Note 4 - Stockholders' Equity, Stock Options and Warrants

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 4 – STOCKHOLDERS’ EQUITY, STOCK OPTIONS AND WARRANTS

Authorized Shares

At the special meeting on August 17, 2021, the stockholders approved a proposal to increase the number of authorized shares of common stock to 200,000,000 shares of common stock, $0.01 par value. The amendment to the certificate of incorporation to affect this increase was filed on August 17, 2021.

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.

2021 Offerings

In January and February 2021, the Company completed a series of five offerings, all of which were priced at-the-market under applicable NASDAQ rules. The first four offerings were registered direct offerings of common stock under its shelf registration statement, and in each such case, in a concurrent private placement, the Company also issued such investors one warrant to purchase common stock for each two shares purchased in the transaction. Following those four offerings, the Company completed a private placement of common stock, with each investor receiving one warrant to purchase common stock for each two shares purchased in the transaction. In June 2021, the Company completed a registered direct offering of common stock and warrants. The warrants became exercisable on the effective date of an increase in the number of shares of the Company’s authorized common stock, which occurred on August 17, 2021, and expire three years after the initial exercise date. In each case, each such investor warrant is exercisable immediately upon issuance and will expire five and one-half years from the issue date. 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 reimbursed the placement agent for certain non-accountable and 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, with a term of five years for the registered direct offerings (three years for the June 2021 offering) or five and one-half years for the private placement.

These 2021 offerings were as follows:

Offering Closing Date	Shares		Sale Price per Share*		Investor Warrants		Exercise Price per Share – investor Warrants		Placement Agent Warrants		Exercise Price per Share – Placement Agent Warrants		Gross Proceeds of Offering		Net Proceeds of Offering
January 12, 2021 (registered direct)		3,650,840	$	0.842		1,825,420	$	0.80		273,813	$	1.0525	$	3,074,007	$	2,731,767
January 21, 2021 (registered direct)		2,200,000	$	1.00		1,100,000	$	1.00		165,000	$	1.25	$	2,200,000	$	1,932,050
January 26, 2021 (registered direct)		3,414,970	$	1.20		1,707,485	$	1.20		256,123	$	1.50	$	4,097,964	$	3,668,687
February 16, 2021 (registered direct)		4,222,288	$	1.75		2,111,144	$	2.00		316,672	$	2.1875	$	7,389,004	$	6,679,989
February 23, 2021 (private placement)		9,043,766	$	1.95		4,521,883	$	2.00		678,282	$	2.4375	$	17,635,344	$	16,064,739
June 16, 2021 (registered direct)		15,520,911	$	1.375		15,520,911	$	1.25		1,164,068	$	1.71875	$	21,341,252	$	19,446,296
Total		38,057,775				26,786,843				2,853,958			$	55,737,571	$	50,523,528

* Sale price includes one share and a warrant to purchase one-half share (or one whole share in the case of the June 16, 2021 offering).

2021 Warrant Exercises

During the year ended December 31, 2021, the holders of outstanding investor warrants have exercised such warrants for the total purchase of 5,269,059 shares at a weighted average exercise price of $0.86 per share, for total proceeds of $4,513,871.

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. During the year ended December 31, 2022, the Company issued 315,000, shares of its common stock valued at $236,009 pursuant to the equity line. As of December 31, 2021, there was $9,113,829 of remaining available balance under the equity line, subject to shareholder approval required for additional purchases, as well as requirements for market conditions including trading volume and stock price, and subject to other limitations. 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. The equity line expired on October 23, 2022.

Equity Incentive Plan

The Company has an equity incentive plan, which allows issuance of incentive and non-qualified stock options, stock appreciation rights, stock awards, restricted stock, restricted stock units and performance awards to employees, directors and consultants of the Company, where permitted under the plan. The exercise price for each stock option is determined by the market price on the date of issuance. Vesting requirements are determined by the Board of Directors when granted and currently range from immediate to three years. Options outstanding under this plan have a contractual life of ten years.

At the special meeting on August 17, 2021, the stockholders approved a proposal to increase the reserve shares of common stock authorized for issuance under the Amended and Restated 2012 Stock Incentive Plan by 1,500,000 to 3,250,000 reserve shares. On December 1, 2022 during the 2022 annual meeting of stockholders (the “Annual Meeting”), the stockholders approved a proposal to increase the reserve shares of common stock authorized for issuance under the Amended and Restated 2012 Stock Incentive Plan by 3,250,000 to 5,750,000 reserve shares.

Options and Warrants

ASC 718, Compensation – Stock Compensation, (“ASC 718”) requires that a company that issues equity as compensation needs to record compensation expense on its statements of net loss that corresponds to the estimated cost of those equity grants. ASC 718 requires companies to estimate the fair value of stock-based payment awards on the date of grant using an option-pricing model or other acceptable means.

The Company determines the grant date fair value of options and warrants using a Black-Scholes option valuation model based upon assumptions regarding risk-free interest rate, expected dividend rate, volatility and estimated term. See Note 1 – Summary of Significant Accounting Policies – Accounting Policies and Estimates.

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		31,970			0.42		21,062,714			0.70
Forfeited		(40,241	)		0.88		-			-
Expired		(73,540	)		10.42		(108,435	)		16.48
Cancelled		-			-		(16,325,433	)		1.51
Outstanding at December 31, 2022		981,060		$	4.58		36,328,731		$	1.13

At December 31, 2022, 953,635 stock options are fully vested and currently exercisable with a weighted average exercise price of $4.69 and a weighted average remaining term of 6.54 years. There are 36,328,731 warrants at December 31, 2022 that are fully vested and exercisable. At December 31, 2021, 949,615 stock options are fully vested and currently exercisable with a weighted average exercise price of $5.27 and a weighted average remaining term of 8.14 years.

During the year ended December 31, 2021, the Company issued 450,000 RSUs under the plan which have market, performance and service vesting conditions through January 1, 2024. 333,333 RSUs became vested during the year ended December 31, 2022 and 33,333 vested during the year ended December 31, 2021. At December 31, 2022, there were 83,334 RSUs outstanding under the plan.

For performance-based awards, the Company generally recognizes expense over the requisite service period unless there is a compelling reason to make it shorter and when performance-based conditions are considered probable to be satisfied. For market-based awards, we determine the grant-date fair value utilizing a Monte Carlo valuation model, which incorporates various assumptions including stock price volatility, expected term and risk-free interest rates. The stock-based compensation for performance-based awards is insignificant.

There were 31,699,885 warrants that are fully vested and exercisable as of December 31, 2021. Stock-based compensation recognized in 2022 and 2021 was $108,596 and $146,714, respectively.

Stock-based compensation recognized in 2022 and 2021 was $108,596 and $146,714, respectively. The Company has $16,045 of unrecognized compensation expense related to non-vested stock options and RSUs that are expected to be recognized over the next 23 months.

The following summarizes the status of options and warrants outstanding at December 31, 2022:

Range of Exercise Prices		Shares		Weighted Average Remaining Life
Options:
$	0.26 –0.81		266,382		8.10
$	1.02 –1.25		50,795		8.82
$	1.25 –1.64		318,686		5.99
$	2.610 –7.90		208,040		6.49
$	10.10 –5,962.50		137,157		4.55
Total			981,060
Warrants:
$	0.70 –0.80		21,626,850		4.83
$	0.84 –1.72		10,271,436		1.68
$	1.80 –2.18		2,758,881		3.37
$	2.25 –10.00		1,555,778		2.51
$	10.71 –22.50		115,786		2.25
Total			36,328,731

Stock options and warrants expire on various dates from March 2023 to December 2032.

Stock Options and Warrants Granted by the Company

The following table is the listing of outstanding stock options and warrants as of December 31, 2022 by year of grant:

Stock Options:

Year	Shares		Price
2013		123	$	1.54	–		5,962.50
2014		84		1.54	–		3,468.75
2015		239		1.54	–		862.50
2016		6,641		1.54	–		42.50
2017		214,555		1.54	–		21.00
2018		57,868		1.54	–		13.50
2019		306,663		1.54	–		7.50
2020		297,669		0.73	–		3.48
2021		76,812		0.72	–		1.47
2022		20,406		0.26	–		0.7361
Total		981,060	$	0.40	–	$	5,962.50

Warrants:

Year	Shares		Price
2018		196,946	$	8.36	–		13.13
2019		1,690,286		0.85	–		11.80
2020		1,311,731		0.85	–		2.99
2021		12,067,054		0.80	–		2.44
2022		21,062,714		0.70	–		0.75
Total		36,328,731	$	0.70	–	$	13.13