Quarterly report pursuant to Section 13 or 15(d)

Shareholders??? Equity

v3.20.2
Shareholders’ Equity
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Shareholders’ Equity

Note 5. Shareholders' Equity

 

Preferred Stock

 

In March 2019, the Company sold 590,643 shares of Series A preferred stock for aggregate proceeds of approximately $1,850,000. The Company also issued 213,510 shares of Series A preferred stock in March 2019, in connection with the conversion of the Simple Agreement for Future Equity (SAFE) agreements. See Note 6. In connection with the sale and issuance of the Series A preferred stock in March 2019, the Company issued warrants to purchase an aggregate of 96,499 shares of Series A preferred stock at an initial exercise price of $3.13 per share.

 

As of December 31, 2019, the Company had 3,480,000 authorized shares of preferred stock, of which 2,438,866 shares designated as Series A Preferred Stock were issued and outstanding. The holders of Series A Preferred Stock were entitled to receive dividends when, as and if declared by the Company's Board of Directors, payable in preference and priority to any declaration or payment of dividends on Common Stock.

 

Effective January 15, 2020, as a result of the reincorporation in the state of Delaware, the par value of the Company's preferred stock was changed from $0.01 to $0.0001 per share, and all data on preferred stock was retroactively adjusted to be shown herein as reflective of this change

 

Upon the Company's IPO, all shares of the Company's Series A preferred stock were converted into 2,438,851 shares of common stock effective June 15, 2020, with fractional share adjustments made in connection with the conversion as discussed below. As of June 30, 2020, the Company had 1,000,000 authorized share of preferred stock, with zero shares of preferred stock issued and outstanding.

 

Common Stock

 

On June 15, 2020, the Company received net proceeds of $23,419,721 in its IPO, after deducting underwriting discounts and commissions of $1,968,750 and other offering expenses of $861,529 borne by the Company. The Company issued and sold 1,750,000 shares of common stock in its IPO at a price of $15.00 per share. In connection with the IPO, all shares of the Company's Series A Preferred Stock were converted into 2,438,851 shares of common stock, after giving effect to the 1.74 for 1 forward stock split of the common stock and net of the fractional shares adjustments that occurred in connection with the IPO.

 

The Company is to make payments of approximately $261 in the aggregate in connection with fractional shares resulting from the stock split and the conversion of the preferred stock that took place in connection with the IPO.

 

During the three and six months ended June 30, 2020, the Company issued zero and 50,460 shares of common stock relating to the exercise of stock options. The shares were issued at a purchase price of $1.03 for total proceeds of $52,000.

 

As of June 30, 2020, the Company had 25,000,000 authorized shares of Common Stock, of which 6,217,577 shares were issued and outstanding. As of December 31, 2019, the Company had 12,180,000 authorized shares of Common Stock, of which 1,978,269 shares were issued and outstanding.

 

Warrants

 

The Company had warrants to purchase 332,014 shares of common stock outstanding and exercisable as of June 30, 2020 at a weighted average exercise price of $6.42 per share. The Company had warrants to purchase 232,885 shares of Series A Preferred Stock outstanding and exercisable as of June 30, 2019 at a weighted average exercise price of $3.13 per share.

 

In connection with the IPO and the conversion of the Series A Preferred Stock into common stock, all outstanding warrants to purchase Series A Preferred Stock converted into warrants to purchase common stock.

 

In connection with the IPO, the Company granted the underwriters warrants (the "Underwriters' Warrants") to purchase an aggregate of 70,000 shares of common stock at an exercise price of $18.75 per share, which is 125% of the initial public offering price. The Underwriters' Warrants have a five-year term and are not exercisable prior to December 7, 2020. All of the Underwriters' Warrants were outstanding at June 30, 2020.

 

In connection with the Series A Preferred Stock financing transactions discussed above, during the six months ended June 30, 2019, the Company issued warrants to purchase an aggregate of 96,498 shares of Series A Preferred Stock.

 

Options

 

The Company recorded stock-based compensation of approximately $124,000 and $22,000 related to stock options during the six months ended June 30, 2020 and 2019, respectively, and approximately $105,000 and $6,000 during the three months ended June 30, 2020 and 2019, respectively. These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company recorded approximately $87,000 in additional stock-based compensation during the three months ended June 30, 2020, resulting from the acceleration of the vesting conditions of stock options upon the closing of the IPO.

 

A summary of stock option activity under the Lantern Pharma Inc. 2018 Equity Incentive Plan, as amended, (the "Plan") during the six months ended June 30, 2020 is presented below:

 

      Options Outstanding  
      Number of
Shares
      Weighted-Average
Exercise Price Per Share
 
Outstanding December 31, 2019     607,491     $ 1.03  
Granted     306,743       15.00  
Exercised     (50,460 )     1.03  
Cancelled or expired     (43,166 )     1.03  
Outstanding June 30, 2020     820,608     $ 6.25  

 

Options were exercisable for 508,966 shares of Common Stock at June 30, 2020.

 

During the six months ended June 30, 2019, options to purchase 1,342 shares of Common Stock were granted, no options were exercised, and no options expired or were canceled.