Note 5 - Stockholders' Equity, Stock Options and Warrants

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 5 – STOCKHOLDERS’ EQUITY, STOCK OPTIONS AND WARRANTS

May 2022 Offerings

On May 16, 2022, the Company, issued and sold to several institutional and accredited investors in a registered direct offering (the “First Offering”) an aggregate of 3,837,280 shares of its common stock, at a purchase price of $0.60 per share. Pursuant to the securities purchase agreement, in a concurrent private placement, the Company also agreed to issue to these purchasers unregistered warrants to purchase up to an aggregate of 3,837,280 shares of common stock (the “Warrants”). The Warrants have an exercise price equal to $0.70 per share, will become exercisable six months from the date of issuance, and will expire five and one-half years from the date of issuance.

In addition, in a concurrent registered direct offering (the “Second Offering”), on May 16, 2022, the Company issued and sold to several institutional and accredited investors an aggregate of 8,162,720 shares of its common stock, at a purchase price of $0.60 per share. The Company also entered into a warrant amendment agreement (the “Warrant Amendment”) with each of the purchasers in the Second Offering. Under the Warrant Amendment, the Company agreed to amend certain existing warrants to purchase up to 16,325,433 shares of common stock that were previously issued in 2020 and 2021 to those purchasers, with exercise prices ranging from $1.00 to $2.00 per share (the “Existing Warrants”), were amended to: (i) lower the exercise price of the Existing Warrants to $0.70 per share, (ii) provide that the Existing Warrants, as amended, will not be exercisable until six months following the closing date of the Second Offering, and (iii) extend the original expiration date of the Existing Warrants by five and one-half years following the close of the Second Offering.

In each case, the Company paid to the placement agent an aggregate fee equal to 7.5% of the aggregate gross proceeds received by the Company in the offering and a management fee equal to 1% of the aggregate gross proceeds received by the Company in the offering and provided the placement agent expense allowance of $65,000 for non-accountable and other out-of-pocket expenses. In addition, the Company granted to the placement agent or its assigns warrants to purchase 7.5% of the shares sold to investors in the offering at an exercise price equal to 125% of the price of the shares in the transaction, or $0.75 per share, with a term of five years (the “Agent Warrants”). The Agent Warrants become exercisable six months after issuance.

Equity Line

On October 24, 2019, the Company entered into an equity purchase agreement with an investor, providing for an equity financing facility. Upon the terms and subject to the conditions in the purchase agreement, the investor is committed to purchase shares having an aggregate value of up to $15,000,000 of the Company’s common stock for a period of up to three years. The Company issued to the investor 104,651 commitment shares at a fair market value of $450,000 for entering into the agreement. From time to time during the three-year commitment period, provided that the closing conditions are satisfied, the Company may provide the investor with put notices to purchase a specified number of shares subject to certain limitations and conditions and at specified prices, which generally represent discounts to the market price of the common stock. As of June 30, 2022, there was $8,877,820 remaining in available balance under the equity line. In connection with the May 2022 Offerings, the Company agreed not to access the remaining balance for a period of one year after the closing date, or May 18, 2022. Additional issuances under this line will be dilutive. During the six months ended June 30, 2022, the Company issued 315,000 shares of its common stock valued at $236,009 pursuant to the equity line.

Equity Incentive Plan

The Company has an equity incentive plan, which allows the Company to issue incentive and non-qualified stock options to employees, directors, and consultants of the Company, where permitted under the plan. The exercise price for each stock option is determined by the Board of Directors. Vesting requirements are determined by the Board of Directors when granted and currently range from immediate to three years. Options under this plan have terms ranging from three to ten years.

The following summarizes transactions for stock options and warrants for the periods indicated:

	Stock Options					Warrants
	Number of Shares			Average Exercise Price		Number of Shares			Average Exercise Price
Outstanding at December 31, 2020		1,013,547		$	5.41		7,353,376		$	1.99
Issued		147,230			1.06		29,640,801			1.44
Forfeited		(92,593	)		8.64		-			-
Expired		-			-		(25,233	)		10.00
Exercised		(5,313	)		0.74		(5,269,059	)		0.86
Outstanding at December 31, 2021		1,062,871		$	4.83		31,699,885		$	1.66
Issued		14,075			0.51		21,062,714			0.70
Forfeited		-			-		(38,640	)		-
Expired		(41,701	)		13.41		(16,325,433	)		26.91
Outstanding at June 30, 2022		1,035,245		$	4.49		36,398,526		$	0.74

Stock-based compensation expense recognized for three months ended June 30, 2022 and 2021 was $39,383 and $33,243, respectively. Stock-based compensation expense recognized for six months ended June 30, 2022 and 2021 was $75,901 and $598,325, respectively The Company has $30,234 of unrecognized compensation expense related to non-vested stock options that is expected to be recognized over the next 21 months and $72,296 of unrecognized compensation expense related to non-vested restricted stock units that is expected to be recognized over the next 27 months. At June 30, 2022, there were 366,666 RSUs outstanding under the plan.