| Stockholders' equity | 8. Stockholders’ equity Details of the Company’s common stock and preferred stock are discussed in Note 8 of the 2023 Consolidated Financial Statements and are supplemented by the below new activities in the six-month Common shares:
i) Equity Offerings On January 23, 2024, the Company completed a registered offering and issued 279,404 common shares, 16,100,000 Class B1 warrants exercisable to 161,000 common shares at an exercise price of $37.5 (subject to further adjustments, as described below) or pursuant to an alternative cashless exercise option for no consideration and 32,200,000 322,000 6,132,714 2,016,338 3,325,145 4,229,276 On March 19, 2024, the Company completed a registered offering and issued 1,200,000 67,450,000 674,500 134,900,000 1,349,000 5,281,565 1,255,228 1,578,198 The Company in its assessment for the accounting of the Class B1, Class B2, Class C1 and Class C2 warrants has taken into consideration ASC 480 “Distinguishing liabilities from equity” and determined that the warrants should be classified as liability due to certain exercise price adjustment clauses of warrant terms, which provide for a reduction in the warrants’ initial exercise price. For those warrants meeting the classification of liability, the initial recognition is at fair value and are remeasured at each balance sheet date with the offsetting adjustments recorded in change in fair value of warrant liabilities within the unaudited interim condensed consolidated statement of comprehensive income. Upon settlement or termination, warrants classified as liabilities at fair value, are marked to their fair value at the settlement date and then the liability settled. Of the total gross proceeds of the offerings amounting to $13,147,990, $8,176,955 were allocated to the Class B1, Class B2, Class C1 and Class C2 warrants, representing their fair value at issuance, while the remaining gross proceeds of the offerings amounting to $4,971,035 were allocated to common shares. Of the total issuance costs of the offerings amounting to $1,733,711, $1,078,622 were allocated to the Class B1, Class B2, Class C1 and Class C2 warrants based on their relative fair value to the total gross proceeds, were expensed immediately and were included in General and administrative expenses in the accompanying unaudited interim consolidated statement of comprehensive income, while the remaining $655,089 of the issuance costs were presented contra to the offering proceeds classified within equity. During the six months ended June 30, 2024, upon the exercise of the Class B1, Class B2, Class C1 and Class C2 warrants, as described above, the Company marked the warrants to their fair value at the settlement date and then settled the warrant liability. As of June 30, 2024, the Company re-valued The value of the outstanding warrants as of June 30, 2024, was $14,486,493 and presented under ‘Warrant liability” in the accompanying unaudited interim condensed balance sheet. The Company values its warrants classified as liabilities using Level 3 of the fair value hierarchy as defined in FASB guidance for Fair Value Measurements, as they are derived by using significant unobservable inputs such as historical volatility. The Company uses the Black & Scholes model for the valuation of the warrants at each settlement and at each measurement date, under the following assumptions (a) expected volatility (b) risk free rate (c) market value of common stock of, which was the current market price as of the date of each fair value measurement. As of June 30, 2024, the number of common shares that can potentially be issued under each outstanding class of warrants are:
Warrant Shares to be issued upon
Class A 47,650
Class B1 126,861
Class B2 7,487,974
Class C1 36,540
Class C2 7,864,715
Total 15,563,740
Preferred shares: As of June 30, 2024, the conversion price of Series A Preferred shares was adjusted to $1.2573, after the RSS (Note 1) and adjustment of the exercise price of warrants. Pursuant to ASC 260, Earnings per Share, the Company recorded a deemed dividend for the down round adjustment of $2,862,000 which reduced income available to common shareholders in the Company’s earnings per share calculations (Note 9). Aggregate dividends of $0.4 million were paid on the Company’s Series A Preferred Shares during the six months ended June 30, 2024. |
