Note 8. Stockholders’ Equity

On August 14, 2024, the Company filed a shelf registration statement on Form S-3 with the SEC (the “2024 Registration Statement”) (File No. 333-281550), which upon being declared effective on August 23, 2024, allowed the Company to offer up to $250.0 million of securities from time to time in one or more public offerings. The 2024 Registration Statement replaced the Company’s prior shelf registration statement on Form S-3 (the “2021 Registration Statement”), which had allowed the Company to offer up to $250.0 million of securities including up to $75.0 million of shares of the Company’s common stock pursuant to an “at-the-market” sales agreement dated July 30, 2021 with Cantor Fitzgerald & Co. (the “2021 Sales Agreement”).

Due to the SEC’s “baby shelf” rules, which prohibit companies with a public float of less than $75 million from issuing securities under a shelf registration statement in excess of one-third of such company’s public float in a 12-month period, the Company is currently only able to issue a limited number of shares under our 2024 Registration Statement that aggregate to no more than one-third of the Company’s public float.

February 2023 Registered Direct Offering

On February 3, 2023, the Company entered into a securities purchase agreement relating in part to the purchase and sale of an aggregate of 1,700,000 shares of its common stock and common warrants to purchase an aggregate of 2,000,000 shares of its common stock, in a registered direct offering (the "February Offering"). The common warrants were immediately exercisable and currently have a $0.51 exercise price. A holder (together with its affiliates) may not exercise any portion of a common warrant to the extent that the holder would own more than 4.99% (or, at the election of the holder 9.99%) of the Company’s outstanding common stock immediately after exercise.

The Company accounts for the common warrants as current liabilities based upon the guidance of ASC 480 and ASC 815. Estimating fair values of liability-classified financial instruments requires the development of estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of the Company’s common stock. Because liability-classified financial instruments are initially and subsequently carried at fair value, the Company’s financial results will reflect the volatility in these estimate and assumption changes. Changes in estimated fair value are recognized as a component of other income (expense) in the statements of operations.

At the date of issuance, the Company valued the common warrants at an estimated fair value of $10.3 million using a Monte-Carlo valuation model due to the presence of an alternative cashless settlement feature in the financing agreement. As of June 30, 2025 and December 31, 2024, common warrants to purchase 600,000 shares of the Company's common stock were outstanding.

At June 30, 2025, the Company updated the estimated fair value of the outstanding common warrants using a Monte-Carlo valuation model resulting in an estimated fair value of $396,000, a decrease of $18,000 for these common warrants as compared to at December 31, 2024.

The gain of $42,000 and $18,000 in common warrants resulting from the change in the estimated fair value of the liabilities for such warrants was recorded as a change in the estimated fair value of warrant liabilities in the accompanying statements of operations and comprehensive loss for the three and six months ended June 30, 2025, respectively.

The loss of $42,000 and $402,000 in common warrants resulting from the change in the estimated fair value of the liabilities for such warrants was recorded as a change in the estimated fair value of warrant liabilities in the accompanying statements of operations and comprehensive loss for the three and six months ended June 30, 2024, respectively.

The common warrant liability will be adjusted to estimated fair value at each balance sheet date until the warrants are settled. Changes in the estimated fair value of the warrant liabilities are recognized as a component of other income (expense), net in the statements of operations and comprehensive loss.

July 2023 Registered Direct Offering

On July 21, 2023, the Company issued to several institutional investors (i) 2,991,027 shares of its common stock, par value $0.0001 per share, and (ii) accompanying common warrants to purchase an aggregate of 2,991,027 shares of common stock, in a registered direct offering (the “July Offering”).

The common warrants were immediately exercisable and have a five-year term with a combined offering price of $5.015 per share and accompanying common warrant. A holder (together with its affiliates) may not exercise any portion of the common warrants to the extent that the holder would own more than 4.99% (or, at the election of the holder 9.99%) of the Company’s outstanding common stock immediately after exercise.

The Company accounts for the common warrants issued in the July Offering as current liabilities based upon the guidance of ASC 815. Estimating fair values of liability-classified financial instruments requires the development of estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of the Company’s common stock. Because liability-classified financial instruments are initially and subsequently carried at fair value, the Company’s financial results will reflect the volatility in these estimate and assumption changes. Changes in estimated fair value are recognized as a component of other income (expense) in the statements of operations.

The Company valued the common warrants issued in the July Offering using the Black-Scholes option valuation model. As of the issuance date of July 21, 2023, December 31, 2024 and as of June 30, 2025, the common warrants were valued at $5.8 million, $1.1 million and $826,000, respectively. The gain of $404,000 and $308,000 resulting from the change in the fair value of the liability for these warrants was recorded as a change in estimated fair value of warrant liabilities in the accompanying statements of operations for the three and six months ended June 30, 2025, respectively. The loss of $36,000 and $1.4 million resulting from the change in the fair value of the liability for these warrants was recorded as a change in estimated fair value of warrant liabilities in the accompanying statements of operations for the three and six months ended June 30, 2024, respectively

The common warrant liability will be adjusted to estimated fair value at each balance sheet date until the warrants are settled. Changes in the estimated fair value of the warrant liabilities are recognized as a component of other income (expense), net in the statements of operations and comprehensive loss.

As of June 30, 2025, none of the warrants issued in the July Offering have been exercised. Common warrants to purchase 2,991,027 shares of the Company's common stock were outstanding with an exercise price of $4.89 per share.

ATM Financings

During the three and six months ended June 30, 2025, there were no sales of the Company's common stock in the open market. During the three months ended June 30, 2024, there were no sales of the Company's common stock in the open market. During the six months ended June 30, 2024, the Company raised net proceeds (net of commissions) of approximately $648,000 from the sale of 702,090 shares of the Company’s common stock in the open market at a weighted average price of $0.94 per share pursuant to the 2021 Registration Statement and the 2021 Sales Agreement.

As of August 8, 2025, the Company had up to $250.0 million of the Company’s securities available for sale under the 2024 Registration Statement. However, due to the SEC’s “baby shelf” rules discussed above, only up to approximately $19.6 million of our securities are available for sale under the 2024 Registration Statement.