Note 15 – Subsequent Events

The Company has evaluated all subsequent events through the date of filing, August 24, 2023, of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the condensed consolidated financial statements as of June 30, 2023, and events which occurred after June 30, 2023, but which were not recognized in the financial statements. The Company has determined that there were no subsequent events which required recognition, adjustment to or disclosure in the financial statements.

January Note Exchange Agreement

On July 10, 2023, the Company and one of the remaining January Investors entered into a Forbearance Agreement (the “Forbearance Agreement”), which was subsequently amended by a First Amendment to the Forbearance Agreement on July 14, 2023 (the “First Amendment”). As amended by the First Amendment, the Forbearance Agreement provides that such January Investor shall forbear the exercise of its rights and remedies due to certain events of defaults under the January Note, including payment, until December 31, 2023, in exchange for a non-refundable payment of $100,000 in the form of a promissory note due December 31, 2023 (the “New Note”), which the terms of the New Note are under negotiation, and the payment of such January Investor’s attorneys’ fees and related costs up to $20,000. On July, 11, 2023, such January Investor agreed with the Company to accept 152,085 shares of the Company’s common stock as payment in full of their January Note, which such obligations were approximately $931,000.

On July 14, 2023, another of the remaining January Investors agreed with the Company to accept 25,143 shares of common stock as payment in full of their January Note, which such obligations were approximately $132,000.

On August 2, 2023, the Company entered into an exchange agreement with the remaining January Investor to exchange their January Note, with a balance of approximately $52,000, for 12,374 shares of common stock as payment in full of their January Note.

Following the above, there are no January Notes outstanding.

Equity Line of Credit

On July 20, 2023, the Company entered into a Common Stock Purchase Agreement (the “ELOC Purchase Agreement”) with a purchaser (the “ELOC Purchaser”), whereby the Company has the right, but not the obligation, to sell to the ELOC Purchaser, and the ELOC Purchaser is obligated to purchase, up to an aggregate of $50 million of newly issued shares (the “ELOC Shares”) of the Company’s common stock.

The purchase price of the shares of common stock that the Company elects to sell to the ELOC Purchaser pursuant to the ELOC Purchase Agreement will be equal to ninety-seven percent (97.0%) of the lower of (i) the lowest intraday sale price of the common stock on the Company’s current trading market on the applicable purchase date and (ii) the arithmetic average of the three (3) lowest closing sale prices during the ten (10) trading days immediately preceding the applicable purchase date. There is no upper limit on the price per share that the ELOC Purchaser could be obligated to pay for the common stock under the ELOC Purchase Agreement.

The Purchase Agreement prohibits the Company from directing the ELOC Purchaser to purchase any shares of our common stock if those shares, when aggregated with all other shares of our common stock then beneficially owned by the ELOC Purchaser (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder), would result in the ELOC Purchaser beneficially owning more than 4.99% of the outstanding common stock.

As consideration for the ELOC Purchaser’s irrevocable commitment to purchase shares of common stock upon the terms of and subject to satisfaction of the conditions set forth in the ELOC Purchase Agreement, concurrently with the execution and delivery of the ELOC Purchase Agreement, we agreed to issue to the ELOC Purchaser 21,840 shares of common stock (the “Initial Commitment Shares”) and at the earlier of the date that is thirty days following the closing of the Company’s first public offering of common stock or October 16, 2023, the Company will issue up to an additional 87,417 shares of common stock as additional commitment shares (the “Additional Commitment Shares”).

Subsequent to June 30, 2023 the Company received net proceeds on sales of 283,949 shares of common stock of approximately $0.5 million (after deducting $0.03 million in commissions and expenses) at a weighted average price of $1.81 per share pursuant to the ELOC Purchase Agreement.

ATM Offering

On July 5, 2023, the Company and the Sales Agents filed the second amendment to the Sales Agreement (the “Second Amendment to the Sales Agreement”). Pursuant to the First Amendment to the Sales Agreement, the Company may from time to time, sell up to $5.1 million in Placement Shares of the Company’s common stock through the Sales Agents in a continuous At-the-Market Offering (the Amended ATM Offering”). According to the First Amendment to the Sales Agreement, the Company will pay the Sales Agents a commission of up to 3.0% of the aggregate gross proceeds the Company receives from all sales of its common stock in the Amended ATM Offering.

Subsequent to June 30, 2023 the Company received net proceeds on sales of 421,758 shares of common stock of approximately $1.59 million (after deducting $0.76 million in commissions and expenses) at a weighted average price of $3.94 per share.

The additional $2.1 million of combined ATM and ELOC equity offerings have contributed to the Company maintaining Stockholder equity levels in excess of the $2.5 million Nasdaq threshold.