10. Stockholders’ Equity

Common stock

In August 2021, the Company completed an underwritten public offering and received gross proceeds of $30.0 million, with $2.4 million of issuance expenses for net proceeds of $27.6 million. The Company sold 33,193,485 shares of its common stock and pre-funded warrants to purchase 2,100,632 shares of common stock at $0.0001 per share. Each share of common stock was sold with a common warrant to purchase one share of common stock with an exercise price of $0.85, at a combined offering price of $0.85, and each pre-funded warrant was sold with a common warrant to purchase one share of common stock with an exercise price of $0.85, at a combined offering price of $0.8499, for an aggregate issuance of 35,294,117 common warrants.

In connection with the offering, the Company granted the underwriters a 30-day overallotment option to purchase up to 5,294,117 shares of common stock and up to 5,294,117 common warrants. The underwriters partially exercised their overallotment option, resulting in the issuance of an additional 4,294,117 common warrants with an exercise price of $0.85, each of which is to purchase one share of common stock and was sold at a price of $0.01 per warrant.

In addition, warrants to purchase 705,882 shares of common stock were issued to the underwriters as compensation for their services related to the offering. These common stock warrants have an exercise price of $1.0625 per share.

The Company entered into an At-the-Market Sales Agreement with BTIG on February 5, 2021 (the “Sales Agreement”). Pursuant to the Sales Agreement, the Company had the ability to offer and sell, from time to time, through BTIG, as sales agent and/or principal, shares of its common stock, having an aggregate offering price of up to $15,875,000, subject to certain limitations set forth in the Sales Agreement. Through September 30, 2021 the Company sold an aggregate of 7,454,238 shares under the Sales Agreement for gross proceeds of $15.9 million and net proceeds of $15.2 million, thus reaching the maximum amount able to be sold under the Sales Agreement.

Also during the year ended September 30, 2021, the Company issued 326,920 shares of common stock upon the vesting of restricted stock units.

Prior to the Merger, the Company sold 186,075 shares of common stock and issued private warrants to purchase 93,026 shares of common stock with an exercise price of $29.32 per share for net proceeds of $4.1 million. In addition, the Company issued 8,526 shares of common stock and private warrants to purchase 4,262 upon conversion of outstanding promissory notes with an outstanding principal balance of $0.2 million at the time of conversion.

Upon consummation of the Merger, the Company issued 547,639 common shares and 206,371 warrants to legacy Chanticleer shareholders. The warrants are to purchase shares of common stock with exercise prices ranging from $0.01 per share to $1,820 per share and a weighted average exercise price of $26.60 per share.

Sonnet BioTherapeutics Holdings, Inc.

Notes to Consolidated Financial Statements

In April 2020, the Company sold 1,699,232 shares of common stock to new investors for net proceeds of $15.0 million in a private placement. The new investors also received 3,300,066 Series A warrants with an exercise price of $5.3976 and 2,247,726 Series B warrants with an exercise price of $0.0001. An advisor for the private placement was issued 453,128 shares of common stock.

The Company issued 757,933 shares to acquire the nets assets of Relief (see Note 4).

Warrant amendments and exercises

During the year ended September 30, 2021, the Series B warrant holders exercised 23,863 warrants for proceeds of $2. An additional 2,242,427 of Series B warrants were net share settled, resulting in the issuance of 2,242,339 shares of common stock.

During the year ended September 30, 2021, the Chanticleer warrants to purchase 186,161 shares of common stock with an exercise price of $0.01 per share were net share settled, resulting in the issuance of 185,422 shares of common stock.

During the year ended September 30, 2021, the 2,100,632 of pre-funded warrants sold in conjunction with the 2021 public offering were net share settled, resulting in the issuance of 2,100,265 shares of common stock.

In August 2020, the Company agreed to reduce the exercise price of the Series A warrants from $5.3976 to $3.19 per share in order to induce warrant holders to exercise their warrants for cash. In addition, each warrant holder agreed not to purchase any shares of common stock, other than pursuant to exercises of the Series A warrants, until such time that no Series A warrants are held by such holder.

In August 2020, the Series A warrant holders exercised all of the 3,300,066 Series A warrants resulting in net proceeds of $9.8 million. Upon exercise of the Series A warrants, the Series A holders received an aggregate of 11,329,461 Series C warrants. The Series C warrants have an exercise price of $3.19 per share and are exercisable six months from the date of issuance and expire on October 16, 2025.

In connection with the amendment to the Series A warrants, the Series B warrant agreements were modified such that they no longer provide for resets to the number of shares of common stock underlying the Series B warrants and the Series B warrant holders were issued an additional 2,284,800 Series B warrants with an exercise price of $0.0001 per warrant. In July 2020, the Series B warrant holders exercised 2,223,863 warrants resulting in proceeds of $223.

As a result of the warrant amendments that occurred in August 2020, the Company recognized a deemed dividend of $41.3 million which reflects the fair value, as determined by a Black-Scholes option-pricing model, of the consideration given as an inducement for the investors to exercise the warrants. This deemed dividend is recorded in the Company’s consolidated statement of operations as an increase to the net loss attributable to common stockholders for purposes of computing basic and diluted net loss per share.

Sonnet BioTherapeutics Holdings, Inc.

Notes to Consolidated Financial Statements

Common stock warrants

As of September 30, 2021, the following equity-classified warrants and related terms were outstanding:

Schedule of Warrants Outstanding