Note 9 - Stockholders' Equity

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 9: STOCKHOLDERS’ EQUITY

The Company is authorized to issue a total of 185,000,000 shares of stock consisting of 175,000,000 shares of common stock, par value $0.18 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. The Company has designated 750,000 shares of Series A junior participating preferred stock, par value $0.001 per share, 4,000 shares of Series A convertible preferred stock, par value $0.001 per share, 25,000 shares of Series B convertible preferred stock, par value $0.001 and 5,425 shares of Series C convertible preferred stock, par value $0.001 per share, through the filings of certificates of designation with the Delaware Secretary of State. No shares of Series A junior participating preferred stock, no shares of Series A convertible preferred stock and no shares of Series C convertible preferred stock are outstanding as of September 30, 2021 and December 31, 2020.

2021 Financing Transactions

On January 6, 2021, the Company entered into a securities purchase agreement with certain institutional and accredited investors relating to the offering and sale of 23,850,000 shares of Company common stock, par value $0.18 per share and warrants to purchase 17,887,500 shares of common stock. The combined purchase price for one share of common stock and a warrant to purchase 0.75 shares of common stock was $1.055. Subject to certain ownership limitations, the warrants are exercisable upon issuance. The warrants will expire on the 4.5 year anniversary of the date of issuance and have an exercise price of $1.055 per share. The common stock and warrants have been registered under the Securities Act of 1933, as amended. The Company paid the placement agent a cash fee of 7% of the aggregate gross proceeds and reimbursed the placement agent for expenses, including legal fees, up to $45,000. The offering closed on January 8, 2021 with net proceeds to the Company from the offering of approximately $23.3 million, after deducting fees and expenses.

On March 22, 2021, the Company entered into a securities purchase agreement with certain institutional and accredited investors relating to the offering and sale of 17,361,100 shares of our common stock, par value $0.18 per share. Concurrently with the offering, and pursuant to the purchase agreement, the Company also commenced a private placement whereby it issued and sold warrants exercisable for an aggregate of up to 13,020,825 shares of common stock. The combined purchase price for one share of common stock and a purchase warrant to purchase 0.75 shares of common stock is $2.88. Subject to certain ownership limitations, the warrants are exercisable upon issuance. The warrants will expire on the 4.5 year anniversary of the date of issuance. Subsequent to the issuance of the warrants, the Company filed a registration statement on Form S-3 (File No. 333-255411) to cover the sale of an aggregate of 13,020,825 shares of common stock issuable upon exercise of the warrants which was declared effective by the SEC on  April 29, 2021. The Company paid the placement agent a cash fee of 7% of the aggregate gross proceeds of the offering and the private placement. The Company also agreed to reimburse the placement agent for expenses, including the legal fees, up to $45,000. The net proceeds to the Company from the offering and the private placement are approximately $46.4 million, after deducting fees and expenses.

2021 Warrants 

The terms and conditions of the warrants included in the 2021 offerings are as follows:

Exercisability. Each warrant is exercisable at any time and will expire 4.5 years from the date of issuance. The warrants are exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice and payment in full for the number of shares of our common stock purchased upon such exercise, except in the case of a cashless exercise as discussed below.

The number of shares of common stock issuable upon exercise of the warrants is subject to adjustment in certain circumstances, including a stock split of, stock dividend on, or a subdivision, combination or recapitalization of the common stock. Upon the merger, consolidation, sale of substantially all of our assets, or other similar transaction, the holders of warrants shall, at the option of the Company, be required to exercise the warrants immediately prior to the closing of the transaction, or such warrants shall automatically expire. Upon such exercise, the holders of warrants shall participate on the same basis as the holders of common stock in connection with the transaction.

Cashless Exercise. If at any time there is no effective registration statement registering, or the prospectus contained therein is not available for issuance of, the shares issuable upon exercise of the warrant, the holder may exercise the warrant on a cashless basis. When exercised on a cashless basis, a portion of the warrant is cancelled in payment of the purchase price payable in respect of the number of shares of our common stock purchasable upon such exercise.

Exercise Price. Each warrant represents the right to purchase one share of common stock at an exercise price of $1.055 per share for the January 2021 financing or $2.88 per share for the March 2021 financing. In addition, the exercise price per share is subject to adjustment for stock dividends, distributions, subdivisions, combinations, or reclassifications, and for certain dilutive issuances. Subject to limited exceptions, a holder of warrants will not have the right to exercise any portion of the warrant to the extent that, after giving effect to the exercise, the holder, together with its affiliates, and any other person acting as a group together with the holder or any of its affiliates, would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving effect to its exercise. The holder, upon notice to the Company, may increase or decrease the beneficial ownership limitation provisions of the warrant, provided that in no event shall the limitation exceed 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise of the warrant.

Transferability. Subject to applicable laws and restrictions, a holder may transfer a warrant upon surrender of the warrant to us with a completed and signed assignment in the form attached to the warrant. The transferring holder will be responsible for any tax that liability that may arise as a result of the transfer.

Exchange Listing. We do not intend to apply to list the warrants on any securities exchange or recognized trading system.

Rights as Stockholder. Except as set forth in the warrant, the holder of a warrant, solely in such holder’s capacity as a holder of a warrant, will not be entitled to vote, to receive dividends, or to any of the other rights of our stockholders.

Warrants Outstanding

As of September 30, 2021, warrants to purchase 22,276,844 shares of common stock were outstanding including: 

	Outstanding Warrants to Purchase Shares		Exercise Price		Expiration date
May 2018 warrants		762,344	$	4.05	May 30, 2022
December 2020 warrants		6,489,500	$	1.00	December 11, 2024-June 21, 2025
January 2021 warrants		4,500,000	$	1.055	July 8, 2025
March 2021 warrants		10,525,000	$	2.88	September 22, 2025
		22,276,844

Warrant Activity

During the three and nine months ended September 30, 2021, the Company received $862,466 and $43,818,409 respectively, from the exercises of warrants. The warrant exercise resulted in the reduction of approximately 296,000 and 37,452,000 warrants, respectively, for the three and nine months ended September 30, 2021 and the issuance of approximately 296,000 and 37,452,000 shares of common stock for the same period. There were no warrant exercises during the three or nine months ended September 30, 2020.

Conversion of Series B Convertible Preferred Stock

During the three and nine months ended September 30, 2021, certain holders of the Series B convertible preferred stock exercised their conversion option and converted an aggregate of 3 and 37 shares, into 854 and 10,516 shares of the Company's common stock, respectively. During the three and nine months ended September 30, 2020, certain holders of the Series B convertible preferred stock exercised their conversion option and converted an aggregate of 3 and 48 shares, into 853 and 13,639 shares of the Company's common stock, respectively.