Note 12 - Equity Offerings |
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| Equity [Text Block] |
Note 12. Equity Offerings
May 2025
PIPE Financing
On
May 12, 2025, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) for a private placement with
three institutional investors (
“May 2025 PIPE Financing”). Pursuant to the Securities Purchase Agreement, the Company sold an aggregate of (i)
1,500 PIPE Units and (ii)
1,500 additional shares of a new series of the Company’s preferred stock, designated Series B Convertible Preferred Stock, par value
$0.0001 per share. Each PIPE Unit consisted of (i)
one share of Series B Convertible Preferred Stock and (ii) Series L common stock purchase warrants ("Series L Warrants") to purchase approximately
150 shares of common stock at an exercise price of
$9.50 per share. As consideration for the PIPE Units and Series B Convertible Preferred Stock, the Company collected gross proceeds of
$1.5 million in cash and the QHSLab Notes, which had an initial fair value of
$864 thousand as of the closing date, previously held by
one of the investors, before deducting placement agent fees and offering expenses of
$0.4 million (collectively, the “Placement Agent Fees”).
The Series L Warrants were
not exercisable until stockholders' approval was obtained ("Stockholder Approval"), and expire
5.5 years thereafter. Each Series L Warrant is exercisable into
one share of the Company's common stock and
may be exercised on a cashless basis under certain circumstances. The exercise price of the Series L Warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company's common stock. The Series L Warrants are callable by the Company for
$0.19 per share if the volume-weighted average price of the Company's common stock for
20 consecutive trading days exceeds
$28.50 per share and the Series L Warrants have
not been exercised. Stockholder approval was obtained on
July 25, 2025.
In the event of certain transactions resulting in a change in control, at the option of the holder, the Company shall repurchase the Series L Warrants for an amount of cash equal to the Black Scholes Value of the unexercised portion of the Series L Warrants. However, if the change of control is not within the Company’s control, then the holders shall receive the same type of consideration offered to the Company’s common stockholders at the Black Scholes Value of the unexercised portion of the Series L Warrant. If the Company’s common stockholders can choose the type of consideration (i.e., cash, stock, or other assets) to be received, then the Holders shall have the same choice. If the Company’s common stockholders do not receive any consideration, they are deemed to receive common stock of the successor entity.
In the event of certain restructuring or disposal events, then upon the subsequent exercise of the Series L Warrants, for each share of common stock that would have been issuable upon exercise immediately prior to the event, the holders shall receive the number of shares of common stock of the successor entity and any alternate consideration given to common stockholders. The exercise price shall be adjusted to apply to such alternate consideration based on the amount of alternate consideration issuable for one share of common stock. If holders of common stock are given any choice as to the securities, cash or property to be received for alternate consideration, then the holder shall be given the same choice.
Subject to limited exceptions, the holders of Series L Warrants, will not have the right to exercise any portion of the warrant if the holder (together with such holder’s affiliates) would beneficially own a number of shares of common stock in excess of 4.99% of the shares of common stock then outstanding (the “Beneficial Ownership Limitation”). At the holder’s option, the holder may increase the Beneficial Ownership Limitation to 9.99% of the shares of common stock then outstanding, with any such increase becoming effective upon 61 days’ prior notice to the Company.
In connection with the
May 2025 PIPE Financing, the Company also issued Placement Agent Warrants to purchase an aggregate of
13,534 shares of common stock at an exercise price of
$10.3075 per share to the Placement Agent. The Placement Agent Warrants terminate
5 years from the date of issuance. The Placement Agent Warrants are
not callable by the Company. Except for the exercise price, contract term, call option, and change in control provision, the Placement Agent Warrants have the same terms and conditions as the Series L Warrants.
The Company assessed the Series L Warrants and Placement Agent Warrants issued in connection with the May 2025 PIPE Financing and determined that they do not require liability classification pursuant to ASC Topic 480. Furthermore, the Series L Warrants and Placement Agent Warrants do not have any net cash settlement provisions that would preclude equity classification under ASC Topic 815-40. Accordingly, the Series L Warrants and Placement Agent Warrants were recorded to additional paid-in capital in the condensed consolidated balance sheets.
See Note 13, Preferred Stock for additional information on the Series B Convertible Preferred Stock issued by the Company in connection with the May 2025 PIPE Financing.
In addition, the Company entered into a registration rights agreement with the investors requiring the Company to register for resale the shares of common stock issuable upon the conversion of the Series B Convertible Preferred Stock and Series L Warrants. Failure to timely maintain the registration shall lead to an obligation to pay to the investors cash liquidated damages equal to 2% of each investor’s subscription amount for then outstanding securities for every 30-day period the lapse continues, with unpaid amounts accruing interest at 18% per annum after a specified grace period.
On May 21, 2025, the Company filed the registration statement on Form S-3 for the resale of shares of common stock issuable upon the conversion of the Series B Convertible Preferred Stock and Series L Warrants, and it was declared effective on May 30, 2025. It is not probable that the Company will be obligated to make payments under the registration rights agreement as of March 31, 2026.
At the Market Offering Agreement
On
May 19, 2025, the Company entered into an At Market Offering Agreement (“ATM Agreement”) with Ladenburg. Under the ATM Agreement, the Company
may offer and sell up to
$1.3 million of shares of common stock, par value
$0.0001 per share, through Ladenburg. On
June 13, 2025, the Company filed a prospectus supplement increasing the aggregate amount available to be sold to
$3.2 million under the ATM (“Shares”). On
August 7, 2025, the Company filed a prospectus supplement, which supersedes and replaces the prospectus supplement dated
June 13, 2025, increasing the aggregate amount of shares available to be sold to
$4.3 million. The Shares have been and will continue to be issued pursuant to the Company’s previously filed and effective Registration Statement on Form S-
3 (File
No.
333-
284217), which was initially filed with the Securities and Exchange Commission on
January 10, 2025 and declared effective on
January 22, 2025.
The Company has no obligation to sell, and Ladenburg is not obligated to buy or sell, any of the Shares under the ATM Agreement and may at any time suspend offers under the ATM Agreement. The ATM Agreement will terminate upon the earlier of (i) the issuance and sale of all of the shares through Ladenburg on the terms and subject to the conditions set forth in the ATM Agreement or (ii) termination of the ATM Agreement as otherwise permitted thereby. The ATM Agreement may be terminated at any time by either party upon five (5) business days’ prior notice, or by Ladenburg at any time in certain circumstances, including the occurrence of a material adverse effect on the Company.
The Company has agreed to pay Ladenburg a commission equal to
3% of the aggregate gross proceeds from sale of its shares of common stock.
As of
December 31, 2025,
887,852 shares of common stock had been sold under the ATM Agreement for gross proceeds of
$4.0 million before deduction of commission and offering expenses of
$0.3 million. As of
March 31, 2026,
no shares of common stock had been sold under the ATM Agreement.
February 2026 Private Placement
In February 2026, the Company entered into a Securities Purchase Agreement (the “February 2026 SPA”) with certain accredited investors for a private placement financing. Pursuant to the February 2026 SPA, the Company completed the first closing and issued an aggregate of (i) 392,608 shares of the Company's common stock, par value $0.0001 per share, at a purchase price of $1.43 per share, and (ii) 1,617 shares of a newly designated series of the Company’s preferred stock, designated Series C-1 Convertible Preferred Stock. The Company collected gross proceeds of $2.2 million before deducting direct and incremental offering expenses payable by the Company.
Pursuant to the February 2026 SPA, the investors agreed to purchase 1,617 shares of each newly designated Series C-2 and Series C-3 Convertible Preferred Stock, under additional closings (the "Second Tranche" and "Third Tranche," respectively) for aggregate gross proceeds of $1.6 million per closing. The closings of the Second Tranche and Third Tranche are subject to certain closing conditions, including stockholder approval to issue shares of common stock in excess of 19.99% of the Company’s issued and outstanding shares of common stock and to effect a reverse stock split (“Stockholder Approval”). Solely with respect to the closing of the Third Tranche and any closings under the Additional Investment Right (defined below), the closing is further subject to the declaration of the effectiveness of a Registration Statement filed for the resale of the common stock underlying the applicable Convertible Preferred Stock.
Furthermore, under the February 2026 SPA, the investors have the right, but not the obligation, to purchase up to an aggregate of $39.2 million of Series C-4 Convertible Preferred Stock, in one or more closings (the "Additional Investment Right"). The Additional Investment Right is exercisable for a period of twelve months following the later of the Stockholder Approval Date and the date the related resale registration statement is first declared effective by the Securities and Exchange Commission, subject to a minimum gross proceeds threshold of $500,000 for each such additional closing.
The Company determined that, except as described in Note 13, Preferred Stock, with respect to certain contingent payment provisions embedded in the Series C-1 Convertible Preferred Stock, these instruments do not require liability classification pursuant to ASC 480 and do not contain net cash settlement provisions that would preclude equity classification under ASC 815-40. Accordingly, these instruments were recorded to additional paid-in capital in the consolidated balance sheets. See Note 13, Preferred Stock, for additional information on the convertible preferred stock issued in connection with the February 2026 SPA.
In connection with the February 2026 Private Placement, the Company also entered into a registration rights agreement with the investors requiring the Company to register for resale the shares of common stock issuable upon conversion of the Series C-1, Series C-2 and Series C-3 Convertible Preferred Stock. Failure to timely comply with certain registration obligations may require the Company to make cash payments to the investors. As of March 31, 2026, the Company concluded that the estimated amount of potential payments under the registration rights agreement was de minimis, and accordingly, no liability was recorded related to the registration rights agreement.
February 2026 Letter Agreement - Series L Warrants
On February 6, 2026, the Company entered into a letter agreement (the “Letter Agreement”) with the holders of the Company’s Series B Convertible Preferred Stock and Series L Warrants, which were originally issued pursuant to the Securities Purchase Agreement dated May 12, 2025. Pursuant to the Letter Agreement, the Company agreed to reduce the exercise price of the Series B Convertible Preferred Stock and the Series L Warrants to $1.78 per share, and the holders agreed to immediately exercise all of their Series L Warrants for cash. Following the execution of the Letter Agreement, the holders exercised 225,564 Series L Warrants to purchase 225,564 shares of common stock at the reduced exercise price of $1.78 per share, resulting in aggregate gross proceeds to the Company of approximately $0.4 million. There are no Series L Warrants outstanding as of March 31, 2026.
Pursuant to the Letter Agreement, the Company and the holders also agreed that the beneficial ownership limitation applicable to the Series L Warrants would be increased from 4.99% to 9.99%, effective immediately as of the date of the agreement, with the holders waiving any prior notice period requirements. Additionally, the holders agreed to certain trading volume restrictions.
The Company accounted for the reduction in the exercise price of the Series L Warrants as a modification of equity-classified warrants. The incremental fair value of the Series L Warrants resulting from the modification, which was measured as of the modification date using a Black-Scholes valuation model, was recognized as an equity issuance cost within additional paid-in capital in the condensed consolidated balance sheets. The Company accounted for the settlement of the Series L Warrants pursuant to the Letter Agreement as an induced exercise of equity-classified warrants. The incremental fair value of the additional consideration provided to the holders in connection with the settlement, including the incremental fair value attributable to the modified Series B Convertible Preferred Stock, was recognized as a deemed dividend within additional paid-in capital in the condensed consolidated balance sheets. See Note 13, Preferred Stock, for additional information.
March 2026 Private Placement
In
March 2026, the Company entered into an additional Securities Purchase Agreement (the
“March 2026 SPA”) with certain accredited investors for a private placement financing. Pursuant to the
March 2026 SPA, the Company completed the
first closing and issued
1,853 shares of Series C-
1 Convertible Preferred Stock. The Company collected gross proceeds of
$1.9 million before deducting direct and incremental offering expenses payable by the Company.
Pursuant to the March 2026 SPA, the investors agreed to purchase 1,853 shares of each newly designated Series C-2 and Series C-3 Convertible Preferred Stock, under additional closings (the "Second Tranche" and "Third Tranche," respectively) for aggregate gross proceeds of $1.9 million per closing. The closings of the Second Tranche and Third Tranche are subject to certain closing conditions, including stockholder approval to issue shares of common stock in excess of 19.99% of the Company’s issued and outstanding shares of common stock and to effect a reverse stock split (“Stockholder Approval”). Solely with respect to the closing of the Third Tranche and any closings under the Additional Investment Right (defined below), the closing is further subject to the declaration of the effectiveness of a Registration Statement filed for the resale of the common stock underlying the applicable Convertible Preferred Stock.
Furthermore, under the March 2026 SPA, the investors have the right, but not the obligation, to purchase up to an aggregate of $39.2 million of Series C-4 Convertible Preferred Stock, in one or more closings (the "Additional Investment Right"). The Additional Investment Right is exercisable for a period of twelve months following the later of the Stockholder Approval Date and the date the related resale registration statement is first declared effective by the Securities and Exchange Commission, subject to a minimum gross proceeds threshold of $500,000 for each such additional closing.
The Company evaluated the Series C-1 Convertible Preferred Stock, the additional closing rights related to the Series C-2 and Series C-3 Convertible Preferred Stock, and the additional investment right related to the Series C-4 Convertible Preferred Stock. The Company determined that, except as described in Note 13, Preferred Stock, with respect to certain contingent payment provisions embedded in the Series C-1 Convertible Preferred Stock, these instruments do not require liability classification pursuant to ASC Topic 480 and do not contain net cash settlement provisions that would preclude equity classification under ASC Topic 815-40. Accordingly, these instruments were recorded to additional paid-in capital in the consolidated balance sheets. See Note 13, Preferred Stock, for additional information on the convertible preferred stock issued in connection with the March 2026 SPA.
In connection with the March 2026 Private Placement, the Company also entered into a registration rights agreement with the investors requiring the Company to register for resale the shares of common stock issuable upon conversion of the Series C-1, Series C-2 and Series C-3 Convertible Preferred Stock. Failure to timely comply with certain registration obligations may require the Company to make cash payments to the investors. As of March 31, 2026, the Company concluded that the estimated amount of potential payments under the registration rights agreement was de minimis, and accordingly, no liability was recorded related to the registration rights agreement.
Warrants
The following table presents the number of common stock warrants outstanding:
As of March 31, 2026 and December 31, 2025, all warrants outstanding are recorded in additional paid-in capital in the condensed consolidated balance sheets. The following table presents the number and type of common stock purchase warrants outstanding, their exercise price, and expiration dates as of March 31, 2026:
**The December 2025 Series M Warrants expire 5.5 years from the initial exercise date. The exercise date is defined as the date of stockholder approval. As of the date of this filing, such stockholder approval has not yet occurred.
As of March 31, 2026, the warrants issued by the Company had a weighted average exercise price of $19.42.
Placement Fees
In connection with offerings completed by the Company in
2022, (the
"2022 Offerings"), the Company entered into an agreement with a placement agent that, subject to satisfaction of the requirements contained therein, called for a placement fee payable based on capital raised from certain investors for a definitive time following the expiration of the agreement. The accrued placement fee of approximat
ely $1.4 million r
elated to the
2022 Offerings is included in accrued expenses in the condensed consolidated balance sheets as of
March 31, 2026 and
December 31, 2025. Additionally, the agreement called for the issuance of warrants with the following terms:
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