 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity: | ||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, 3,592 and 13,765 shares issued and outstanding, at March 31, 2024 and December 31, 2023, respectively | ||
Common stock, par value $0.0001 per share, 300,000,000 shares authorized, 1,379,750 and 889,668 shares issued and outstanding, at March 31, 2024 and December 31, 2023, respectively | ||
Additional paid-in capital | 112,007 | 104,757 |
Accumulated other comprehensive loss | (1,596) | (1,578) |
Accumulated deficit | (103,856) | (95,066) |
Total stockholders' equity | 6,555 | 8,113 |
Total liabilities and stockholders' equity | $ 9,757 | $ 11,272 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) | Mar. 31, 2024 $ / shares shares | Dec. 31, 2023 $ / shares shares |
Condensed Consolidated Balance Sheets | ||
Preferred shares, par value | $ / shares | $ 0.0001 | $ 0.0001 |
Preferred stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 3,592 | 13,765 |
Preferred Stock, Shares Outstanding | 3,592 | 13,765 |
Par value of common stock (in $ per share) | $ / shares | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 |
Common Stock, Shares Issued | 1,379,750 | 889,668 |
Common Stock, Shares Outstanding | 1,379,750 | 889,668 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss | ||
Revenue | $ 16 | |
Cost of revenue | 16 | |
Other operating income | $ 202 | 269 |
Operating expenses | ||
Research and development | 1,276 | 1,279 |
Selling, general and administrative | 1,362 | 1,433 |
Loss on foreign currency transactions | 13 | 111 |
Total operating expenses | 2,651 | 2,823 |
Loss from operations | (2,449) | (2,554) |
Non-operating income/(expense) | ||
Gain/(loss) on foreign currency transactions | (6) | 502 |
Change in fair value of the warrant liability, net | 753 | |
Interest income | 6 | 4 |
Total non-operating income/(expense) | 753 | 506 |
Net loss | (1,696) | (2,048) |
Other comprehensive loss: | ||
Foreign currency translation | (18) | (456) |
Total comprehensive loss | $ (1,714) | $ (2,504) |
Common share data: | ||
Basic net loss per common share (in dollars per share) | $ (0.62) | $ (2.45) |
Diluted net loss per common share (in dollars per share) | (3.21) | $ (2.45) |
Dividend per common stock | $ (2.59) | |
Basic weighted average shares outstanding (in shares) | 2,735,375 | 835,718 |
Diluted weighted average shares outstanding (in shares) | 2,735,375 | 835,718 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Loss(Parenthetical) | Sep. 21, 2023 | Sep. 19, 2023 |
Condensed Consolidated Statements of Operations and Comprehensive Loss | ||
Stock split ratio | 0.0286 | 0.0286 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity $ in Thousands | Preferred Stock shares | Common stock USN ($) shares | Additional paid-in capital USD ($) | Accumulated other comprehensive income / (loss) USD ($) | Accumulated deficit USD ($) | USD ($) |
Beginning Balance at Dec. 31, 2022 | $ 92,933 | $ (483) | $ (86,567) | $ 5,883 | ||
Beginning Balance (in shares) at Dec. 31, 2022 | shares | 771,054 | |||||
Stock-based compensation expense | 293 | 293 | ||||
Issuance of common stock to vendor | 55 | 55 | ||||
Issuance of common stock to vendor (in shares) | shares | 2,937 | |||||
Foreign currency translation adjustment | (456) | (456) | ||||
Net Income (Loss) | (2,048) | (2,048) | ||||
Ending Balance at Mar. 31, 2023 | $ 773,991 | 93,281 | (939) | (88,615) | 3,727 | |
Beginning Balance at Dec. 31, 2023 | 104,757 | (1,578) | (95,066) | 8,113 | ||
Beginning Balance (in shares) at Dec. 31, 2023 | shares | 13,765 | 889,668 | ||||
Stock-based compensation expense | 107 | 107 | ||||
Issuance of stock awards | 21 | 21 | ||||
Issuance of stock awards (in Shares) | shares | 3,400 | |||||
Issuance of common stock to vendor | 53 | 53 | ||||
Issuance of common stock to vendor (in shares) | shares | 50,000 | |||||
Conversion of preferred stock into common stock | $ 436,294 | |||||
Conversion of preferred stock into common stock (in shares) | shares | (3,817) | |||||
Exchange of Preferred stock into common stock warrants (in shares) | shares | (6,356) | |||||
Deemed dividend on extinguishment of Preferred stock | 7,069 | (7,094) | (25) | |||
Exercise of warrants into common stock | $ 388 | |||||
Foreign currency translation adjustment | (18) | (18) | ||||
Net Income (Loss) | (1,696) | (1,696) | ||||
Ending Balance at Mar. 31, 2024 | $ 112,007 | $ (1,596) | $ (103,856) | $ 6,555 | ||
Ending Balance (in shares) at Mar. 31, 2024 | shares | 3,592 | 1,379,750 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) | Sep. 21, 2023 | Sep. 19, 2023 |
Condensed Consolidated Statements of Stockholders' Equity | ||
Stock split ratio | 0.0286 | 0.0286 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flow from operating activities: | ||
Net loss | $ (1,696) | $ (2,048) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 63 | 42 |
Stock-based compensation expense | 129 | 293 |
Issuance of common stock to vendor | 53 | 55 |
Right-of-use asset amortization | 60 | 56 |
Gain/(loss) on foreign currency transactions | 19 | (391) |
Change in fair value of the warrant liability, net | (753) | |
Change in operating assets and liabilities: | ||
Accounts receivable | 267 | 29 |
Research and development tax credit receivable | (202) | (211) |
Prepaid expenses and other current assets | (264) | (340) |
Accounts payable and accrued expenses | 822 | 293 |
Lease liabilities | (69) | (43) |
Income tax payable | (22) | |
Other current liabilities | (146) | |
Net cash used in operating activities | (1,571) | (2,433) |
Effect of exchange rate changes on cash | (14) | (102) |
Net change in cash | (1,585) | (2,535) |
Cash, beginning of period | 8,836 | 4,235 |
Cash, end of period | 7,251 | 1,700 |
Supplemental disclosure of cash and non-cash investing and financing activities | ||
Issuance of common shares for consulting services | $ 53 | $ 55 |
ORGANIZATION, BUSINESS, LIQUIDI
ORGANIZATION, BUSINESS, LIQUIDITY AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2024 | |
ORGANIZATION, BUSINESS, LIQUIDITY AND BASIS OF PRESENTATION | |
ORGANIZATION, BUSINESS, LIQUIDITY AND BASIS OF PRESENTATION | 1. ORGANIZATION, BUSINESS, LIQUIDITY AND BASIS OF PRESENTATION Organization SmartKem, Inc. (the “Company”) formerly known as Parasol Investments Corporation (“Parasol”), was formed on May 13, 2020, and is the successor of SmartKem Limited, which was formed under the Laws of England and Wales. The Company was founded as a “shell” company registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with no specific business plan or purpose until it began operating the business of SmartKem Limited following the closing of the transactions contemplated by the Securities Exchange Agreement (the “Exchange Agreement”), dated February 21, 2021, with SmartKem Limited. Pursuant to the Exchange Agreement all of the equity interests in SmartKem Limited, except certain deferred shares which had no economic or voting rights and which were purchased by Parasol for an aggregate purchase price of $1.40, were exchanged for shares of Parasol common stock and SmartKem Limited became a wholly owned subsidiary of Parasol (the “Exchange”). Business The Company is seeking to reshape the world of electronics with its disruptive organic thin-film transistors (“OTFTs”) that have the potential to drive the next generation of displays. The Company’s patented TRUFLEX® semiconductor and dielectric inks, or electronic polymers, are used to make a new type of transistor that has the potential to revolutionize the display industry. The Company’s inks enable low temperature printing processes that are compatible with existing manufacturing infrastructure to deliver low-cost displays that outperform existing technology. The Company’s electronic polymer platform can be used in a number of display technologies including microLED, miniLED and AMOLED displays for next generation televisions, laptops, augmented reality (“AR”) and virtual reality (“VR”) headsets, smartwatches and smartphones. The Company develops its materials at its research and development facility in Manchester, UK and provides prototyping services at the Centre for Process Innovation (“CPI”) at Sedgefield, UK. It has a field application office in Taiwan. The Company has an extensive IP portfolio including 125 granted patents across 19 patent families and 40 codified trade secrets. Risk and Uncertainties The Company’s activities are subject to significant risks and uncertainties including the risk of failure to secure additional funding to properly execute the Company’s business plan. The Company is subject to risks that are common to companies in the development stage, including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, reliance on third party manufacturers, protection of proprietary technology and compliance with regulatory requirements. The Company has access under a framework agreement to equipment which is used in the manufacturing of demonstrator products employing the Company’s inks. If the Company lost access to this fabrication facility, it would materially and adversely affect the Company’s ability to manufacture prototypes and demonstrate products for potential customers. The loss of this access could significantly impede the Company’s ability to engage in product development and process improvement activities. Alternative providers of similar services exist but would take effort and time to bring into the Company’s operations. Liquidity The accompanying unaudited interim condensed consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company has incurred continuing losses including net losses of $1.7 million for the three months ended March 31, 2024. The Company’s cash as of March 31, 2024 was $7.3 million. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to research funding, further development of our technology and products and expenses related to the commercialization of our products. The Company expects that its cash and cash equivalents of The Company’s future viability is dependent on its ability to raise additional capital to fund its operations. The Company will need to obtain additional funds to satisfy its operational needs and to fund its sales and marketing efforts, research and development expenditures, and business development activities. Until such time, if ever, as the Company can generate sufficient cash through revenue, management’s plans are to finance the Company’s working capital requirements through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. If the Company raises additional funds by issuing equity securities, the Company’s existing security holders will likely experience dilution. If the Company borrows money, the incurrence of indebtedness would result in increased debt service obligations and could require the Company to agree to operating and financial covenants that could restrict its operations. If the Company enters into a collaboration, strategic alliance or other similar arrangement, it may be forced to give up valuable rights. There can be no assurance however that such financing will be available in sufficient amounts, when and if needed, on acceptable terms or at all. The precise amount and timing of the funding needs cannot be determined accurately at this time, and will depend on a number of factors, including the market demand for the Company’s products and services, the quality of product development efforts, management of working capital, and continuation of normal payment terms and conditions for purchase of services. If the Company is unable to substantially increase revenues, reduce expenditures, or otherwise generate cash flows for operations, then the Company will need to raise additional funding. Basis of Presentation The unaudited interim condensed consolidated financial statements of the Company as of March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and 2023 should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”), which was filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2024 and may also be found on the Company’s website (www.smartkem.com). In these notes to the interim condensed consolidated financial statements the terms “us,” “we” or “our” refer to the Company and its consolidated subsidiaries. These interim condensed consolidated financial statements are unaudited and were prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim reporting and with the SEC’s instructions to Form 10-Q and Article 10 of Regulation S-X. They include the accounts of all wholly owned subsidiaries and all significant inter-company accounts and transactions have been eliminated in consolidation. Amounts are presented in thousands, except number of shares and per share data. The preparation of interim condensed consolidated financial statements requires management to make assumptions and estimates that impact the amounts reported. These interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the Company’s results of operations, financial position and cash flows for the interim periods ended March 31, 2024 and 2023; however, certain information and footnote disclosures normally included in our audited consolidated financial statements included in our Annual Report have been condensed or omitted as permitted by GAAP. It is important to note that the Company’s results of operations and cash flows for interim periods are not necessarily indicative of the results of operations and cash flows to be expected for a full fiscal year or any interim period. Reverse Stock Split All share numbers and per share amounts presented in these financial statements, including these footnotes reflect a one-for-thirty-five |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2024 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Other than the policies listed below, there have been no material changes to the Company’s significant accounting policies as set forth in Note 3 Summary of Significant Accounting Policies to the consolidated financial statements included in the Company’s Annual Report. The Company records, when necessary, deemed dividends for: (i) the exchange of preferred shares for pre-funded warrants, based on the fair value of the pre-funded warrants in excess of the carrying value of the preferred shares and (ii) the amendment of preferred stock accounted for as an extinguishment, based on the fair value of the preferred stock immediately before and after the amendments. Management’s Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and liabilities, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates in the Company’s consolidated financial statements relate to the valuation of common stock, fair value of stock options and fair value of warrant liabilities. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Due to the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results may materially vary from these estimates. Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting Improvements to Reportable Segment Disclosures On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2024 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: March 31, December 31, (in thousands) 2024 2023 Prepaid insurance $ 444 $ 274 Research grant receivable 195 160 Prepaid facility costs 166 101 VAT receivable 176 104 Prepaid software licenses 60 24 Prepaid professional service fees 5 68 Other receivable and other prepaid expenses 36 80 Total prepaid expenses and other current assets $ 1,082 $ 811 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2024 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following: March 31, December 31, (in thousands) 2024 2023 Plant and equipment $ 1,569 $ 1,584 Furniture and fixtures 107 108 Computer hardware and software 24 24 1,700 1,716 Less: Accumulated depreciation (1,312) (1,261) Property, plant and equipment, net $ 388 $ 455 Depreciation expense was $63.2 thousand and $42.2 thousand for the three months ended March 31, 2024 and 2023, respectively and is classified as research and development expense. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2024 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following: March 31, December 31, (in thousands) 2024 2023 Accounts payable $ 1,180 $ 355 Payroll liabilities 534 375 Accrued expenses – audit & accounting fees — 182 Accrued expenses – legal fees 90 — Accrued expenses – technical fees 79 91 Accrued expenses – other professional service fees 57 — Accrued expenses – other 98 175 Total accounts payable and accrued expenses $ 2,038 $ 1,178 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2024 | |
LEASES | |
LEASES | 6. LEASES The Company has operating leases consisting of office space, lab space and equipment with remaining lease terms of 1 to 3 years, subject to certain renewal options as applicable. The Company is not the lessor in any lease agreement, and no related party transactions for lease arrangements have occurred. The table below presents certain information related to the lease costs for the Company’s operating leases for the periods ended: Three Months Ended March 31, (in thousands) 2024 2023 Operating lease cost $ 65 $ 64 Short-term lease cost 6 4 Variable lease cost — 45 Total lease cost $ 71 $ 113 The total lease cost is included in the unaudited condensed consolidated statements of operations as follows: Three Months Ended March 31, (in thousands) 2024 2023 Research and development $ 65 $ 104 Selling, general and administrative 6 9 Total lease cost $ 71 $ 113 Right of use lease assets and lease liabilities for the Company’s operating leases were recorded in the unaudited condensed consolidated balance sheet as follows: March 31, December 31, (in thousands) 2024 2023 Assets Right of use assets - Operating Leases $ 223 $ 285 Total lease assets $ 223 $ 285 Liabilities Current liabilities: Lease liability, current - Operating Leases $ 174 $ 230 Noncurrent liabilities: Lease liability, non-current - Operating Leases 4 19 Total lease liabilities $ 178 $ 249 The Company had no right of use lease assets and lease liabilities for financing leases as of March 31, 2024 and December 31, 2023. The table below presents certain information related to the cash flows for the Company’s operating leases for the periods ended: March 31, (in thousands) 2024 2023 Operating cash outflows from operating leases $ 69 $ 43 The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of the period ended: March 31, 2024 Weighted average remaining lease term (in years) – operating leases 0.76 Weighted average discount rate – operating leases 6.28% Remaining maturities of the Company’s operating leases, excluding short-term leases, are as follows: March 31, (in thousands) 2024 2024 $ 167 2025 19 Total undiscounted lease payments 186 Less imputed interest (8) Total net lease liabilities $ 178 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2024 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 7. COMMITMENTS AND CONTINGENCIES Legal proceedings In the normal course of business, the Company may become involved in legal disputes regarding various litigation matters. In the opinion of management, any potential liabilities resulting from such claims would not have a material effect on the interim condensed consolidated financial statements. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2024 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 8. STOCKHOLDERS’ EQUITY Reverse Stock Split At the Company’s Annual Meeting of Stockholders held on August 25, 2023 (the “Annual Meeting”), the Company’s stockholders approved a proposal to approve and adopt an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of its shares of common stock, issued and outstanding or reserved for issuance, at a specific ratio within a range from 1-for- 30 60 35 On September 19, 2023, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Charter Amendment”) to effect a reverse stock split of the issued and outstanding shares of the Company’s common stock, $0.01 par value per share, at a ratio of 1-for- 35 Preferred Stock The board of directors has the authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences, and privileges could include dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms, and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock. Series A-1 Preferred Stock On June 14, 2023, the Company filed a Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Delaware designating 18,000 shares out of the authorized but unissued shares of its preferred stock as Series A-1 Preferred Stock with a stated value of $1,000 per share (the “Series A-1 Certificate of Designation”). On January 29, 2024, the Company filed an Amended and Restated Certificate of Designation of Preferences, Rights and Limitation with the Secretary of State of Delaware designating 11,100 shares of Series A-1 Preferred Stock The following is a summary of the principal amended and restated terms of the Series A-1 Preferred Stock as set forth in the Amended and Restated Series A-1 Certificate of Designation: Dividends The holders of Series A-1 Preferred Stock will be entitled to dividends, on an as-if converted basis, equal to and in the same form as dividends actually paid on shares of Common Stock, when and if actually paid. In addition, in the event that on the 18 th Voting Rights The shares of Series A-1 Preferred Stock have no voting rights, except to the extent required by the Delaware General Corporation Law. As long as any shares of Series A-1 Preferred Stock are outstanding, the Company may not, without the approval of a majority of the then outstanding shares of Series A-1 Preferred Stock which must include AIGH Investment Partners LP and its affiliates (“AIGH”) for so long as AIGH is holding at least $1,500,000 in aggregate stated value of Series A-1 Preferred Stock acquired pursuant to the Purchase Agreement (a) alter or change the powers, preferences or rights given to the Series A-1 Preferred Stock, (b) alter or amend the Amended and Restated Certificate of Incorporation (the “Charter”), the Series A-1 Certificate of Designation, the Series A-2 Certificate of Designation (as defined below) or the bylaws of the Company (the “Bylaws”) in such a manner so as to materially adversely affect any rights given to the Series A-1 Preferred Stock, (c) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined below) senior to, or otherwise pari passu with, the Series A-1 Preferred Stock, other than 3,050 shares of Series A-2 Preferred Stock of the Company, (d) increase the number of authorized shares of Series A-1 Preferred Stock, (e) issue any Series A-1 Preferred Stock except pursuant to the Purchase Agreement, or (f) enter into any agreement to do any of the foregoing. Liquidation Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the then holders of the Series A-1 Preferred Stock are entitled to receive out of the assets available for distribution to stockholders of the Company an amount equal to 100% of the stated value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon, prior and in preference to the Common Stock or any other series of preferred stock (other than the Series A-2 Preferred Stock). Conversion The Series A-1 Preferred Stock is convertible into Common Stock at any time at a conversion price of $87.50, subject to adjustment for certain anti-dilution provisions set forth in the Series A-1 Certificate of Designation (the “Series A-1 Conversion Price”). Upon conversion the shares of Series A-1 Preferred Stock will resume the status of authorized but unissued shares of preferred stock of the Company. Conversion at the Option of the Holder The Series A-1 Preferred Stock is convertible at the then-effective Series A-1 Conversion Price at the option of the holder at any time and from time to time. Mandatory Conversion at the Option of the Company So long as certain equity conditions are satisfied, the Company may give notice requiring the holders to convert all of the outstanding shares of Series A-1 Preferred Stock into shares of Common Stock at the then-effective Series A-1 Conversion Price. Beneficial Ownership Limitation The Series A-1 Preferred Stock cannot be converted to Common Stock if the holder and its affiliates would beneficially own more than 4.99% (or 9.99% at the election of the holder) of the outstanding common stock. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us, provided that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase or decrease will apply only to the holder providing such notice. Preemptive Rights No holders of Series A-1 Preferred Stock will, as holders of Series A-1 Preferred Stock, have any preemptive rights to purchase or subscribe for Common Stock or any of our other securities. Redemption The shares of Series A-1 Preferred Stock are not redeemable by the Company. Negative Covenants As long as any Series A-1 Preferred Stock is outstanding, unless the holders of more than 50% in stated value of the then outstanding shares of Series A-1 Preferred Stock shall have otherwise given prior written consent (which must include AIGH for so long as AIGH is holding at least $1,500,000 in aggregate stated value of Series A-1 Preferred Stock acquired pursuant to the Purchase Agreement), the Company cannot, subject to certain exceptions, (a) enter into, create, incur, assume, guarantee or suffer to exist any indebtedness, (b) enter into, create, incur, assume or suffer to exist any liens, (c) repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock, Common Stock equivalents or junior securities, (d) enter into any transaction with any affiliate of the Company which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Company, (e) declare or pay a dividend on junior securities or (f) enter into any agreement with respect to any of the foregoing. Trading Market There is no established trading market for any of the Series A-1 Preferred Stock, and we do not expect a market to develop. We do not intend to apply for a listing for any of the Series A-1 Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series A-1 Preferred Stock will be limited. Series A-2 Preferred Stock On June 14, 2023, the Company filed a Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of the State of Delaware designating 18,000 shares out of the authorized but unissued shares of its preferred stock as Series A-2 Preferred Stock with a stated value of $1,000 per share (the “Series A-2 Certificate of Designation”). The following is a summary of the principal terms of the Series A-2 Preferred Stock as set forth in the Series A-2 Certificate of Designation: Dividends The holders of Series A-2 Preferred Stock will be entitled to dividends, on an as-if converted basis, equal to and in the same form as dividends actually paid on shares of Common Stock, when and if actually paid. Voting Rights The shares of Series A-2 Preferred Stock have no voting rights, except to the extent required by the DGCL. As long as any shares of Series A-2 Preferred Stock are outstanding, the Company may not, without the approval of a majority of the then outstanding shares of Series A-2 Preferred Stock (a) alter or change the powers, preferences or rights of the Series A-2 Preferred Stock, (b) alter or amend the Charter, the Series A-2 Certificate of Designation or the Bylaws in such a manner so as to materially adversely affect any rights given to the Series A-2 Preferred Stock, (c) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a liquidation senior to, or otherwise pari passu Liquidation Upon a Liquidation, the then holders of the Series A-2 Preferred Stock are entitled to receive out of the assets available for distribution to stockholders of the Company an amount equal to 100% of the stated value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon, prior and in preference to the Common Stock or any other series of preferred stock (other than the Series A-1 Preferred Stock). Conversion The Series A-2 Preferred Stock is convertible into Common Stock at any time at a conversion price of $8.75, subject to adjustment for certain anti-dilution provisions set forth in the Series A-2 Certificate of Designation (the “Series A-2 Conversion Price”). Upon conversion the shares of Series A-2 Preferred Stock will resume the status of authorized but unissued shares of preferred stock of the Company. Conversion at the Option of the Holder The Series A-2 Preferred Stock is convertible at the then-effective Series A-2 Conversion Price at the option of the holder at any time and from time to time. Automatic Conversion On the trading day immediately preceding the date on which shares of Common Stock commence trading on the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange all, but not less than all, of the outstanding shares of Series A-2 Preferred Stock shall automatically convert, without any action on the part of the holder thereof and without payment of any additional consideration, into that number of shares of Common Stock determined by dividing the stated of such share of Series A-2 Preferred Stock by the then applicable Series A-2 Conversion Price. Beneficial Ownership Limitation The Series A-2 Preferred Stock cannot be converted to common stock if the holder and its affiliates would beneficially own more than 4.99% (or 9.99% at the election of the holder) of the outstanding common stock. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us, provided that any increase in this limitation will not be effective until 61 days after such notice from the holder to us and such increase or decrease will apply only to the holder providing such notice. Preemptive Rights No holders of Series A-2 Preferred Stock will, as holders of Series A-2 Preferred Stock, have any preemptive rights to purchase or subscribe for Common Stock or any of our other securities. Redemption The shares of Series A-2 Preferred Stock are not redeemable by the Company. Trading Market There is no established trading market for any of the Series A-2 Preferred Stock, and the Company does not expect a market to develop. The Company does not intend to apply for a listing for any of the Series A-2 Preferred Stock on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the Series A-2 Preferred Stock will be limited. Series A-1 and A-2 Preferred Stock and Class A and Class B Warrant Issuances On June 14, 2023, the Company and certain investors entered into a securities purchase agreement (the “Purchase Agreement”) pursuant to which the Company sold an aggregate of (i) 9,229 shares of Series A-1 Convertible Preferred Stock at a price of $1,000 per share (the “Series A-1 Preferred Stock”), (ii) 2,950 shares of the Company’s Series A-2 Convertible Preferred Stock at a price of $1,000 per share (“Series A-2 Preferred Stock” and together with the Series A-1 Preferred Stock, the “Preferred Stock”), (iii) Class A Warrants to purchase up to an aggregate of 1,391,927 shares of common stock (the “Class A Warrant”), and (iv) Class B Warrants to purchase up to an aggregate of 798,396 shares of common stock (the “Class B Warrant” and together with the Class A Warrant, the “Warrants”) for aggregate gross proceeds of $12.2 million (the “June 2023 PIPE”). In addition, 34,286 Class B Warrants were issued in lieu of cash payments for consulting services related to the offering. The fair value of the service provided was $59 thousand. On June 22, 2023, in a second closing of the June 2023 PIPE, the Company sold an aggregate of (i) 1,870.36596 Series A-1 Preferred Stock, (ii) 100 shares of Series A-2 Preferred Stock, and (iii) Class A Warrants to purchase up to an aggregate of 225,190 shares of Common Stock pursuant to the Purchase Agreement for aggregate gross proceeds of $2.0 million. In addition, 8,572 Class B Warrants were issued in lieu of cash payments for consulting services related to the offering. The fair value of the service provided was $15 thousand. Each Class A Warrant has an exercise price of $8.75 and each Class B Warrant has an exercise price of $0.35, both subject to adjustments in accordance with the terms of the Warrants. The Warrants expire five years from the issuance date. There were an additional 127,551 warrants issues related to a placement agent fee. The fair value of this fee is $31 thousand. The Company has accounted for the Class A and Class B Warrants as derivative instruments in accordance with ASC 815, Derivatives and Hedging. The Company classified the Warrants as a liability because they cannot be considered indexed to the Company’s stock due to provisions that, in certain circumstances, adjust the number of shares to be issued if the exercise price is adjusted and the existence of a pre-specified volatility input to the Black-Scholes calculation which could be used to calculate consideration in the event of a Fundamental Transaction, as defined in the agreements. The Company received net proceeds after expenses of $12.7 million. Of the net proceeds, the Company allocated an estimated fair value of $1.8 million to the Warrants. The Company also expensed $0.2 million of issuance costs that were allocated to the warranty liability during the three and six months ended June 30, 2023. The terms of the June 2023 PIPE include a number of restrictions on our operations and on our ability to raise additional capital. The Purchase Agreement, among other things, provides that, for a period ending on June 14, 2024, we may not use cash from operating activities (as defined under GAAP) of more than an average of $2.8 million for any consecutive three-month period (subject to certain exceptions). This provision may cause us to delay certain actions that may benefit our business and may prevent us from pursuing potentially favorable business opportunities, even if a majority of our board of directors believes such actions or opportunities are in the best interest of our company and our stockholders. Under the terms of the Purchase Agreement, for a period ending on December 15, 2025, in the event that we issue common stock or common stock equivalents in a subsequent financing (as defined in the Purchase Agreement), the significant purchasers (defined in the Purchase Agreement as a purchaser acquiring at least 1,000 shares of Series A-1 Preferred Stock) will have the right to purchase up to 40% of the securities sold in the subsequent financing. This provision may make it more difficult for us to raise additional capital because other investors may want to provide all, or a larger portion of the capital provided in the subsequent financing or may be unwilling to co-invest with one or more of the significant purchasers or may be unwilling to commit to provide financing without knowing how much of the subsequent financing will be provided by the significant purchasers. In addition, during such period, the Company may not issue common stock or common stock equivalents in a subsequent financing with an effective price per share of common stock that is or may become lower than the then-effective conversion price of the Series A-1 Preferred Stock without the consent of the significant purchasers, which must include AIGH Investment Partners LP and its affiliates for so long as they are holding at least $1,500,000 in aggregate stated value of Series A-1 Preferred Stock acquired pursuant to the Purchase Agreement. This provision may prevent the Company from obtaining additional capital on market terms even if a majority of the Company’s board of directors believes that the terms of the subsequent financing are in the best interests of the Company and its stockholders. This provision may also have the effect of increasing the cost of obtaining additional capital either because the significant purchasers refuse to consent to any such subsequent financing unless provided by them on terms approved by them or because the Company is required to provide additional consideration to such significant purchasers in exchange for their consent. In the event that the Company issues common stock or common stock equivalents in a subsequent financing prior to the time the common stock is listed on a national securities exchange, the Purchase Agreement provides that if a significant purchaser reasonably believes that any of the terms and conditions of the subsequent financing are more favorable to an investor in the subsequent financing than the terms of the June 2023 PIPE, such significant purchaser has the right to require the Company to amend the terms of the June 2023 PIPE to include such more favorable term for such significant purchaser. This provision may make it more expensive to obtain additional capital prior to an uplisting because it permits any significant purchaser to “cherry pick” the terms of the subsequent financing and to require any term deemed to be more favorable to be included retroactively in the terms of the June 2023 PIPE. This provision also potentially creates uncertainty around the terms of a subsequent financing because the significant purchasers have the right to review terms of a completed subsequent financing before deciding which, if any, of the terms thereof they find more favorable to them. The Purchase Agreement provides that, until June 14, 2025, a significant purchaser may participate in a subsequent transaction by exchanging some or all of its Series A-1 Preferred Stock having a stated value equal to its subscription amount in the subsequent financing. This provision may adversely affect the amount of capital the Company raises in a subsequent financing, as it permits a significant purchaser to roll its existing investment into the new financing rather than being required to invest cash. This provision also has the potential to make it more difficult for the Company to raise additional capital as other investors may want to provide all or a larger portion of the capital provided in the subsequent financing or may require the Company to raise a minimum amount of new capital or may be unwilling to commit to provide financing without knowing how much of the subsequent financing will be provided by the significant purchasers in cash. If the Company is unable to raise additional capital when needed, the Company may be required to delay, limit, reduce or terminate commercialization, its research and product development, or grant rights to develop and market its products that the Company would otherwise prefer to develop and market itself and may have a material adverse effect on the Company’s business, financial condition and results of operations. Consent, Conversion and Amendment Agreement On January 26, 2024, the Company entered into a Consent, Conversion and Amendment Agreement (the “Consent Agreement”) with each holder of the Series A-1 Preferred Stock (each a “Holder” and together, the “Holders”). Pursuant to the Consent Agreement, each Holder converted, subject to the terms and conditions of the Consent Agreement, 90% of its Series A-1 Preferred Stock (the “Conversion Commitment”) into shares of Common Stock or Class C warrants (each a “Class C Warrant”) covering the shares of Common Stock that would have been issued to such Holder but for the Beneficial Ownership Limitation (the “Exchange”). The Class C Warrants have an exercise price of $0.0001, were exercisable upon issuance and will expire when exercised in full. Under the Consent Agreement, the Company issued (i) 412,293 shares of Common Stock and (ii) Class C Warrants to purchase up to 726,344 shares of Common Stock upon the conversion or exchange of an aggregate of 9,963 shares of Series A-1 Preferred Stock. 1,106 shares of Series A-1 Preferred Stock remain outstanding after giving effect to the transactions contemplated by the Consent Agreement. Pursuant to the Consent Agreement, the Company and the Holders agreed to amend and restate the Certificate of Designation of Preferences, Rights and Limitations for the Series A-1 Preferred Stock (the “Amended and Restated Series A-1 Certificate of Designation”) to (i) make certain adjustments to reflect the Reverse Split, (ii) remove all voting rights, except as required by applicable law, (iii) increase the stated value of the Series A-1 Preferred Stock to $10,000 from $1,000, and (iv) adjust the conversion price of the Series A-1 Preferred Stock to $87.50 as a result of the increase in stated value. The Consent Agreement, the Registration Rights Agreement, the Amended and Restated Series A-1 Certificate of Designation and the form of Class C Warrant, are attached as Exhibits 10.1, 10.2, 3.1 and 4.2 to the Form 8-K filed with the SEC on January 29, 2024. The Company credited additional paid in capital $7.1 million for deemed dividends as a result of (i) the exchange of Series A-1 Preferred Shares for Series C Warrants, based on the fair value of the Series C Warrants in excess of the carrying value of the preferred shares and (ii) the amendment of Series A-1 Preferred Stock accounted for as an extinguishment, based on the fair value of the Series A-1 Preferred Stock immediately before and after the amendments. The Company estimated the fair value of the deemed dividend related to the exchange of Series A-1 Preferred Stock for Series C Warrants as part of the fair value model utilized to value all the securities issued in the transaction with the stock price input estimated as of the January 26, 2024, transaction date. The Company estimated the fair value of the deemed dividend related to the amendment of preferred stock using an option pricing model based on the following assumptions: (1) dividend yield of 19.99%, (2) expected volatility of 50.0%, (3) risk-free interest rate of 4.15%, and (4) expected life of 10.0 years. As of March 31, 2024, there was an aggregate of 1,106 shares of Series A-1 and 2,486 shares of Series A-2 Preferred Stock outstanding, respectively. Common Stock Voting Rights Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. The Company’s Charter and the Company’s Bylaws do not provide for cumulative voting rights. The holders of one-third of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, constitutes a quorum for the transaction of business at all meetings of the stockholders. Dividends The Company has never paid any cash dividends to stockholders and do not anticipate paying any cash dividends to stockholders in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon financial condition, results of operations, capital requirements and such other factors as the board of directors deems relevant. Common Stock Issued to Vendors for Services On March 7, 2024, the Company issued 50,000 shares of common stock, as payment for financial consulting services. Common Stock Warrants A summary of the Company’s warrants to purchase common stock activity is as follows: Weighted- Average Weighted- Remaining Average Contractual Number of Exercise Price Exercise Term Shares per Share Price (Years) Warrants outstanding at January 1, 2024 2,542,655 $0.35 - $70.00 $ 6.89 4.43 Issued — — Exercised (400) 0.35 Expired — — Warrants outstanding at March 31, 2024 2,542,255 $0.35 - $70.00 $ 6.89 4.17 A summary of the Company’s pre-funded warrants to purchase common stock activity is as follows: Weighted- Average Number of Exercise Shares Price Pre-funded warrants outstanding at January 1, 2024 61,587 $ 0.3500 Issued 726,344 0.0001 Exercised — Expired — Pre-funded warrants outstanding at March 31, 2024 787,931 $ 0.02745 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2024 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 9. SHARE-BASED COMPENSATION: On February 23, 2021, the Company approved the 2021 Equity Incentive Plan (“2021 Plan”), in which a maximum aggregate number of shares of common stock that may be issued under the 2021 Plan is 65,000 shares. Subject to the adjustment provisions of the 2021 Plan, the number of shares of the Company’s common stock available for issuance under the 2021 Plan will also include an annual increase on the first day of each fiscal year beginning with 2022 fiscal year and ending on the Company’s 2031 fiscal year in an amount equal to the least of: 1) 65,000 shares of the Company’s common stock; 2) four percent (4%) of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year; or 3) such number of shares of the Company’s common stock as the administrator may determine. At the 2023 Annual Meeting, the Company’s stockholders approved an amendment (the “2021 Plan Amendment”) to the Company’s 2021 Plan, increasing the number of the shares of common stock, par value $0.0001 per share (“Common Stock”), reserved for issuance under the 2021 Plan from 125,045 shares to 743,106 shares. The Company’s Board of Directors (the “Board”) had previously approved the 2021 Plan Amendment, subject to stockholder approval.. Determining the appropriate fair value of share-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and for share options, the expected life of the option, and expected share price volatility. The Company uses the Black-Scholes option pricing model to value its share option awards. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, the share-based compensation expense could be materially different for future awards. There were no options granted under the 2021 Plan for the three months ended March 31, 2024 and 2023. There were 3,400 shares of Common Stock granted and no shares granted under the 2021 Plan during the three months ended March 31, 2024 and 2023, respectively. The following table reflects share activity under the share option plans for the three months ended March 31, 2024: Weighted- Average Weighted- Remaining Weighted- Aggregate Average Contractual Average Intrinsic Number of Exercise Term Fair Value at Value Shares Price (Years) Grant Date (in thousands) Options outstanding at January 1, 2024 70,411 $ 63.07 7.28 $ 33.98 Exercised — — Cancelled/Forfeited (491) 70.00 Expired — Granted — — Options outstanding at March 31, 2024 69,920 $ 63.02 7.04 $ 33.98 Options exercisable at March 31, 2024 46,347 $ 59.47 6.56 $ 78.24 Stock-based compensation is included in the unaudited interim condensed consolidated statements of operations as follows: Three Months Ended March 31, (in thousands) 2024 2023 Research and development $ 42 $ 70 Selling, general and administration 65 223 Total $ 107 $ 293 Total compensation cost related to non-vested stock option awards not yet recognized as of March 31, 2024 was $0.6 million and will be recognized on a straight-line basis through the end of the vesting periods in July 2026. The amount of future stock option compensation expense could be affected by any future option grants or by any forfeitures. |
NET LOSS PER COMMON SHARE
NET LOSS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2024 | |
NET LOSS PER COMMON SHARE | |
NET LOSS PER COMMON SHARE | 10. NET LOSS PER COMMON SHARE: Basic net loss per share is determined by dividing net loss by the weighted average shares of common stock outstanding during the period, without consideration of potentially dilutive securities, except for those shares that are issuable for little or no cash consideration. Diluted net loss per share is determined by dividing net loss by diluted weighted average shares outstanding. Diluted weighted average shares reflects the dilutive effect, if any, of potentially dilutive common shares, such as stock options and warrants calculated using the treasury stock method. In periods with reported net operating losses, all common stock options and warrants are generally deemed anti-dilutive such that basic net loss per share and diluted net loss per share are equal. Three Months Ended March 31, (in thousands, except share data) 2024 2023 Net loss - basic $ (1,696) $ (2,048) Preferred stock dividends (7,094) — Net loss - diluted $ (8,790) $ (2,048) Weighted average shares outstanding - basic* 2,735,375 835,718 Weighted average shares outstanding - diluted* 2,735,375 835,718 Net loss per common share - basic* $ (0.62) $ (2.45) Net loss per common share - diluted* $ (3.21) $ (2.45) Dividend per common share $ (2.59) $ - * reflects a one-for-thirty-five (1: 35 ) reverse stock split effected on September 21, 2023 The following potentially dilutive securities were excluded from the computation of earnings per share as of March 31, 2024 and 2023 because their effects would be anti-dilutive: March 31, 2024 2023 Common stock warrants 3,330,186 89,748 Assumed conversion of preferred stock 410,587 — Stock options 69,920 80,084 Total 3,810,693 169,832 At March 31, 2024, the Company had 61,587 pre-funded warrants, 769,426 Class B Warrants and 726,344 Class C Warrants outstanding. The following table provides a reconciliation of the weighted average shares outstanding calculation for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 2023 Weighted average shares issued 1,217,723 773,773 Weighted average pre-funded and penny warrants 1,517,652 61,945 Weighted average shares outstanding 2,735,375 835,718 |
DEFINED CONTRIBUTION PENSION
DEFINED CONTRIBUTION PENSION | 3 Months Ended |
Mar. 31, 2024 | |
DEFINED CONTRIBUTION PENSION | |
DEFINED CONTRIBUTION PENSION | 11. DEFINED CONTRIBUTION PENSION: The Company operates a defined contribution pension scheme for its UK employees. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund. Pension cost is included in the unaudited interim condensed consolidated statements of operations as follows: Three Months Ended March 31, (in thousands) 2024 2023 Research and development $ 21 $ 22 Selling, general and administration 16 18 Total $ 37 $ 40 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2024 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 12. FAIR VALUE MEASUREMENTS The table below presents activity within Level 3 of the fair value hierarchy, our liabilities carried at fair value for the quarter ended March 31, 2024: (in thousands) Warrant Liability Balance at January 1,2024 $ 1,372 Fair value of warrant issued in Private Placement Offering — Total change in the liability included in earnings (753) Balance at March 31, 2024 $ 619 The valuation of the warrants was determined using option pricing models. These models use inputs such as the underlying price of the shares issued at the measurement date, expected volatility, risk free interest rate and expected life of the instrument. Since our common stock was not publicly traded until February 2022 there has been insufficient volatility data available. Accordingly, we have used an expected volatility based on historical common stock volatility of our peers. The Company has accounted for them as derivative instruments in accordance with ASC 815, adjusting the fair value at the end of each reporting period. The fair value of the common warrants at March 31, 2024 was determined by using an option pricing model assuming the following: March 31, December 31 2024 2023 Expected term (years) 4.21 4.46 Risk-free interest rate 4.20% 3.81% Expected volatility 50.0% 50.0% Expected dividend yield 0.0% 0.0% Additionally, the Company has determined that the warrant liability should be classified within Level 3 of the fair-value hierarchy by evaluating each input for the option pricing models against the fair-value hierarchy criteria and using the lowest level of input as the basis for the fair-value classification as called for in ASC 820. There are six inputs: closing price of the Company’s Common Stock on the day of evaluation; the exercise price of the warrants; the remaining term of the warrants; the volatility of the Company’s stock over that term; annual rate of dividends; and the risk-free rate of return. Of those inputs, the exercise price of the warrants and the remaining term are readily observable in the warrant agreements. The annual rate of dividends is based on the Company’s historical practice of not granting dividends. The closing price of SmartKem stock would fall under Level 1 of the fair-value hierarchy as it is a quoted price in an active market (ASC 820-10). The risk-free rate of return is a Level 2 input as defined in ASC 820-10, while the historical volatility is a Level 3 input as defined in ASC 820. Since the lowest level input is a Level 3, the Company determined the warrant liability is most appropriately classified within Level 3 of the fair value hierarchy. The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value as of March 31, 2024 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value. In general, the fair values were determined using Level 3: Quoted Prices Significant Other Significant in Active Observable Unobservable Markets Inputs Inputs March 31, (Level 1) (Level 2) (Level 3) 2024 Description Liabilities: Warrant liability $ — $ — $ 619 $ 619 Total liabilities $ — $ — $ 619 $ 619 Equity: Deemed dividend on extinguishment of Preferred stock $ — $ — $ 7,094 $ 7,094 Total Equity $ — $ — $ 7,094 $ 7,094 Quoted Prices Significant Other Significant in Active Observable Unobservable Markets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2023 Description Liabilities: Warrant liability $ — $ — $ 1,372 $ 1,372 Total liabilities $ — $ — $ 1,372 $ 1,372 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2024 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS: Preferred Stock Conversions Subsequent to March 31, 2024, the Company issued 8,574 shares of the Company’s common stock upon the conversion of 75 shares Series A-2 Preferred Stock. Common Stock Issued to Vendors for Services Subsequent to March 31, 2024, the Company issued 50,000 shares of common stock, as payment for financial consulting services. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Management's Use of Estimates | Management’s Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and liabilities, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates in the Company’s consolidated financial statements relate to the valuation of common stock, fair value of stock options and fair value of warrant liabilities. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Due to the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results may materially vary from these estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting Improvements to Reportable Segment Disclosures On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Schedule of Prepaid Expenses and Other Current Assets | March 31, December 31, (in thousands) 2024 2023 Prepaid insurance $ 444 $ 274 Research grant receivable 195 160 Prepaid facility costs 166 101 VAT receivable 176 104 Prepaid software licenses 60 24 Prepaid professional service fees 5 68 Other receivable and other prepaid expenses 36 80 Total prepaid expenses and other current assets $ 1,082 $ 811 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
PROPERTY, PLANT AND EQUIPMENT | |
Schedule of Property, Plant and Equipment | March 31, December 31, (in thousands) 2024 2023 Plant and equipment $ 1,569 $ 1,584 Furniture and fixtures 107 108 Computer hardware and software 24 24 1,700 1,716 Less: Accumulated depreciation (1,312) (1,261) Property, plant and equipment, net $ 388 $ 455 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |
Schedule of Accounts Payable and Accrued Expenses | March 31, December 31, (in thousands) 2024 2023 Accounts payable $ 1,180 $ 355 Payroll liabilities 534 375 Accrued expenses – audit & accounting fees — 182 Accrued expenses – legal fees 90 — Accrued expenses – technical fees 79 91 Accrued expenses – other professional service fees 57 — Accrued expenses – other 98 175 Total accounts payable and accrued expenses $ 2,038 $ 1,178 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
LEASES | |
Schedule of lease costs | Three Months Ended March 31, (in thousands) 2024 2023 Operating lease cost $ 65 $ 64 Short-term lease cost 6 4 Variable lease cost — 45 Total lease cost $ 71 $ 113 Three Months Ended March 31, (in thousands) 2024 2023 Research and development $ 65 $ 104 Selling, general and administrative 6 9 Total lease cost $ 71 $ 113 |
Schedule of right of use lease assets and lease liabilities for operating leases | March 31, December 31, (in thousands) 2024 2023 Assets Right of use assets - Operating Leases $ 223 $ 285 Total lease assets $ 223 $ 285 Liabilities Current liabilities: Lease liability, current - Operating Leases $ 174 $ 230 Noncurrent liabilities: Lease liability, non-current - Operating Leases 4 19 Total lease liabilities $ 178 $ 249 |
Schedule of operating lease cash flow information | March 31, (in thousands) 2024 2023 Operating cash outflows from operating leases $ 69 $ 43 |
Schedule of weighted average remaining lease term and weighted average discount rate for operating leases | March 31, 2024 Weighted average remaining lease term (in years) – operating leases 0.76 Weighted average discount rate – operating leases 6.28% |
Schedule of remaining maturities of operating leases, excluding short-term leases | March 31, (in thousands) 2024 2024 $ 167 2025 19 Total undiscounted lease payments 186 Less imputed interest (8) Total net lease liabilities $ 178 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Common Stock Warrants | |
Schedule of Warrants | Weighted- Average Weighted- Remaining Average Contractual Number of Exercise Price Exercise Term Shares per Share Price (Years) Warrants outstanding at January 1, 2024 2,542,655 $0.35 - $70.00 $ 6.89 4.43 Issued — — Exercised (400) 0.35 Expired — — Warrants outstanding at March 31, 2024 2,542,255 $0.35 - $70.00 $ 6.89 4.17 |
Pre Funded Warrants | |
Schedule of Warrants | Weighted- Average Number of Exercise Shares Price Pre-funded warrants outstanding at January 1, 2024 61,587 $ 0.3500 Issued 726,344 0.0001 Exercised — Expired — Pre-funded warrants outstanding at March 31, 2024 787,931 $ 0.02745 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
SHARE-BASED COMPENSATION | |
Schedule of share activity under the share option plans | Weighted- Average Weighted- Remaining Weighted- Aggregate Average Contractual Average Intrinsic Number of Exercise Term Fair Value at Value Shares Price (Years) Grant Date (in thousands) Options outstanding at January 1, 2024 70,411 $ 63.07 7.28 $ 33.98 Exercised — — Cancelled/Forfeited (491) 70.00 Expired — Granted — — Options outstanding at March 31, 2024 69,920 $ 63.02 7.04 $ 33.98 Options exercisable at March 31, 2024 46,347 $ 59.47 6.56 $ 78.24 |
Schedule of stock-based compensation | Three Months Ended March 31, (in thousands) 2024 2023 Research and development $ 42 $ 70 Selling, general and administration 65 223 Total $ 107 $ 293 |
NET LOSS PER COMMON SHARE (Tabl
NET LOSS PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
NET LOSS PER COMMON SHARE | |
Schedule of basic net loss per share and diluted net loss per share are equal | Three Months Ended March 31, (in thousands, except share data) 2024 2023 Net loss - basic $ (1,696) $ (2,048) Preferred stock dividends (7,094) — Net loss - diluted $ (8,790) $ (2,048) Weighted average shares outstanding - basic* 2,735,375 835,718 Weighted average shares outstanding - diluted* 2,735,375 835,718 Net loss per common share - basic* $ (0.62) $ (2.45) Net loss per common share - diluted* $ (3.21) $ (2.45) Dividend per common share $ (2.59) $ - * reflects a one-for-thirty-five (1: 35 ) reverse stock split effected on September 21, 2023 |
Schedule of potentially anti-dilutive securities were excluded from the computation of earnings per share | March 31, 2024 2023 Common stock warrants 3,330,186 89,748 Assumed conversion of preferred stock 410,587 — Stock options 69,920 80,084 Total 3,810,693 169,832 |
Schedule of reconciliation of the weighted average shares outstanding calculation | Three Months Ended March 31, 2024 2023 Weighted average shares issued 1,217,723 773,773 Weighted average pre-funded and penny warrants 1,517,652 61,945 Weighted average shares outstanding 2,735,375 835,718 |
DEFINED CONTRIBUTION PENSION (T
DEFINED CONTRIBUTION PENSION (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
DEFINED CONTRIBUTION PENSION | |
Schedule of pension cost | Three Months Ended March 31, (in thousands) 2024 2023 Research and development $ 21 $ 22 Selling, general and administration 16 18 Total $ 37 $ 40 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
FAIR VALUE MEASUREMENTS | |
Summary of activity within Level 3 of the fair value hierarchy, our liabilities carried at fair value | (in thousands) Warrant Liability Balance at January 1,2024 $ 1,372 Fair value of warrant issued in Private Placement Offering — Total change in the liability included in earnings (753) Balance at March 31, 2024 $ 619 |
Summary of fair value of the preferred and common warrants determined by using option pricing models assumptions | March 31, December 31 2024 2023 Expected term (years) 4.21 4.46 Risk-free interest rate 4.20% 3.81% Expected volatility 50.0% 50.0% Expected dividend yield 0.0% 0.0% |
Summary of financial assets and liabilities that have been measured at fair value and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value | Quoted Prices Significant Other Significant in Active Observable Unobservable Markets Inputs Inputs March 31, (Level 1) (Level 2) (Level 3) 2024 Description Liabilities: Warrant liability $ — $ — $ 619 $ 619 Total liabilities $ — $ — $ 619 $ 619 Equity: Deemed dividend on extinguishment of Preferred stock $ — $ — $ 7,094 $ 7,094 Total Equity $ — $ — $ 7,094 $ 7,094 Quoted Prices Significant Other Significant in Active Observable Unobservable Markets Inputs Inputs December 31, (Level 1) (Level 2) (Level 3) 2023 Description Liabilities: Warrant liability $ — $ — $ 1,372 $ 1,372 Total liabilities $ — $ — $ 1,372 $ 1,372 |
ORGANIZATION & BUSINESS (Detail
ORGANIZATION & BUSINESS (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | |||||
Sep. 21, 2023 | Sep. 19, 2023 | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Feb. 21, 2021 $ / shares | |
Net Income (Loss) | $ (1,696) | $ (2,048) | ||||
Cash and cash equivalents | $ 7,251 | $ 8,836 | ||||
Stock split ratio | 0.0286 | 0.0286 | ||||
Securities Exchange Agreement, Smartkem Limited | ||||||
Purchase price (in dollars per share) | $ / shares | $ 1.40 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Prepaid insurance | $ 444 | $ 274 |
Research grant receivable | 195 | 160 |
Prepaid facility costs | 166 | 101 |
VAT receivable | 176 | 104 |
Prepaid software licenses | 60 | 24 |
Prepaid professional service fees | 5 | 68 |
Other receivable and other prepaid expenses | 36 | 80 |
Total prepaid expenses and other current assets | $ 1,082 | $ 811 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 1,700,000 | $ 1,716,000 | |
Less: Accumulated depreciation | (1,312,000) | (1,261,000) | |
Property, plant and equipment, net | 388,000 | 455,000 | |
Depreciation | 63,000 | $ 42,000 | |
Plant and equipment | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 1,569,000 | 1,584,000 | |
Furniture and fixtures | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 107,000 | 108,000 | |
Computer hardware and software | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | 24,000 | $ 24,000 | |
Research and development | |||
Property, Plant and Equipment | |||
Depreciation | $ 63,200 | $ 42,200 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Accounts payable | $ 1,180 | $ 355 |
Payroll liabilities | 534 | 375 |
Accrued expenses - audit & accounting fees | 182 | |
Accrued expenses - legal fees | 90 | |
Accrued expenses - technical fees | 79 | 91 |
Accrued expenses - other professional service fees | 57 | |
Accrued expenses - other | 98 | 175 |
Total accounts payable and accrued expenses | $ 2,038 | $ 1,178 |
LEASES - Lease Costs (Details)
LEASES - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Operating lease cost | $ 65 | $ 64 |
Short-term lease cost | 6 | 4 |
Variable lease cost | 45 | |
Total lease cost | 71 | 113 |
Research and development | ||
Total lease cost | 65 | 104 |
Selling, general and administrative | ||
Total lease cost | $ 6 | $ 9 |
LEASES - Right of Use Lease Ass
LEASES - Right of Use Lease Assets And Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Total Right-of-use assets - Operating Leases | $ 223 | $ 285 |
Current liabilities | ||
Lease liability, current - Operating Leases | 174 | 230 |
Noncurrent liabilities: | ||
Lease liability, non-current - Operating Leases | 4 | 19 |
Total lease liabilities | $ 178 | $ 249 |
LEASES - Cash flows information
LEASES - Cash flows information for operating leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
LEASES | ||
Operating cash outflows from operating leases | $ 69 | $ 43 |
LEASES - Weighted Average (Deta
LEASES - Weighted Average (Details) | Mar. 31, 2024 |
LEASES | |
Weighted average remaining lease term (in years) - operating leases | 9 months 3 days |
Weighted average discount rate - operating leases | 6.28% |
LEASES - Remaining maturities o
LEASES - Remaining maturities of operating leases (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
LEASES | ||
2024 | $ 167 | |
2025 | 19 | |
Total undiscounted lease payments | 186 | |
Less imputed interest | (8) | |
Total net lease liabilities | $ 178 | $ 249 |
LEASES - Additional Information
LEASES - Additional Information (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Finance lease - Right-of-use assets | $ 0 | $ 0 |
Finance Lease Liabilities | $ 0 | $ 0 |
Minimum | ||
Operating lease term (in years) | 1 year | |
Maximum | ||
Operating lease term (in years) | 3 years |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | 3 Months Ended | 6 Months Ended | |||||||||||||
Apr. 01, 2024 shares | Mar. 07, 2024 shares | Jan. 26, 2024 $ / shares shares | Sep. 21, 2023 $ / shares | Sep. 19, 2023 | Aug. 25, 2023 | Jun. 22, 2023 USD ($) shares | Jun. 14, 2023 USD ($) Right Vote $ / shares shares | Mar. 31, 2024 USD ($) Vote $ / shares shares | Jun. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) shares | Jun. 30, 2023 USD ($) | Jan. 29, 2024 shares | Jan. 25, 2024 $ / shares | Dec. 31, 2023 $ / shares shares | |
Class of Stock [Line Items] | |||||||||||||||
Stock split ratio | 0.0286 | 0.0286 | |||||||||||||
Par value of common stock (in $ per share) | $ / shares | $ 0.01 | $ 0.0001 | $ 0.0001 | ||||||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |||||||||||||
Preferred shares, par value | $ / shares | $ 0.0001 | $ 0.0001 | |||||||||||||
Extinguishment Of Preferred Stock Deemed Dividend Amount | $ | $ 7,094,000 | ||||||||||||||
Net proceeds from issuance of equity | $ | 12,700,000 | ||||||||||||||
Proceeds from the issuance of warrants in private placement | $ | $ 1,800,000 | ||||||||||||||
Warrants issuance costs | $ | $ 200,000 | $ 200,000 | |||||||||||||
Expected term (years) | 5 years | ||||||||||||||
Number of votes, common shares | Vote | 1 | ||||||||||||||
Issuance of common stock to vendor (in shares) | 50,000 | ||||||||||||||
Net cash used in operating activities | $ | $ (1,571,000) | $ (2,433,000) | |||||||||||||
Term of restriction for usage of cash from operating activities | 3 months | ||||||||||||||
Securities sold in subsequent financing (as percentage) | 40% | ||||||||||||||
Preferred Stock, Shares Outstanding | 3,592 | 13,765 | |||||||||||||
Securities purchase agreement | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Proceeds from the issuance of warrants in private placement | $ | $ 12,200,000 | ||||||||||||||
Minimum | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Stock split ratio | 0.0333 | ||||||||||||||
Preferred stock shares to be acquired | 1,000 | ||||||||||||||
Maximum | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Stock split ratio | 0.0167 | ||||||||||||||
Net cash used in operating activities | $ | $ (2,800,000) | ||||||||||||||
Class A Warrant | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Exercise price of warrant | $ / shares | $ 8.75 | ||||||||||||||
Class A Warrant | Securities purchase agreement | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Warrants to purchase shares of common stock | 225,190 | 1,391,927 | |||||||||||||
Proceeds from the issuance of warrants in private placement | $ | $ 2,000,000 | ||||||||||||||
Warrants issued in lieu of private placement fee | 127,551 | ||||||||||||||
Warrants issued in lieu of private placement fee fair value | $ | $ 31,000 | ||||||||||||||
Class B Warrant | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Exercise price of warrant | $ / shares | $ 0.35 | ||||||||||||||
Class B Warrant | Securities purchase agreement | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Warrants to purchase shares of common stock | 798,396 | ||||||||||||||
Warrants issued for consulting services | 8,572 | 34,286 | |||||||||||||
Fair value of warrant issued for consulting services | $ | $ 15,000 | $ 59,000 | |||||||||||||
Series A-1 Preferred Stock | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Preferred stock, shares authorized | 18,000 | 11,100 | |||||||||||||
Preferred shares, par value | $ / shares | $ 1,000 | ||||||||||||||
Trailing period | 30 days | ||||||||||||||
Dividends distribution (as a percent) | 19.99% | ||||||||||||||
Percentage of trailing period VWAP for dividend payable in shares | 90% | ||||||||||||||
Trailing period for VWAP for dividend payable in Shares | 10 days | ||||||||||||||
Number of trading days prior to the dividend paid date considered for VWAP | 10 days | ||||||||||||||
Amount payable to preferred stockholders on liquidation (as percentage) | 100% | ||||||||||||||
Conversion price | $ / shares | $ 87.50 | ||||||||||||||
Term of notice period of limitation | 61 days | ||||||||||||||
Number of holders with preemptive rights | Right | 0 | ||||||||||||||
Stated value of preferred stock shares outstanding (as percentage) | 50% | ||||||||||||||
Extinguishment Of Preferred Stock Deemed Dividend Amount | $ | $ 7,100,000 | ||||||||||||||
Number of votes, preferred shares | Vote | 0 | ||||||||||||||
Preferred Stock, Shares Outstanding | 1,106 | ||||||||||||||
Series A-1 Preferred Stock | AIGH Investment Partners LP and its Affiliates | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Preferred stock outstanding | $ | $ 1,500,000 | ||||||||||||||
Series A-1 Preferred Stock | Securities purchase agreement | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Number of shares sold | 1,870.36596 | 9,229 | |||||||||||||
Price per share | $ / shares | $ 1,000 | ||||||||||||||
Series A-1 Preferred Stock | Consent, Conversion and Amendment Agreement | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Preferred shares, par value | $ / shares | $ 1,000 | $ 10,000 | |||||||||||||
Conversion price | $ / shares | $ 87.50 | ||||||||||||||
Percentage of preferred stock converted | 90% | ||||||||||||||
Shares converted | 9,963 | ||||||||||||||
Preferred Stock, Shares Outstanding | 1,106 | ||||||||||||||
Series A-1 Preferred Stock | Minimum | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Beneficial ownership limitation on common stock (as percentage) | 4.99% | ||||||||||||||
Series A-1 Preferred Stock | Maximum | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Beneficial ownership limitation on common stock (as percentage) | 9.99% | ||||||||||||||
Series A-2 Preferred Stock | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Preferred stock, shares authorized | 18,000 | ||||||||||||||
Preferred shares, par value | $ / shares | $ 1,000 | ||||||||||||||
Number of votes, preferred shares | Vote | 0 | ||||||||||||||
Amount payable to preferred stockholders on liquidation (as percentage) | 100% | ||||||||||||||
Conversion price | $ / shares | $ 8.75 | ||||||||||||||
Term of notice period of limitation | 61 days | ||||||||||||||
Number of holders with preemptive rights | Right | 0 | ||||||||||||||
Shares excluded in class of stock | 3,050 | ||||||||||||||
Preferred Stock, Shares Outstanding | 2,486 | ||||||||||||||
Series A-2 Preferred Stock | Securities purchase agreement | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Number of shares sold | 100 | 2,950 | |||||||||||||
Price per share | $ / shares | $ 1,000 | ||||||||||||||
Series A-2 Preferred Stock | Minimum | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Beneficial ownership limitation on common stock (as percentage) | 4.99% | ||||||||||||||
Series A-2 Preferred Stock | Maximum | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Beneficial ownership limitation on common stock (as percentage) | 9.99% | ||||||||||||||
Class C Warrants | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Exercise price of warrant | $ / shares | $ 0.0001 | ||||||||||||||
Class C Warrants | Consent, Conversion and Amendment Agreement | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Warrants to purchase shares of common stock | 726,344 | ||||||||||||||
Subsequent events | Series A-2 Preferred Stock | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Shares issued upon conversion | 8,574 | ||||||||||||||
Shares converted | 75 | ||||||||||||||
Preferred Stock | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Expected term (years) | 10 years | ||||||||||||||
Risk-free interest rate | 4.15% | ||||||||||||||
Expected volatility | 50% | ||||||||||||||
Expected dividend yield | 19.99% | ||||||||||||||
Shares issued upon conversion | (3,817) | ||||||||||||||
Common stock | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Issuance of common stock to vendor (in shares) | 50,000 | 2,937 | |||||||||||||
Common stock | Consent, Conversion and Amendment Agreement | |||||||||||||||
Class of Stock [Line Items] | |||||||||||||||
Shares issued upon conversion | 412,293 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock Warrants (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Number of shares | ||
Warrants outstanding at end of the year | 61,587 | |
Common Stock Warrants | ||
Number of shares | ||
Warrants outstanding at beginning of the year | 2,542,655 | |
Exercised | (400) | |
Warrants outstanding at end of the year | 2,542,255 | |
Weighted-Average Exercise Price | ||
Warrants outstanding at beginning of the year | $ 6.89 | |
Exercised | 0.35 | |
Warrants outstanding at end of the year | $ 6.89 | |
Weighted Average Remaining Contractual Term (years) | ||
Warrants outstanding at beginning of the year | 4 years 5 months 4 days | |
Warrants outstanding at end of the year | 4 years 2 months 1 day | |
Common Stock Warrants | Minimum | ||
Number of shares | ||
Exercise Price per Share | $ 0.35 | $ 0.35 |
Common Stock Warrants | Maximum | ||
Number of shares | ||
Exercise Price per Share | $ 70 | $ 70 |
Pre Funded Warrants | ||
Number of shares | ||
Warrants outstanding at beginning of the year | 61,587 | |
Issued | 726,344 | |
Warrants outstanding at end of the year | 787,931 | |
Weighted-Average Exercise Price | ||
Warrants outstanding at beginning of the year | $ 0.3500 | |
Issued | 0.0001 | |
Warrants outstanding at end of the year | $ 0.02745 |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||||||
Feb. 23, 2021 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Sep. 21, 2023 | Aug. 25, 2023 | Aug. 24, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Par value of common stock (in $ per share) | $ 0.0001 | $ 0.0001 | $ 0.01 | ||||
Unrecognized compensation costs | $ 0.6 | ||||||
2021 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options granted (in shares) | 3,400 | 0 | |||||
Annual share increase (in shares) | 65,000 | ||||||
Percentage of annual increase in outstanding shares (in %) | 4% | ||||||
Par value of common stock (in $ per share) | $ 0.0001 | ||||||
Reserved for future issuance (in shares) | 743,106 | 125,045 | |||||
Maximum aggregate number of shares under grant (in shares) | 65,000 | ||||||
2021 Plan | Employee Stock Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options granted (in shares) | 0 | 0 |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share Option Activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Number of Shares | ||
Options outstanding at beginning | 70,411 | |
Cancelled/Forfeited | (491) | |
Options outstanding at end | 69,920 | 70,411 |
Options exercisable at March 31, 2024 | 46,347 | |
Weighted-Average Exercise Price | ||
Options outstanding at beginning | $ 63.07 | |
Cancelled/Forfeited | 70 | |
Options outstanding at end | 63.02 | $ 63.07 |
Options exercisable at March 31, 2024 | $ 59.47 | |
Weighted-Average Remaining Contractual Term (Years) | ||
Options outstanding weighted-average remaining contractual term (in years) | 7 years 14 days | 7 years 3 months 10 days |
Options exercisable weighted average remaining contractual term (in years) | 6 years 6 months 21 days | |
Weighted- Average Fair Value at Grant Date | ||
Weighted- Average Fair Value at Grant Date at beginning (in $ per share) | $ 33.98 | |
Weighted- Average Fair Value at Grant Date at end (in $ per share) | $ 33.98 | $ 33.98 |
Aggregate Intrinsic Value, Options exercisable | $ 78,240 |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $ 107 | $ 293 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 42 | 70 |
Selling, general and administration | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $ 65 | $ 223 |
NET LOSS PER COMMON SHARE - Net
NET LOSS PER COMMON SHARE - Net Loss Per Share and Diluted Net Loss (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
NET LOSS PER COMMON SHARE | ||
Net loss - basic | $ (1,696) | $ (2,048) |
Preferred stock dividends | (7,094) | |
Net loss - diluted | $ (8,790) | $ (2,048) |
Basic weighted average shares outstanding (in shares) | 2,735,375 | 835,718 |
Diluted weighted average shares outstanding (in shares) | 2,735,375 | 835,718 |
Basic net loss per common share (in dollars per share) | $ (0.62) | $ (2.45) |
Diluted net loss per common share (in dollars per share) | (3.21) | $ (2.45) |
Dividend per common stock | $ (2.59) |
NET LOSS PER COMMON SHARE - N_2
NET LOSS PER COMMON SHARE - Net Loss Per Share and Diluted Net Loss (Details) (Parenthetical) | Sep. 21, 2023 | Sep. 19, 2023 |
NET LOSS PER COMMON SHARE | ||
Stock split ratio | 0.0286 | 0.0286 |
NET LOSS PER COMMON SHARE - Ant
NET LOSS PER COMMON SHARE - Antidilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
NET LOSS PER COMMON SHARE | ||
Antidilutive securities excluded from computation of earnings per share | 3,810,693 | 169,832 |
Common stock warrants | ||
NET LOSS PER COMMON SHARE | ||
Antidilutive securities excluded from computation of earnings per share | 3,330,186 | 89,748 |
Assumed conversion of preferred stock | ||
NET LOSS PER COMMON SHARE | ||
Antidilutive securities excluded from computation of earnings per share | 410,587 | |
Employee Stock Option | ||
NET LOSS PER COMMON SHARE | ||
Antidilutive securities excluded from computation of earnings per share | 69,920 | 80,084 |
NET LOSS PER COMMON SHARE (Deta
NET LOSS PER COMMON SHARE (Details) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Common stock warrants outstanding | 61,587 | |
Weighted average shares issued | 1,217,723 | 773,773 |
Weighted average pre-funded and penny warrants | 1,517,652 | 61,945 |
Weighted average shares outstanding | 2,735,375 | 835,718 |
Class B Warrants [Member] | ||
Common stock warrants outstanding | 769,426 | |
Class C Warrants [Member] | ||
Common stock warrants outstanding | 726,344 |
DEFINED CONTRIBUTION PENSION -
DEFINED CONTRIBUTION PENSION - Pension cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
DEFINED CONTRIBUTION PENSION | ||
Total | $ 37 | $ 40 |
Research and development | ||
DEFINED CONTRIBUTION PENSION | ||
Total | 21 | 22 |
Selling, general and administrative | ||
DEFINED CONTRIBUTION PENSION | ||
Total | $ 16 | $ 18 |
FAIR VALUE MEASUREMENTS - Activ
FAIR VALUE MEASUREMENTS - Activity within Level 3 of the fair value hierarchy, our liabilities carried at fair value (Details) - Warrant Liability $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Activity within Level 3 of the fair value hierarchy, our liabilities carried at fair value | |
Balance at the beginning | $ 1,372 |
Total change in the liability included in earnings | (753) |
Balance at the end | $ 619 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair value of the preferred and common warrants determined by using option pricing models assumptions (Details) | Mar. 31, 2024 Y | Jun. 22, 2023 Y |
Expected term (years) | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of the preferred and common warrants, measurement input | 4.21 | 4.46 |
Risk-free interest rate | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of the preferred and common warrants, measurement input | 0.0420 | 0.0381 |
Expected volatility | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of the preferred and common warrants, measurement input | 0.500 | 0.500 |
Expected dividend yield | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of the preferred and common warrants, measurement input | 0 | 0 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial assets and liabilities that have been measured at fair value (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Liabilities: | ||
Warrant liability | $ 619 | $ 1,372 |
Total liabilities | 619 | 1,372 |
Deemed dividend on extinguishment of Preferred stock | 7,094 | |
Equity, Fair Value Disclosure | 7,094 | |
Significant Unobservable Inputs (Level 3) | ||
Liabilities: | ||
Warrant liability | 619 | 1,372 |
Total liabilities | 619 | $ 1,372 |
Deemed dividend on extinguishment of Preferred stock | 7,094 | |
Equity, Fair Value Disclosure | $ 7,094 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent events | Apr. 01, 2024 shares |
Series A-2 Preferred Stock | |
SUBSEQUENT EVENTS | |
Shares issued upon conversion | 8,574 |
Shares converted | 75 |
Common stock | |
SUBSEQUENT EVENTS | |
Exercise of warrants into common stock (in shares) | 50,000 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (1,696) | $ (2,048) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Rule 10b5-1 Arrangement Modified | false |
Non-Rule 10b5-1 Arrangement Modified | false |