General
On April 26, 2021, we entered into a Purchase Agreement and a Registration Rights Agreement with the selling stockholder. The Purchase Agreement provides that we may elect, subject to satisfaction of specified conditions, to require the selling stockholder to purchase from time to time shares of common stock for up to an aggregate of $20,000,000 on or before June 1, 2024. Pursuant to the terms of the Registration Rights Agreement, we have filed the registration statement of which this prospectus forms a part to register for resale under the Securities Act of 1933, or the Securities Act, a total of 1,379,668 shares of common stock that have been, or may be, issued to the selling stockholder under the Purchase Agreement.
Pursuant to the terms of the Purchase Agreement, we issued to the selling stockholder on April 26, 2021 the 56,041 Commitment Shares as consideration for the selling stockholder’s commitment to purchase additional shares of common stock under the Purchase Agreement. The Commitment Shares are included in the 1,379,668 shares of common stock registered under the registration statement of which this prospectus forms a part.
Under the terms of the Purchase Agreement, we have the right, but not the obligation, to sell to the selling stockholder, and upon our request the selling stockholder will be obligated to purchase from us, shares of common stock for a cumulative total purchase price of $20,000,000. Any such sales of common stock by us will be subject to specified conditions and may occur from time to time, at our election, on or before June 1, 2024, subject to conditions specified in the Purchase Agreement. The selling stockholder has no right to require us to sell any shares of common stock to it, but it is obligated to make purchases as we elect, subject to conditions set forth in the Purchase Agreement. We are obligated to pay to Maxim Group LLC, our financial adviser, a fee of 3.0% of the purchase price we receive from the selling stockholder in connection with each purchase of shares of common stock, including the issuance of the Commitment Shares, under the Purchase Agreement.
A total of 1,379,668 shares of common stock that have been, or may be, issued to the selling stockholder are being offered by this prospectus. Depending on the market prices of common stock at the various times we may elect to sell shares to the selling stockholder under the Purchase Agreement, we may be required, under the Registration Rights Agreement, to register for resale under the Securities Act additional shares of common stock that we may sell to the selling stockholder in order for us to receive the total commitment of $20,000,000 available under the Purchase Agreement. If we elect to issue and sell to the selling stockholder more than the 1,379,668 shares offered under this prospectus, which we have the right, but not the obligation, to do, we must first register for resale under the Securities Act any such additional shares, which could cause additional substantial dilution to our stockholders. The number of shares ultimately offered for resale by the selling stockholder is dependent upon the number of shares we sell to the selling stockholder under the Purchase Agreement.
Under applicable rules of the NYSE American, we would not be able to sell to the selling stockholder under the Purchase Agreement more than 8,297,049 shares of common stock (including the Commitment Shares), which represents 19.99% of the 41,505,998 shares of common stock outstanding immediately prior to the execution of the Purchase Agreement and which we refer to as the Exchange Cap, unless (a) we obtain stockholder approval to issue shares of common stock in excess of the Exchange Cap or (b) the price of all applicable sales of common stock to the selling stockholder under the Purchase Agreement equals or exceeds the greater of book or market value of common stock, as calculated in accordance with the applicable rules of NYSE American, such that the issuances and sales of common stock to the selling stockholder under the Purchase Agreement would be exempt from the Exchange Cap limitation under applicable rules of the NYSE American.
Under the Purchase Agreement, we may not require the selling stockholder to purchase any shares of common stock if those shares, when aggregated with all other shares of common stock then beneficially owned by the selling stockholder and its affiliates, would result in the selling stockholder and its affiliates having beneficial ownership, at any single point in time, of more than 4.99% of the then total outstanding shares of common stock, which limitation we refer to as the Beneficial Ownership Cap.
Purchase of Shares under the Purchase Agreement
Regular Purchases
Under the Purchase Agreement, we may elect from time to time, subject to specified conditions, to require the selling stockholder to purchase on any single business day, on which the closing price of common stock is equal to or greater than $1.00, which we refer to as a Regular Purchase, (a) up to 60,000 shares of common stock, (b) if the closing sale