Quarterly report pursuant to Section 13 or 15(d)

Shareholders' Equity

v3.20.2
Shareholders' Equity
9 Months Ended
Sep. 30, 2020
Stockholders' Equity Note [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.


In July 2019, the Company sold 341,761 shares of Series A preferred stock for aggregate proceeds of approximately $1,070,000. In connection with the issuance of the Series A preferred stock, the Company issued warrants to purchase an aggregate of 41,015 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 September 30, 2020, the Company had 1,000,000 authorized shares 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 made 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 nine months ended September 30, 2020, the Company issued zero and 50,460 shares of common stock, respectively, 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 September 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 September 30, 2020 at a weighted average exercise price of $6.42 per share. The Company had warrants to purchase 273,900 shares of Series A Preferred Stock outstanding and exercisable as of September 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 September 30, 2020.


In connection with the Series A Preferred Stock financing transactions discussed above, during the nine months ended September 30, 2019, the Company issued warrants to purchase an aggregate of 137,514 shares of Series A Preferred Stock.


Options


The Company recorded stock-based compensation of approximately $167,000 and $54,000 related to stock options during the nine months ended September 30, 2020 and 2019, respectively, and approximately $43,000 and $32,000 of stock-based compensation during the three months ended September 30, 2020 and 2019, respectively. These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.


A summary of stock option activity under the Lantern Pharma Inc. 2018 Equity Incentive Plan, as amended and restated (the “Plan”) during the nine months ended September 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 September 30, 2020     820,608     $ 6.25  

Options were exercisable for 515,695 shares of Common Stock at September 30, 2020.


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