Fair Value Disclosures: The Company has
categorized assets and liabilities recorded at fair value based
upon the fair value hierarchy specified by the guidance. The levels
of fair value hierarchy are as follows:
Level 1: Quoted market prices in active markets for
identical assets or liabilities.
Level 2: Observable market based inputs or unobservable
inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by
market data.
The carrying values of cash and cash equivalents, restricted cash,
trade and other receivables, trade accounts payable, balances with
related parties and accrued liabilities are reasonable estimates of
their fair value due to the short term nature of these financial
instruments. Cash and cash equivalents are considered Level 1
items as they represent liquid assets with short-term maturities.
The fair value of long term bank loans is estimated based on
current rates offered to the Company for similar debt of the same
remaining maturities. Their carrying value approximates their fair
market value due to their variable interest rate. Variable interest
rates are observable at commonly quoted intervals for the full
terms of the loans and hence floating rate loans are considered
Level 2 items in accordance with the fair value hierarchy.
7. Stockholders’ Equity
Details of the Company’s common stock and preferred stock are
discussed in Note 8 of the 2021 Consolidated Financial Statements
and are supplemented by the below new activities in the nine-month
period ended September 30, 2022.
Common Shares:
On June 17, 2022, the Company received a written notification
from the NASDAQ Stock Market, indicating that because the closing
bid price of the Company’s common stock for 30 consecutive business
days, from May 5, 2022 to June 16, 2022, was below the
minimum $1.00 per share bid price requirement for continued listing
on the Nasdaq Capital Market, the Company was not in compliance
with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing
Rule 5810(c)(3)(A), the applicable grace period to regain
compliance was 180 days, or until December 14, 2022. The
Company can cure this deficiency if the closing bid price of its
common stock is $1.00 per share or higher for at least ten
consecutive business days during the grace period. During this
time, the Company’s common stock continues to be listed and trade
on the Nasdaq Capital Market.
During the nine-month period ended September 30, 2022, the
Company raised $167,574,514 in gross proceeds, or $156,655,903 in
net proceeds, from underwritten public offerings and from the
partial exercises of warrants issued in the underwritten public
offerings (details are provided below).
In the first quarter of 2022, the Company completed an underwritten
public offering for 11,040,000 of its common stock and 11,040,000
Class A Warrants, each exercisable for one share of common
stock at a price per share of $1.25, including full exercise of the
underwriter’s overallotment option. The Company also issued the
underwriters of the offering 552,000 warrants (the “February 2022
Representative Purchase Warrants”), each exercisable for one share
of common stock at a price per share of $1.375. The offering
resulted in gross proceeds to the Company of $13,800,000. As of
September 30, 2022, an aggregate of 10,997,000 Class A
Warrants had been exercised for 10,997,000 shares of the Company’s
common stock, resulting in gross proceeds to the Company of
$13,746,250.
In March 2022, the Company completed an underwritten public
offering, including the full exercise of the underwriter’s
overallotment option, of 43,124,950 units for $1.60 per unit, each
unit consisting of (i) one share of common stock of the
Company (or pre-funded warrants, all
of which were subsequently exercised for common stock, in the case
of 3,900,000 units) and (ii) one Class B Warrant to
purchase one share of common stock at an exercise price of $1.60
per share. The Company also issued 1,724,998 warrants to the
representative of the underwriters (the “March 2022 Representative
Purchase Warrants”) to purchase up to an aggregate of 1,724,998
share of common stock at an exercise price of $2.00 per share. The
offering resulted in gross proceeds to the Company of $68,999,920.
In June 2022, several existing holders of Class B Warrants
exercised 31,150,000 outstanding Class B Warrants to purchase
an aggregate of 31,150,000 shares of common stock for cash, at an
exercise price reduced by the Company from $1.60 per share to $0.70
per share, resulting in gross proceeds to the Company of
$21,805,000. The exercising holders also received an aggregate of
31,150,000 Class D Warrants to purchase up to an aggregate of
31,150,000 shares of common stock in a private placement pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended.
As of September 30, 2022, an aggregate of 31,322,950
Class B Warrants had been exercised for 31,322,950 shares of
the Company’s common stock, resulting in gross proceeds to the
Company of $22,081,720.
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