|6 Months Ended|
Jun. 30, 2021
|Subsequent Events [Abstract]|
|Subsequent Events||Subsequent Events
Warrant exercise and issuance
On July 21, 2021, the Company entered into a letter agreement (“Letter Agreement”) with two existing accredited investors to exercise certain outstanding warrants (the “Exercise”) to purchase up to an aggregate of 21,166,667 shares of the Company’s common stock at an exercise price per share of $0.06 (the “Existing Warrants”). The Existing Warrants were issued on August 4, 2020, had an exercise price of $0.06 per share and an exercise period of five years from the date of issuance.
On July 26, 2021, the transaction closed and the Company issued 21,166,667 shares of common stock upon exercise of the Existing Warrants. The common stock is registered pursuant to effective registration statements on Form S-1 (File Nos. 333-239826 and 333-240226). The gross proceeds to the Company from the exercise were $1,270,000. As consideration for the immediate exercise of the Existing Warrants for cash, the exercising investors received new unregistered warrants to purchase up to an aggregate of 21,166,667 shares of common stock of the Company (the “New Warrants”).
The New Warrants are exercisable immediately at a price of $0.15 per share and have an exercise period of five years from the date of issuance. In addition, the New Warrants contain a cashless exercise provision which may be elected in the absence of an effective registration statement and could also require payment of liquidated damages by the Company in the form of cash payments in the event of a failure by the Company to timely deliver shares of common stock upon exercise of such warrants.
The New Warrants also contain a put option, under which, if the Company enters into a Fundamental Transaction, as defined in the New Warrant Agreement, the holders will be entitled to receive upon exercise, the kind and amount of securities, cash or other property that the holders would have received had they exercised the New Warrants immediately prior to such Fundamental Transaction. Alternatively, the Company or any successor entity will, at the option of a holder of a New Warrant, exercisable concurrently with or at any time within 30 days after the consummation of such Fundamental Transaction, purchase such holder’s New Warrant by paying to such holder an amount equal to the Black Scholes value of the remaining unexercised portion of such holder’s warrant in the same type or form of consideration (and in the same proportion), as is being offered to the holders of the Company's common stock.
H.C. Wainwright & Co., LLC (“Wainwright”) acted as the placement agent for the Exercise and the issuance of the New Warrants. At closing of the Exercise, the Company issued to Wainwright (or its designees) warrants to purchase up to an aggregate of 1,481,667 shares of common stock of the Company (the “2021 Placement Agent Warrants”), which equals 7.0% of the aggregate number of shares of common stock issuable to the investors upon the Exercise. The Placement Agent Warrants have identical terms to the New Warrants, except for the exercise price of $0.19 per share. In addition, the Company has agreed to pay Wainwright an aggregate cash fee equal to 7.5% of the gross proceeds received by the Company from the Exercise and the sale of the New Warrants, a management fee of 1.0% of the gross proceeds received by the Company from the Exercise and the sale of the New Warrants, $25,000 for non-accountable expenses and a $15,950 clearing fee, as applicable.
Stock option grant
On July 8, 2021, the Company granted 600,000 stock options to two consultants of the Company. The options have an exercise price of $0.16 per share and 10% vest immediately upon grant and 22.5% upon each successive anniversary of the vesting commencement date.
On July 22, 2021, in connection with the appointment of a new independent Board Director, the Company granted 250,000 stock options at an exercise price of $0.14 per share, of which 10% of such options shall be immediately vested, and the remaining 90% of the options shall vest in semi-annual installments over a period of two years from the grant date. In the event of a change of control of the Company (as defined in the award documents), the options shall become vested in full.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef