v3.22.2.2
Stockholders' Equity
 9 Months Ended
Sep. 30, 2022
Equity [Abstract]  
Stockholders' Equity
NOTE 18. STOCKHOLDERS' EQUITY

December 2020 Securities Purchase Agreement

During December 2020, the Company entered into a securities purchase agreement (the “December 2020 Securities Purchase Agreement”) with Jack W. Schuler, John Patience, Matthew Strobeck, Mark C. Miller, Thomas D. Brown and Jack Phillips, or entities affiliated with such persons (collectively, the “Original Purchasers”), for the issuance and sale by the Company of an aggregate of 4,166,663 shares of the Company’s common stock. Each of Jack W. Schuler, John Patience, Matthew Strobeck, Mark C. Miller, Thomas D. Brown and Jack Phillips is a member of the Company’s board of directors. Mr. Phillips also serves as the Company’s President and Chief Executive Officer.

The Schuler Trust, which was the entity affiliated with Jack W. Schuler that originally entered into the December 2020 Securities Purchase Agreement for the purchase of 3,964,843 shares for an aggregate purchase price of approximately $30.5 million, subsequently entered into an assignment and assumption agreement whereby it assigned all of its rights and obligations as an Original Purchaser to three other entities under the December 2020 Securities Purchase Agreement (collectively, the “Schuler Purchasers”). These three entities are related to Jack W. Schuler but are not affiliates of his.

Pursuant to the December 2020 Securities Purchase Agreement, the Original Purchasers agreed to purchase the shares at a purchase price (determined in accordance with Nasdaq rules relating to the “market value” of the Company’s common stock) of $7.68 per share, for an aggregate purchase price of approximately $32 million.

The December 2020 Securities Purchase Agreement contemplated that the closing of the purchase and sale of the shares would occur in three tranches, with the first and second tranches having closed on February 19, 2021 and April 9, 2021, respectively, whereby the Company received total proceeds of approximately $21.3 million which were recorded to contributed capital.

On September 17, 2021, the Company entered into a rescission agreement (the “Rescission Agreement”) with the Schuler Purchasers and the Schuler Trust pursuant to which, effective as of January 29, 2021, the Company and the Schuler Purchasers agreed to rescind and unwind the December 2020 Securities Purchase Agreement for all legal, tax and financial purposes ab initio as if the related transactions, including the issuance and sale of an aggregate of 2,643,228 shares in the first two tranche closings and the third tranche (as discussed below) under the December 2020 Purchase Agreement, had never occurred with respect to the Schuler Purchasers and the Company. The 2,643,228 Shares re-acquired by the Company from the Schuler Purchasers as a result of the Rescission Agreement were treated as a reduction to contributed capital and were not outstanding for purposes of the calculation of basic and diluted earnings per share.

On September 30, 2021, the Company closed the final third tranche in connection with the December 2020 Securities Purchase Agreement and received total proceeds of approximately $0.5 million. In accordance with the Rescission Agreement, the Schuler Purchasers did not participate in the third tranche. During the nine months ended September 30, 2021, the Company issued 201,820 shares and received total proceeds of approximately $1.5 million under the December 2020 Securities Purchase Agreement, which were recorded to contributed capital, after giving effect to the Rescission Agreement.
September 2021 Securities Purchase Agreement

During September 2021, the Company entered into a new securities purchase agreement (the “September 2021 Securities Purchase Agreement”) with the Schuler Purchasers for the issuance and sale by the Company of an aggregate of 3,954,546 shares of the Company’s newly designated Series A Preferred Stock, par value $0.001 per share (the “Series A Preferred Shares”). Each share of Series A Preferred Stock is convertible, at the option of the holder, at any time into one share of the Company’s common stock.

Pursuant to the September 2021 Securities Purchase Agreement, the Schuler Purchasers agreed to purchase the Series A Preferred Shares at a purchase price of $7.70 per share for an aggregate purchase price of approximately $30.5 million.

The September 2021 Securities Purchase Agreement contemplated the closing of the purchase and sale of the Series A Preferred Shares would occur in two tranches. The first tranche closed on the date of the execution of the September 2021 Securities Purchase Agreement whereby an aggregate of 2,636,364 Series A Preferred Shares were issued and sold to the Schuler Purchasers. The Company received total proceeds of approximately $20.3 million, which was recorded to contributed capital during the three months ended September 30, 2021.

The second tranche (the “Tranche Right”) had not closed by September 30, 2021 and was concluded to be an obligation of the Schuler Purchasers to acquire, and the Company to sell an additional 1,318,182 Series A Preferred Shares at a purchase price of $7.70 per share for proceeds of $10.2 million, subsequent to the September 30, 2021 balance sheet date. The Company concluded the Tranche Right met the definition of a freestanding financial instrument which was recorded within stockholder’s equity. The value of this Tranche Right as September 30, 2021 was $2.5 million. The estimated fair value of the Tranche Right represented a Level 3 measurement as this financial instrument has no market activity. The estimated fair value of the Tranche Right was determined as the excess value of the forward contract when compared to the underlying asset. The fair value of this forward contract can be represented by the difference between the contractual forward price of $7.70 and the prevailing exchange-traded common stock price ($5.81 at September 22, 2021 and $5.83 at September 30, 2021), multiplied by 1,318,182 Series A Preferred Shares. On October 29, 2021, the Company closed the final second tranche in connection with the September 2021 Securities Purchase Agreement whereby the Company issued and sold an aggregate of 1,318,182 Series A Preferred Shares to the Schuler Purchasers and received total proceeds of approximately $10.2 million.

2021 Exchange Transactions

During the none months ended September 30, 2021, certain holders of the Notes exchanged $46.0 million in aggregate principal amount of Notes held by them for 5,945,718 shares of the Company’s common stock pursuant to their respective exchange agreement. Using the closing stock price on September 22, 2021 of $5.81, the 5,945,718 shares of the Company’s common stock were determined to have a value of $34.5 million, which was recorded to contributed capital during the nine months ended September 30, 2021. See Note 10, Convertible Notes, for additional information.

March 2022 Exchange Transaction

During the nine months ended September 30, 2022, a holder of the Notes exchanged $14.0 million in aggregate principal amount of Notes held by it for 10,798,482 shares of the Company's common stock pursuant to the March 2022 Exchange Agreement. The 10,798,482 shares of the Company’s common stock were determined to have a value of $10.2 million, which was recorded to contributed capital during the nine months ended September 30, 2022. See Note 10, Convertible Notes for additional information.

March 2022 Securities Purchase Agreement

On March 24, 2022, the Company entered into a securities purchase agreement (the “March 2022 Securities Purchase Agreement”) with the Schuler Trust for the issuance and sale by the Company of an aggregate of 2,439,024 shares of the Company’s common stock to the Schuler Trust in an offering (the “Private Placement”) exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder.
Pursuant to the March 2022 Securities Purchase Agreement, the Schuler Trust agreed to purchase the shares at a purchase price (determined in accordance with Nasdaq rules relating to the “market value” of the Company’s common stock) of $1.64 per share, for an aggregate purchase price of $4.0 million.

On June 29, 2022, the Company and the Schuler Trust agreed to extend the closing date of the Private Placement (the “Closing Date”) from June 30, 2022 to September 26, 2022, subject to the satisfaction of customary closing conditions. On September 29, 2022, the parties agreed to further extend the Closing Date to December 30, 2022, effective as of September 26, 2022.

August 2022 Exchange Transaction

On August 15, 2022, the Company entered into the August 2022 Exchange Agreement with the Schuler Trust. Under the terms of the August 2022 Exchange Agreement, the Schuler Trust agreed to exchange with the Company $49.9 million in aggregate principal amount of Notes held by it for (a) the Secured Note in an aggregate principal amount of $34.9 million and (b) the Warrant to acquire the Company’s common stock. The gain from the extinguishment of the Notes was treated as a capital transaction. The net gain on extinguishment was $29.8 million during the three months ended months ended September 30, 2022, and was recorded to contributed capital. See Note 10, Convertible Notes and Note 11, Long-Term Debt Related-Party for additional information.

The Warrant meets the criteria for classification in stockholders’ equity and was recorded in contributed capital at fair value of $3.8 million on August 15, 2022.

August 2022 Public Offering

On August 23, 2022, the Company completed a public offering 17,500,000 shares of its common stock at a public offering price of $2.00 per share. The Company received net proceeds of approximately $32.9 million from the offering after deducting underwriting discounts and commissions and offering expenses paid by the Company.