Note 4 - Stockholders' Equity

9 Months Ended

12 Months Ended

Sep. 30, 2020

Dec. 31, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

4.

   Stockholders' Equity

We have granted share-based compensation awards to employees, board members and service providers. Awards

may

consist of common stock, restricted common stock, restricted common stock units, common stock purchase warrants, or common stock purchase options. Our common stock purchase options and stock purchase warrants have lives of up to

ten

years from the grant date. Awards vest either upon the grant date or over varying periods of time. The stock options provide for exercise prices equal to or greater than the fair value of the common stock at the date of the grant. Restricted stock units grant the holder the right to receive fully paid common shares with various restrictions on the holder's ability to transfer the shares. As of

September 30, 2020,

we have approximately

7.1

million shares of common stock reserved for issuance upon the granting of awards under our equity incentive plans and the exercise of outstanding equity-linked instruments.

We typically record share-based compensation expense on a straight-line basis over the requisite service period. Share-based compensation expenses included in our condensed consolidated statements of operations and comprehensive loss are as follows:

	Three Months Ended September 30,
	2020		2019
Research and development expenses	$	26,251	$	–
General and administrative expenses		180,571		294,600
Total	$	206,822	$	294,600

	Nine Months Ended September 30,
	2020		2019
Research and development expenses	$	26,251	$	200,337
General and administrative expenses		497,710		561,007
Total	$	523,961	$	761,344

Stock Options

A summary of stock option activity and related information for the

nine

months ended

September 30, 2020

follows:

	Number of Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2020		271,660		$	61.83		7.8	$	–
Granted		1,686,466		$	0.62
Exercised		–		$	–			$	–
Forfeited		(157,204	)	$	15.53
Outstanding at September 30, 2020		1,800,922		$	8.55		9.3	$	–
Exercisable at September 30, 2020		710,884		$	20.63		8.9	$	–

Range of Exercise Prices			Number of Options Outstanding		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
	$0.62			1,686,466	$	0.62		9.5	$	–
$5.90	-	$6.00		45,378	$	5.99		8.8		–
$7.20	-	$8.80		6,380	$	8.69		8.4		–
$22.20	-	$80.60		24,488	$	31.15		4.8		–
$107.40	-	$1,102.40		38,210	$	347.18		2.0		–
				1,800,922	$	8.55		9.3	$	–

The Company uses the Black-Scholes option pricing model for “plain vanilla” options and other pricing models as appropriate to calculate the fair value of options. The Company generally uses the “simplified method” to estimate expected life. Significant assumptions used in these models include:

	Nine Months Ended September 30,
	2020			2019
Annual dividend		-			-
Expected life (in years)	4.0	-	5.2	4.8	-	5.5
Risk free interest rate	0.2%	-	0.3%	1.8%	-	2.5%
Expected volatility	110%	-	111%	97%	-	115%

Options granted in the

nine

months ended

September 30, 2020

and

2019,

had a weighted average grant date fair value of

$0.52

and

$3.45

per share, respectively.

Unrecognized compensation cost for unvested stock option awards outstanding at

September 30, 2020

was approximately

$587,000

to be recognized over approximately

2.5

years.

In

2019,

the Company modified certain awards in conjunction with an employee's termination. The modification provided for the accelerated vesting of all unvested awards and the extension of the post-employment exercise period. The modifications resulted in approximately

$102,000

of additional research and development expenses in the

nine

months ended

September 30, 2019.

RSUs

We have granted restricted stock units (RSUs) to certain employees and board members that entitle the holders to receive shares of our common stock upon vesting and subject to certain restrictions regarding the exercise of the RSUs. The grant date fair value of RSUs is based upon the market price of the underlying common stock on the date of grant.

We granted

24,000

and

4,904

RSU's in the

nine

months ended

September 30, 2020

and

2019,

respectively.

RSUs vesting in the

nine

months ended

September 30, 2020

and

2019

had a total value of approximately

$23,400

and

$6,400,

respectively.

At

September 30, 2020,

we had

28,904

outstanding RSUs with a weighted average grant date fair value of

$1.58

and a total intrinsic value of approximately

$16,800.

Unrecognized compensation cost for unvested RSUs at

September 30, 2020

was approximately

$8,000

to be recognized over approximately

0.5

years.

In the

nine

months ended

September 30, 2020,

563

RSU's with an intrinsic value of approximately

$300

were converted. In the

nine

months ended

September 30, 2019,

1,126

RSU's having an intrinsic value of approximately

$10,400

were converted.

Restricted Stock

We have granted restricted stock to certain board members that vest quarterly over the grant year. The grant date fair value of the restricted stock is based upon the market price of the common stock on the date of grant.

No

restricted stock was granted in the

nine

months ended

September 30, 2020.

In the

nine

months ended

September 30, 2019,

we granted

15,688

shares of restricted stock having a weighted average grant date fair value of

$5.95.

Restricted stock vesting in the

nine

months ending

September 30, 2020,

had a weighted average grant date fair value of

$5.90

and a total intrinsic value of approximately

$2,600.

Restricted stock vesting in the

nine

months ending

September 30, 2019,

had a weighted average grant date fair value of

$9.73

and a total intrinsic value of approximately

$14,500.

No

restricted stock was outstanding at

September 30, 2020.

Stock Purchase Warrants.

We have issued warrants to purchase common stock to certain officers, directors, stockholders and service providers as well as in conjunction with debt and equity offerings and at various times replacement warrants were issued as an inducement for warrant exercises.

In

May 2016

and

August 2017,

we issued a total of

87,309

and

112,500

common stock purchase warrants, respectively in conjunction with our offerings. Such warrants are classified as liabilities due to the existence of certain net cash settlement provisions contained in the warrants. At

September 30, 2020,

after giving effect to exercises,

149,136

of these common stock purchase warrants remain outstanding and are recorded at fair value as mark-to-market liabilities (see Note

3

). The exercise price for these warrants was decreased to

$0.90

per share as a result of our

May 2020

capital raise in accordance with their terms.

In

January 2020,

pursuant to the terms of an inducement offer, certain holders of

5,555,554

of our common stock purchase warrants exercised such warrants at an exercise price of

$1.36

per share generating approximately

$7.6

million of gross proceeds. As an inducement to exercise, we reduced the exercise price on the existing warrants from

$2.70

to

$1.36

and issued

5,555,554

replacement warrants with an exercise price of

$1.23

per share. Of the replacement warrants,

2,777,777

have a

two

-year term and

2,777,777

have a

five

-year term. In conjunction with the transaction, we issued to the placement agent

444,445

common stock purchase warrants with an exercise price of

$1.70

and a

five

-year term.

We recognized an expense in the accompanying condensed consolidated statement of operations for the

nine

months ended

September 30, 2020

of approximately

$5.6

million representing the fair value of the inducement offer. The fair value is comprised of the fair value of the modification of the original warrants (the reduction in exercise price) and the fair value of the replacement warrants. The fair values were calculated using the Black-Scholes option pricing model.

In conjunction with our

May 2020

Offering, we issued to the placement agent

400,000

common stock purchase warrants with an exercise price of

$1.25

and a

five

-year term.

A summary of outstanding warrants at

September 30, 2020

follows:

Range of Exercise Prices			Number of Warrants Outstanding		Range of Expiration Dates
$0.90	-	$1.25		3,233,407	May 2021	-	May 2025
$1.70	-	$3.38		1,493,999	December 2020	-	January 2025
$6.00	-	$782.60		199,337	October 2020	-	April 2024
				4,926,743

Preferred and Common Stock

We have outstanding

200,000

shares of Series A

4.5%

Convertible Preferred Stock issued in

December 2016.

Shares of the Series A

4.5%

Convertible Preferred Stock are convertible into

38,873

shares of the Company's common. In

April

and

July 2019,

800,000

Series A

4.5%

Convertible Preferred Stock shares were converted into

155,496

shares of common stock in accordance with their terms.

In

May 2020,

we completed a direct offering of

5,000,000

shares of common stock at a price of

$1.00

per each share resulting in gross proceeds of

$5.0

million. After deducting placement agent and other expenses related to the offering we received approximately

$4.4

million. The securities were sold pursuant to a registration statement on Form S-

3

(file

no.

333

-

218608

). In connection with the offering, we issued to the placement agent warrants to purchase

400,000

shares of our common stock at an exercise price of

$1.25

per share. The warrants are exercisable immediately and expire

5

years from issuance.

Note

4.

  Stockholders' Equity

We have granted share-based compensation awards to employees, board members and service providers. In addition, we have issued warrants to purchase common stock in conjunction with debt and equity offerings. Awards

may

consist of common stock, restricted common stock, restricted common stock units, common stock purchase warrants, or common stock purchase options. Our common stock purchase options and stock purchase warrants have lives of up to

ten

years from the grant date. Awards vest either upon the grant date or over varying periods of time. The stock options provide for exercise prices equal to or greater than the fair value of the common stock at the date of the grant. Restricted stock units grant the holder the right to receive fully paid common shares with various restrictions on the holder's ability to transfer the shares. As of

December 31, 2019,

we have approximately

7,441,532

million shares of common stock reserved for issuance upon the exercise of share-based awards.

We record share-based compensation expense on a straight-line basis over the requisite service period. Share-based compensation expense included in the statements of operations was as follows:

	Year Ended December 31,
	2019		2018
Research and development costs	$	200,337	$	133,334
General and administrative expenses		680,452		500,748
Total	$	880,789	$	634,082

Stock Options

A summary of stock option activity and related information for the year ended

December 31, 2019

follows:

	Number of Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2019		81,674		$	215.60		5.1	$	-
Granted		228,183		$	7.78			$	-
Exercised		-			-
Forfeited/Expired		(38,197	)	$	67.90
Outstanding at December 31, 2019		271,660		$	61.83		7.8	$	-
Exercisable at December 31, 2019		207,813		$	78.30		7.4	$	-

Range of Exercise Prices			Number of Options Outstanding		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
$5.90	-	$6.00		55,484	$	5.99		9.5	$	-
$7.20	-	$8.80		146,972	$	8.51		9.0		-
$22.20	-	$99.20		28,501	$	31.63		5.7		-
$107.40	-	$1,102.41		40,703	$	351.63		2.8		-
				271,660	$	61.83		7.8	$	-

The Company uses the Black-Scholes option pricing model for “plain vanilla” options and other pricing models as appropriate to calculate the fair value of options. Significant assumptions used in these models include:

	Year Ended December 31,
	2019			2018
Annual dividend		-			-
Expected life (in years)	4.8	-	5.5	2.5	-	5.3
Risk free interest rate	1.8%	-	2.5%	2.5%	-	2.8%
Expected volatility	97%	-	115%	97%	-	113%

Options granted in the years ended

December 31, 2019

and

2018

had weighted average grant date fair values of

$3.45

and

$9.40,

respectively. The total fair value of the options vested during the years ended

December 31, 2019

and

2018

was approximately

$671,100

and

$205,000,

respectively.

Unrecognized compensation cost for unvested stock option awards outstanding at

December 31, 2019

was approximately

$155,000

to be recognized over approximately

0.6

years.

In the

three

months ended

March 31, 2019,

the Company modified certain awards in conjunction with an employee's termination. The modification provided for the accelerated vesting of all unvested awards and the extension of the post-employment exercise period. The modifications resulted in approximately

$102,000

of additional research and development expenses in the

three

months ended

March 31, 2019.

RSUs

We have granted restricted stock units (RSU's) that entitle the holders to receive shares of our common stock upon vesting and subject to certain restrictions regarding the exercise of the RSU's and the holders' ability to transfer the shares received upon exercise. The fair value of RSU's granted is based upon the market price of the underlying common stock as if they were vested and issued on the date of grant.

A summary of our RSU activity for the year ended

December 31, 2019

follows:

	Number of RSU's			Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2019		2,816		$	64.80
Granted		4,904		$	5.90
Exercised and converted to common shares		(1,127	)	$	22.20
Forfeited		(1,126	)	$	22.20
Outstanding at December 31, 2019		5,467		$	29.62
Exercisable at December 31, 2019		2,925		$	50.23

The total intrinsic value of the outstanding RSU's at

December 31, 2019

was approximately

$5,400.

The total fair value of RSU's vested during the years ended

December 31, 2019

and

2018,

was approximately

$13,900

and

$50,000,

respectively. The total value of all RSU's that were converted in the year ended

December 31, 2019

was approximately

$10,400.

No

RSU's were converted in the year ended

December 31, 2018.

Unrecognized compensation cost for unvested RSU's outstanding at

December 31, 2019

was approximately

$15,000

to be recognized over approximately

0.5

years.

Restricted Stock

We have granted restricted stock to certain board members.

A summary of our restricted stock activity for the year ended

December 31, 2019

is as follows:

	Shares of Restricted Stock			Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2019		1,127		$	22.20
Granted		15,689		$	5.95
Vested		(8,835	)	$	8.03
Forfeited		-		$	-
Outstanding at December 31, 2019		7,981		$	5.95

The

total intrinsic value of the outstanding restricted stock at

December 31, 2019

was approximately

$7,900.

The total intrinsic value of all restricted stock vested in the year ended

December 31, 2019

was approximately

$18,500.

Unrecognized compensation cost for unvested restricted stock outstanding at

December 31, 2019

was approximately

$47,500

to be recognized over approximately

0.5

years.

Stock Purchase Warrants

We have issued warrants to purchase common stock to certain officers, directors, stockholders and service providers as well as in conjunction with debt and equity offerings and at various times replacement warrants were issued as an inducement for warrant exercises.

In

May 2016

and

August 2017,

we issued a total of

87,309

and

112,500

common stock purchase warrants, respectively in conjunction with the offering of our securities. Such warrants are classified as liabilities due to the existence of certain net cash settlement provisions contained in the warrants. At

December 31, 2019,

after giving effect to exercises,

149,136

of these common stock purchase warrants remain outstanding and are recorded at fair value as mark-to-market liabilities (see Note

3

).

In

February 2019,

we granted

25,000

warrants to an outside

third

party as partial compensation for services. The warrants have an exercise price of

$6.00,

expire

January 2024

and have a grant date fair value of

$3.80

per warrant. The warrants vest

25%

on grant and

75%

on completion of initial services; the warrants were fully vested as of

September 30, 2019.

The warrants were valued using the Black-Scholes option pricing model with the following inputs:

no

annual dividend, expected life of

2.5

years, risk-free rate of

2.5%

and expected volatility of

110%.

In

July 2019,

in connection with our underwritten public offering, we issued the following equity classified common stock purchase warrants: (i)

3,194,443

short-term common stock purchase warrants with an exercise price of

$2.70

per share, exercisable immediately and expiring on

December 31, 2020; (

ii)

3,194,443

long-term common stock purchase warrants with an exercise price of

$2.70

per share, exercisable immediately and expiring

5

-years from issuance and (iii)

2,361,462

“prefunded” common stock purchase warrants with an exercise price of

$0.0001

per share, exercisable immediately with

no

expiration date. As of

December 31, 2019,

all of the “prefunded warrants” had been exercised generating approximately

$200

in proceeds.

In connection with the

July

public offering we also granted the underwriters

222,223

equity classified common stock purchase warrants with an exercise price of

$3.375

per share, exercisable immediately and expiring

5

-years from issuance.

A summary of outstanding warrants at

December 31, 2019

follows:

Range of Exercise Prices			Number of Warrants Outstanding		Range of Expiration Dates
$2.19	-	$2.70		6,538,035	December 2020	-	August 2024
$3.38	-	$17.50		406,223	October 2023	-	July 2024
$22.20	-	$782.60		24,650	March 2020	-	July 2023
				6,968,908

In

January 2020,

pursuant to the terms of an inducement offer, certain holders of

5,555,554

of our common stock purchase warrants exercised such warrants at an exercise price of

$1.36

per share generating approximately

$7.6

million of gross proceeds. As an inducement to exercise we reduced the exercise price on the existing warrants from

$2.70

to

$1.36

and issued

5,555,554

replacement warrants with an exercise price of

$1.23

per share. Of the replacement warrants,

2,777,777

have a

two

-year term and

2,777,777

have a

five

-year term. In conjunction with the transaction we issued to the placement agent

444,445

common stock purchase warrants with an exercise price of

$1.70

and a

five

-year term.

Preferred and Common Stock

We have outstanding

200,000

shares of Series A

4.5%

Convertible Preferred Stock issued in

December 2016.

Shares of the Series A

4.5%

Convertible Preferred Stock are convertible into

38,873

shares of the Company's common stock subject to certain ownership restrictions. In

April

and

July 2019,

800,000

Series A

4.5%

Convertible Preferred Stock shares were converted into

155,496

shares of common stock in accordance with their terms.

In

July 2019,

we completed an underwritten public offering of

416,315

units (“Units”) and

2,361,462

prefunded units (“Prefunded Units”) at a price of

$2.70

per each unit resulting in gross proceeds of approximately

$7.5

million. Each Unit was comprised of

one

share of common stock,

one

short-term warrant and

one

long-term warrant. Each Prefunded Unit was comprised of

one

prefunded-warrant,

one

short-term warrant and

one

long-term warrant. The prefunded warrants have an exercise price of

$0.0001

per share and are exercisable at any time from issuance until all prefunded warrants are exercised. The short-term and long-term warrants have an exercise price of

$2.70

per share and are exercisable immediately. The short-term warrant expires

December 31, 2020

and the long-term warrant expires

five

-years from issuance. The net proceeds of the offering were approximately

$6.6

million, after deducting underwriting discounts and commissions and offering expenses. In addition to the above units, the underwriters exercised their option and purchased an additional short-term

416,666

additional short-term and

416,666

additional long-term warrant combinations at the public offering price per share and per warrant combination, before deducting underwriting discounts and commissions. The securities were sold pursuant to a registration statement on Form S-

1

(file

no.

333

-

232273

).