|9 Months Ended|
Sep. 30, 2022
Note 6 – Stockholders’ Equity
At the Company’s 2021 Annual Meeting of Stockholders held on June 9, 2021, its stockholders approved an amendment to its certificate of incorporation to increase the number of authorized shares of common stock available to issue by 40,000,000 to 135,000,000 with a par value of $0.0001 per share, of which 7,000,000 shares are designated as “Class A common stock.” The amendment was filed with the Secretary of State of the State of Delaware on June 10, 2021.
As of September 30, 2022 and December 31, 2021, there were 7,000,000 shares of Class A common stock held by Fortress. The holders of common stock are entitled to one vote per share of common stock held. The Class A common stockholders are entitled to a number of votes per share equal to 1.1 times a fraction, the numerator of which is the sum of the shares of outstanding common stock and the denominator of which is the number of shares of Class A common stock. Accordingly, the holder of shares of Class A common stock will be able to control or significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions. Each share of Class A common stock is convertible, at the option of the holder thereof, into one (1) fully paid and non-assessable share of common stock subject to adjustment for stock splits and combinations.
In November 2020, the Company filed a shelf registration statement on Form S-3 (the “S-3”), which was declared effective in December 2020. Under the S-3, the Company may sell up to a total of $100 million of its securities. In connection with the S-3, the Company entered into an ATM with Cantor Fitzgerald & Co., Ladenburg Thalmann & Co. Inc. and H.C. Wainwright & Co., LLC (each an “Agent” and collectively, the “Agents”) relating to the sale of shares of common stock. Under the ATM, the Company pays the Agents a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of common stock.
During the nine months ended September 30, 2022, the Company sold a total of 5,157,914 shares of common stock under the ATM, at an average selling price of $1.93 per share, resulting in aggregate total gross proceeds of approximately $9.9 million and net proceeds of approximately $9.7 million after deducting approximately $0.2 million in commissions and other transaction costs.
Pursuant to the Founders Agreement, the Company issued to Fortress 2.5% of the aggregate number of shares of common stock issued in the offering noted above. Accordingly, the Company issued 128,931 shares of common stock to Fortress and recorded expense of approximately $239,000 related to these stock grants, which is included in general and administrative expenses in the Company’s Condensed Statements of Operations for the nine months ended September 30, 2022.
Pursuant to the Founders Agreement, the Company issued 2,121,422 shares of common stock to Fortress for the Annual Equity Fee, representing 2.5% of the fully diluted outstanding equity of Checkpoint on January 1, 2022 (see Notes 2 and 4).
As of September 30, 2022, approximately $44.7 million of securities remain available for sale under the S-3. The Company may offer the securities under the S-3 from time to time in response to market conditions or other circumstances if it believes such a plan of financing is in the best interests of its stockholders.
Equity Incentive Plan
The Company has in effect the Amended and Restated 2015 Incentive Plan (“2015 Incentive Plan”). The 2015 Incentive Plan was adopted in March 2015 by our stockholders. Under the 2015 Incentive Plan, the compensation committee of the Company’s board of directors is authorized to grant stock-based awards to directors, officers, employees and consultants. An amendment to the 2015 Incentive Plan was approved by stockholders in June 2020 to increase the shares available for issuance to 9,000,000 shares. The plan expires 10 years from the effective date of the amendment and limits the term of each option to no more than 10 years from the date of grant.
As of September 30, 2022, 1,313,471 shares are available for issuance under the 2015 Incentive Plan.
Certain employees, directors and consultants have been awarded restricted stock. The restricted stock vesting consists of milestone and time-based vesting. The following table summarizes restricted stock award activity for the nine months ended September 30, 2022:
As of September 30, 2022, there was $3.5 million of total unrecognized compensation cost related to non-vested restricted stock, which is expected to be recognized over a weighted-average period of 2.0 years. This amount does not include, as of September 30, 2022, 513,334 shares of restricted stock outstanding which are performance-based and vest upon achievement of certain corporate milestones. The expense for time-based vesting awards is recognized over the vesting period of the award. Stock-based compensation for milestone awards will be measured and recorded if and when it is probable that the milestone will be achieved.
Restricted Stock Units
The following table summarizes restricted stock units activity for the nine months ended September 30, 2022:
As of September 30, 2022, all restricted stock units outstanding are performance-based and vest upon achievement of certain corporate milestones. The expense for milestone awards will be measured and recorded if and when it is probable that the milestone will be achieved. Because the achievement of these corporate milestones was not probable as of September 30, 2022, no expense related to the restricted stock units has been recognized for the three and nine months ended September 30, 2022.
The following table summarizes stock option award activity for the nine months ended September 30, 2022:
Upon the exercise of stock options, the Company will issue new shares of its common stock.
The Company used the Black-Scholes option pricing model for determining the estimated fair value of stock-based compensation related to stock options. The table below summarizes the assumptions used:
A summary of warrant activities for the nine months ended September 30, 2022 is presented below:
Upon the exercise of warrants, the Company will issue new shares of its common stock.
The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 ($ in thousands):
The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef