Annual report pursuant to Section 13 and 15(d)

Stockholders??? Equity

v3.23.1
Stockholders’ Equity
 12 Months Ended
Dec. 31, 2022
Equity [Abstract]  
Stockholders’ Equity Stockholders’ Equity
Our authorized capital stock consists of 50 million shares of common stock, $0.0005 par value, and one million shares of preferred stock, $0.0005 par value.
Preferred Stock
The preferred stock authorized under the Company's certificate of incorporation may be issued from time to time in one or more series. As of December 31, 2022, no shares of preferred stock have been issued. The Company's board of directors have the full authority permitted by law to establish, without further stockholder approval, one or more series of preferred stock and the number of shares constituting each such series and to fix by resolution voting powers, preferences and relative, participating, optional and other special rights of each series of preferred stock, and the qualifications, limitations or restrictions thereof, if any. Subject to the limitation on the total number of shares of preferred stock that the Company has authority to issue under its certificate of incorporation, the board of directors is also authorized to increase or decrease the number of shares of any series, subsequent to the issue of that series, but not below the number of shares of such series then-outstanding. In case the number of shares of any series is so decreased, the shares constituting such decrease will resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. The Company may, subject to any required stockholder approval, amend from time to time its certificate of incorporation to increase the number of authorized shares of preferred stock or common stock or to make other changes or additions to our capital structure or the terms of our capital stock.
Common Stock Dividends
On May 9, 2022, the board of directors of the Company declared a special cash dividend of $0.30 per share on the Company’s common stock, paid on June 4, 2022, in the amount of $4.7 million to holders of record of the Company’s common stock as of May 25, 2022.
On February 14, 2022, the board of directors of the Company declared a special cash dividend of $0.30 per share on the Company’s common stock, paid on March 10, 2022, in the amount of $4.6 million to holders of record of the Company’s common stock on March 1, 2022.
During the year ended December 31, 2021, the Board declared a special cash dividend of $0.30 per share on the Company’s common stock to holders of record on May 25, 2021, resulting in the payment of $4.5 million to stockholders on June 3, 2021.
Common Stock
Registered Direct Offering
On January 5, 2021, the Company entered into a securities purchase agreement with certain accredited investors and qualified institutional buyers, pursuant to which the Company issued and sold to the purchasers an aggregate of (i) 550,000 shares of the Company's common stock, and (ii) warrants to purchase up to 275,000 shares of the Company's common stock in a registered direct offering.
The shares and warrants were sold at a purchase price of $10.00 per share for net proceeds to the Company of $5.5 million. Each Warrant has an exercise price equal to $11.00 per share of common stock, will be exercisable at any time and from time to time, subject to certain conditions described in the Warrant, after the date of issuance, and will expire on the date that is three years from the date of issuance. The Shares and the Warrants are immediately separable and were issued separately.
Public Offering
On January 18, 2021, the Company entered into an underwriting agreement for the public offering of three million shares of common stock, at a price to the public of $12.50 per share. On January 21, 2021, the Company completed the offering for net proceeds of $35.1 million, after deducting the underwriting discounts and commissions and estimated offering expenses. As part of the offering, the Company also issued to the underwriters warrants to purchase up to an aggregate of 180,000 shares of common stock (6% of the shares of common stock sold in the offering) at an exercise price of $15.625 per share (equal to 125% of the public offering price per share).
At-the-market Offering
On December 28, 2021, the Company entered into a Sales Agreement (the “Sales Agreement”) with ThinkEquity LLC (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time through the Sales Agent, shares (the “ATM Shares”) of the Company's common stock, having an aggregate offering price of up to $100,000,000, subject to the terms and conditions of the Sales Agreement. The Company is not obligated to make any sales of the ATM Shares under the Sales Agreement.
The offering pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all of the ATM Shares subject to the Sales Agreement and (ii) termination of the Sales Agreement as permitted therein. The Company may terminate the Sales Agreement in its sole discretion at any time by giving three business days’ prior notice to the Sales Agent. The Sales Agent may terminate the Sales Agreement under the circumstances specified in the Sales Agreement and in its sole discretion at any time by giving three business days’ prior notice to the Company.
The Company will pay the Sales Agent a fixed commission rate of 2.0% of the aggregate gross proceeds from the sale of the ATM Shares pursuant to the Sales Agreement and has agreed to provide the Sales Agent with customary indemnification and contribution rights. The Company also agreed to reimburse the actual out-of-pocket accountable expenses of the Sales Agent up to $60,000 (of which a $25,000 advance was paid on December 7, 2021), which amount will include the fees and expenses of legal counsel to the Sales Agent up to $50,000, and to pay the costs associated with bound volumes of the public offering materials as well as commemorative mementos and lucite tombstones, in an amount not to exceed $3,000.
Additionally, the Company will pay to H.C. Wainwright & Co. (“Wainwright”), a fee equal to 1.0% of the gross proceeds of the sales price of all the ATM Shares sold under the Sales Agreement, pursuant to a separate financial services agreement with Wainwright. Wainwright is not a sales agent under the Sales Agreement.
For the years ended December 31, 2022 and 2021, the Company did not have any sales under the At-the-market Offering program.
Nebula Acquisition
As part of Nebula Acquisition (see Note 3, Business Acquisitions), a portion of the purchase price was paid in shares to certain Seller Parties and noteholders of Nebula G, based on their election to receive shares of the Company’s common stock in lieu of cash, which shares have been valued at a price per share of $7.46, which is equal to the average closing price of the Company’s common stock on Nasdaq for the five trading days preceding the signing of the Nebula Stock Purchase Agreement.
The Company issued 483,685 shares of its common stock in in lieu of $3.6 million cash payment to Seller Parties and noteholders of Nebula.
Stock Repurchase Program
On July 26, 2022 and September 8, 2021, the Company announced that its board of directors (the “Board”) had approved new stock repurchase programs. Under each of the stock repurchase programs, the Company was authorized to repurchase up to $6.0 million million of its outstanding shares of common stock from time to time, over a six-month period.
The Company repurchased 303,145 and 166,824 shares during the years ended December 31, 2022 and 2021, respectively, pursuant to the stock repurchase programs for an aggregate amount of $2,152,000 and $944,000 respectively, including commissions.
The 2010 Directors’ Equity Compensation Plan
On May 20, 2021, the stockholders of the Company approved the Amended and Restated 2010 Directors’ Equity Compensation Plan (the “Amended 2010 Directors’ Plan”) at the 2021 annual meeting of stockholders of the Company (the "2021 Annual Meeting"). The Amended 2010 Directors’ Plan authorizes the issuance of up to 775,000 shares of common stock.
During the year ended December 31, 2021, stock options to purchase an aggregate of 225,126 shares of the Company's common stock were granted to the Company's directors in lieu of director fees under the Amended 2010 Directors’ Plan with a strike price of $5.28 per share.
The 2022 Directors' Equity Compensation Plan

On May 19, 2022, the stockholders of the Company approved the 2022 Directors' Equity Compensation Plan (the “2022 Directors' Plan”) at the 2022 annual meeting of stockholders (the "2022 Annual Meeting"). The 2022 Director's Plan amended and restated the Amended and Restated 2010 Directors' Equity Compensation Plan and provides for an increase in the number of shares reserved for issuance under the plan by 300,000 shares and provides for the adjustment of the per share exercise price of stock options granted under the 2022 Directors' Plan in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends). At December 31, 2022, there were 120,000 stock options outstanding and there were 180,000 shares of common stock available to be issued under the 2022 Directors’ Plan.
During the year ended December 31, 2022, stock options to purchase an aggregate of 120,000 shares of the Company's common stock were granted to our directors in lieu of director fees under the 2022 Plan with a strike price of $5.28 per share.
The 2010 Equity Compensation Plan
On May 20, 2021, the stockholders of the Company approved the Amended and Restated 2010 Equity Compensation Plan (the “Amended 2010 Plan”) at the 2021 Annual Meeting. The Amended 2010 Plan authorizes the issuance of up to 4,900,000 shares of common stock.

During Fiscal 2021, 1,249,874 stock options were granted to our employees and non-employees under the 2010 Plan at an exercise price between $5.28 - $11.03, the closing price of the Company’s common stock on the date of grant, with 25% of the stock options vested on the grant date, and 75% vesting over a 3-year period in equal annually installments.

The 2022 Equity Compensation Plan
On May 19, 2022, the stockholders of the Company approved the 2022 Equity Compensation Plan (the “2022 Plan”) at the 2022 Annual Meeting. The 2022 Plan amended and restated the Company’s Amended and Restated 2010 Equity Compensation Plan and provides for an increase in the number of shares reserved for issuance under the plan by 1,000,000 shares for a total of 5,900,000 and provides for the adjustment of the per share exercise price of stock options granted under the 2022 Plan in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends).
During Fiscal 2022, 325,000 stock options were granted to the Company's employees and non-employees under the 2022 Plan at exercise prices between $8.96 and $12.01, equal to the closing price of the Company’s common stock on the date of grant, with 25% of each such stock option vested on the grant date, and 75% vesting over a 3-year period in equal annually installments.
The 2018 Stock Incentive Plan
On April 12, 2018, the Company's stockholders approved the 2018 Stock Incentive Plan (the “2018 Stock Plan”). The 2018 Stock Plan provides for the grant of incentive stock options to eligible employees of the Company, and for the grant of non-statutory stock options to eligible employees, directors and consultants. The purpose of the 2018 Stock Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain, and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The 2018 Stock Plan provides that the total number of shares that may be issued pursuant to the 2018
Stock Plan is 2,300,000 shares. At April 12, 2018, all 2,300,000 shares had been granted in the form of stock options to Ted Karkus (the “CEO Option”), the Company's Chief Executive Officer, and, through December 31, 2022, 1,650,000 options under the 2018 Stock Plan had been exercised.
The 2018 Stock Plan requires certain proportionate adjustments to be made to the stock options granted under the 2018 Stock Plan upon the occurrence of certain events, including a special distribution (whether in the form of cash, shares, other securities, or other property) in order to maintain parity. Accordingly, the Compensation Committee of the board of directors, as required by the terms of the 2018 Stock Plan, adjusted the terms of the CEO Option, such that the exercise price of the CEO Option was reduced from $3.00 per share to $2.00 per share, effective as of September 5, 2018, the date the special $1.00 special cash dividend was paid to stockholders. The exercise price of the CEO Option was further reduced from 2.00 $2.00 to $1.75 per share, effective as of January 24, 2019, the date the $0.25 special cash dividend was paid to stockholders. The exercise price of the CEO Option was further reduced from $1.75 to $1.50 per share, effective as of December 12, 2019, the date another $0.25 special cash dividend was paid to stockholders. The exercise price of the CEO Option was further reduced from $1.50 to $1.20 per share, effective as of June 3, 2021, the date another $0.30 special cash dividend was paid to Company’s stockholders. Accordingly, the Compensation Committee of the board of directors, as required by the terms of the 2018 Stock Plan, has adjusted the exercise price of the CEO Option in connection with each special cash dividend paid by the Company proportionately to the amount of the dividend paid. The current exercise price of the CEO Option is $0.60 per share after the latest special cash dividend paid on June 3, 2022.
Inducement Option Awards
As part of Nebula Acquisition, the Company issued a non-qualified stock option to Kamal Obbad, the Chief Executive Officer of Nebula Genomics, as an inducement to his employment with the Company (the “Obbad Award”). The Obbad Award entitles Mr. Obbad to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $7.67 per share, the closing price of the Company’s common stock on the closing date of the Nebula Acquisition. The Obbad Award was granted to Mr. Obbad on the closing date of the Nebula Acquisition. The Obbad Award vested 25% on the grant date and will vest 25% per year for the next three years subject to Mr. Obbad’s continued employment with the Company. The Obbad Award expires on the seventh anniversary of the grant date. Any portion of the Obbad Award that does not vest and become exercisable will be forfeited for no consideration. The grant date fair value of the Obbad Award was approximately $1,128,000.
On May 9, 2022, the Company issued a non-qualified stock option to the prospective Chief Financial Officer of the Company (the “CFO”), as an inducement to his employment with the Company, effective May 23, 2022 (the “CFO Award”). The CFO Award entitled the CFO to purchase up to 400,000 shares of the Company’s common stock at an exercise price of $6.74 per share, the closing price of the Company’s common stock on May 9, 2022. The CFO Award provided for certain proportionate adjustments to be made in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends) in order to maintain parity. The exercise price of the CFO Award was reduced from $6.74 to $6.44 per share, effective as of June 3, 2022, the date $0.30 special cash dividend was paid to Company’s stockholders. The grant date fair value of the CFO Award was approximately $1,604,000. In connection with CFO’s separation from service on October 4, 2022, these options were forfeited on October 4, 2022. The Company reversed $149,000 of stock based compensation expense previously recognized for the unvested options at the time of forfeiture.

During the year ended December 31, 2022, the Company issued an inducement award to a prospective employee to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $13.00, the closing price of the common stock on the date of grant. The award vested 50% on the date of grant and the remaining portion will vest 25% per year for the next two years. The award expires on the seventh anniversary of the grant date.
For the year ended December 31, 2021, the Company granted an inducement award to a prospective employee to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $5.76, the closing price of the common stock on the date of grant. The award vests in four equal installments from the date of grant. The award expires on the seventh anniversary of the grant date.
All inducement awards have been granted outside of the Company’s equity compensation plans pursuant to Nasdaq Listing Rule 5635(c)(4).
Summary of all option grants
For the year ended December 31, 2022, the Company granted in the aggregate 1,095,000 stock options at an exercise price of $6.44-$12.92, the closing price of the Company’s common stock on the date of grant, to certain employees. The stock options vest in four equal annual installments beginning on the date of grant. The options were valued at $6.6 million at fair value, using the Black-Scholes option pricing model to calculate the grant-date fair value of the options. The fair value of stock options for employees are expensed over the vesting term in accordance with the terms of the related stock option agreements and non-employees are expensed over the terms of the service period..
For the year ended December 31, 2021, the Company granted 1,249,874 stock options at an exercise price of $5.28- $11.03, the closing price of the Company’s common stock on the date of grant, to certain employees. The stock options will vest in four equal annual installments beginning on the date of grant. The options were valued at $6.1 million at fair value, using the Black-Scholes option pricing model to calculate the grant-date fair value of the options. The fair value of stock options for employees are expensed over the vesting term in accordance with the terms of the related stock option agreements and non-employees are expensed over the terms of the service period.
The following table summarizes stock options activity during Fiscal 2022 and 2021 (in thousands, except per share data).
Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Total Intrinsic Value
Outstanding as of January 1, 2021 3,795 2.21  3.4 $ 26,441 
Granted 1,825 7.29  6.2 — 
Forfeited (505) 8.50  0 — 
Expired (5) 1.39  0 — 
Outstanding as of December 31, 2021 5,110 $ 3.27  3.4 $ 20,820 
Granted 1,095 9.92  7 — 
Exercised (1,833) 1.29  0 — 
Forfeited (420) 1.56  0 — 
Outstanding as of December 31, 2022 3,952 $ 5.35  4 $ 20,379 
Options vested and exercisable 2,961 $ 4.06  3.2 $ 17,257 
The following table summarizes weighted average assumptions used in determining the fair value of the stock options at the date of grant during Fiscal 2022 and 2021:
For the years ended
December 31,
2022 2021
Exercise price $ 10.03  $ 7.29 
Expected term (years) 4.5 4
Expected stock price volatility 79  % 79  %
Risk-free rate of interest 2.5% 0.8  %
Expected dividend yield (per share) 0  % 0  %
The expected stock price volatility is based on the Company’s historical common stock trading prices and the expected term is based on the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method.
The fair value of the stock options at the time of the grant in Fiscal 2022 and 2021 was $6.9 million and $6.1 million, respectively. For Fiscal 2022 and 2021, we charged to operations approximately $4.0 million and $3.2 million. As of December 31, 2022, there were 3,952,000 stock options outstanding and 2,961,000 stock options vested and exercisable.
The Company will recognize an aggregate of approximately $4.5 million of remaining share-based compensation expense related to outstanding stock options over a weighted average period of 3 years.
For the year ended December 31, 2022, we issued 828,021 shares of common stock through a cashless exercise of 1,833,000 options. In connection with the cashless exercise, the company repurchased 1,103,000 common stock at a cost of $7.5 million to satisfy tax withholding.
Common Stock Warrants
For the year ended December 31, 2021, the Company issued warrants to purchase 275,000 shares of common stock in a registered direct offering and warrants to purchase 180,000 shares of common stock to the underwriters in an underwritten public offering.
For the year ended December 31, 2021, the Company issued 5,986 shares of common stock through a cashless exercise of 50,000 common stock warrants.
During the year ended December 31, 2022, there were no stock warrants issued.
The following table summarizes warrant activities during Fiscal 2022 and 2021 (in thousands, except per share data):
Number of Shares Weighted Average
Exercise
Price		 Weighted Average
Remaining Contractual
Life
(in years)
Outstanding as of January 1, 2021 450 $ 3.22  2.7
Warrants granted 455 12.83  3
Cashless exercise (50) 5.00  0
Outstanding as of December 31, 2021 855 $ 8.23  1.9
Warrants granted —  —  0
Outstanding as of December 31, 2022 855 $ 8.23  1.9
Warrants vested and exercisable 855 $ 8.23  1.9
The following table summarizes weighted average assumptions used in determining the fair value of the warrants at the date of grant during Fiscal 2022 and Fiscal 2021:
  For the years ended
December 31,
  2022 2021
Exercise price $ —  $ 12.83 
Expected term (years) 0 3.0
Expected stock price volatility 0% 81%
Risk-free rate of interest 0.0% 0.2  %
Expected dividend yield (per share) 0  % 0  %
As of December 31, 2022, there were 855,000 warrants outstanding, and the full share-based compensation expense was recognized in prior years. The Company recognized $253,000 of share-based compensation expense for the year ended December 31, 2021.