The Company’s common stock activity for the year ended December 31, 2021 was as follows:

Shares Issued as Part of Public Offering

On March 15, 2021, the Company completed a registered direct offering with institutional investors and sold 9,375,000 shares of common stock at a price of $1.60 per share, which resulted in aggregate net proceeds of $14,129,000. Included in the $14,129,000 is a refund of $144,000 from the underwriter.

Shares Issued as Part of ATM Agreement

In August 2021 and November 2021, the Company entered into two separate at-the-market issuance sales agreements (the “August 2021 ATM” and the “November 2021 ATM”, respectively) with Truist Securities, Inc., pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-252167). The August 2021 ATM was terminated in October 2021. In January 2022, the aggregate offering price of the shares of the Company’s common stock that may be sold under the November 2021 ATM was reduced from $30,000,000 to $7,300,000. The August 2021 and November 2021 ATM offerings are a follow-on offering of securities utilized by the Company in order to raise capital over a period of time. In an ATM offering, the Company sells newly issued shares into the trading market through our designated sales agent at prevailing market prices.

During the year ended December 31, 2021, the Company received net proceeds of $7,937,000.

Shares Issued for Services

During the year ended December 31, 2021, the Company granted 1,546,599 shares of common stock to certain employees and vendors for services rendered and to be rendered with an aggregate fair value of $2,541,000. The shares of common stock were valued based on the market value of the Company’s common stock price at the issuance date or the date the Company entered into the agreement related to the issuance and is being amortized over its vesting term. The Company recorded stock compensation expense of $2,438,000 and issued 1,344,499 shares of common stock to account for common shares vested. In addition, 112,100 shares granted to employees that vested were returned to the Company in exchange for the Company paying the corresponding income and payroll taxes of the employees amounting to $139,000. The Company accounted for the return of the 112,100 shares and the payment of $139,000 for income and payroll taxes paid on behalf of the employees as a reduction in additional paid-in capital. Accordingly, the net increase to additional paid-in capital related to shares issued for services in 2021 is $2,188,000.

Shares Issued from Conversion of Note Payable – Related Party

During the year ended December 31, 2021, the Company issued 194,175 shares of common stock upon a partial conversion of a note payable due to the Company’s Chief Executive Officer totaling $200,000 (see Note 10). The conversion price was $1.03, which was the closing price of the Company’s common stock on the day of conversion.

Shares Issued for Settlement of Accounts Payable and Accrued Expense

During the year ended December 31, 2021, the Company issued 192,678 shares of common stock to employees as settlement of $303,000 of previously recorded accrued payroll as of December 31, 2020. These shares of common stock were valued based on the market value of the Company’s common stock price at the issuance date and approximates the carrying value of the accrued payroll.

During the year ended December 31, 2021, the Company issued 10,500 shares of its restricted common stock to a vendor for conversion of $19,000 of accounts payable. Such issuance of securities was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

Shares Issued for Settlement of Litigation

During the year ended December 31, 2021, the Company issued 600,000 shares to EMA Financial to settle a litigation. The fair market value of the shares issued was based on the closing price of Company’s stock on the day of settlement which amounted to $678,000. As of the settlement date the Company had previously accrued $585,000 and as a result the Company recorded an additional $93,000 in general and administrative expenses to account for the difference between the fair value of the common shares issued and amount accrued at December 31, 2020.

The Company’s common stock activity for the year ended December 31, 2020 was as follows: 

Sale of common stock from private placement

In February 2020, the Company initiated a private placement for the sale and issuance of up to five million shares of its common stock at a per-share price of $1.20, which amount represents a 20% discount to the $1.50 closing price of the Company’s common stock on that day. As a result of this private placement, from February through April 2020, a total of 4,237,833 shares of common stock were sold in exchange for cash proceeds of $4,444,000, net of direct fees and expenses in the aggregate of $641,000.

In preparation for this private placement offering, the Company separately negotiated with certain Series A stockholders to waive their rights in order not to ratchet down the conversion price of their Series A preferred shares (see Note 13). In return for the waiver, the Company granted these Series A stockholders warrants to purchase 2,303,861 shares of common stock. The warrants are exercisable in August 2020, expire in 5 years and are exercisable at $1.20 per share, as adjusted. The exercise price is subject to certain customary adjustments, including subsequent equity sales and rights offerings. In addition, the warrants also included a fundamental transaction provision that could give rise to an obligation to pay cash to the warrant holder. As a result of this fundamental transaction provision, the conversion feature of the warrants was accounted for as derivative liability with a fair value upon issuance of $3,951,000 upon issuance. The Company accounted for the fair value of $3,951,000 as a deemed dividend since if the down round provision of the Series A preferred shares had occurred, it would have been accounted for as a deemed dividend due to it providing additional value to the Series A stockholders.

Sale of common stock from public offering

On July 24, 2020, the Company concluded its public offering pursuant to a registration statement on Form S-1 (File No. 333-239055) and issued 12,545,453 shares of common stock (which included 1,636,363 shares of common stock sold pursuant to the exercise by the underwriters of an overallotment option). The net proceeds to the Company, after deducting the underwriting discounts and commissions and direct offering expenses was $12,337,000.

Shares Issued for Services

During the year ended December 31, 2020, the Company issued 1,007,583 shares of common stock to vendors for services rendered and to be rendered with a fair value of $1,190,000. These shares of common stock were valued based on the market value of the Company’s common stock price at the issuance date or the date the Company entered into the agreement related to the issuance. During the year ended December 31, 2020, the Company expensed $1,035,000 to general and administrative for services rendered. At December 31, 2020, common stock issued in fiscal 2020 with fair value of $155,000 was recorded as prepaid expense as the corresponding services had not been rendered to the Company.