Note 4 - Stockholders' Equity

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 4. STOCKHOLDERS’ EQUITY

Common Stock

On March 5, 2021, the Company completed an underwritten public offering in which the Company issued and sold 7,875,000 shares of the Company’s common stock at a price to the public of $8.00 per share (the "Offering"). Gross proceeds of the Offering were $63 million before deducting underwriting discounts and commissions and other offering expenses payable by the Company and resulted in net proceeds of $59.0 million after deducting underwriting discounts and commissions and other offering expenses payable by the Company. The underwriters retained a customary 30-day overallotment option to purchase up to 1,181,250 shares of common stock at the public offering price, less underwriting discounts and commission. The overallotment option was exercised on March 16, 2021 for 1,049,700 shares with gross proceeds of $8.4 million and net proceeds of $7.9 million after deducting underwriting discounts and commissions and other offering expenses payable by the Company.

Warrants

In June 2017, the Company issued stock purchase warrants to purchase 2,646,091 shares of common stock at an exercise price of $7.50 per share. The warrants, exercisable beginning six months and one day after issuance, have a 10-year term and are liability classified due to the holders’ right to require the Company to repurchase the warrants for cash upon certain deferred fundamental transactions ( “June 2017 Warrants”). See Note 7 for the fair value measurement of the warrant liability.  

In connection with the entry into the Term Loan Facility, the Company issued to SVB and one of its affiliates stock purchase warrants to purchase an aggregate of 58,502 shares of the Company’s common stock at an exercise price of $6.41 per share. These warrants are immediately exercisable, have a 10-year term, contain a cashless exercise provision, and are classified in equity.

In November 2020, the Company issued warrants to purchase 5,230,910 shares of common stock which have an exercise price of $4.31 per share, contain a cashless exercise provision, will expire five years from the date of issuance and are equity classified (the “November 2020 Warrants”).

The following is a summary of warrant activity for the three months ended March 31, 2022:

Description	Outstanding 12/31/2021		Exercised		Outstanding 3/31/22		Exercise Price		Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
June 2017 Warrants		2,457,501		-		2,457,501	$	7.50		5.2	$	-
November 2020 Warrants		4,109,344		-		4,109,344	$	4.31		3.6	$	-
SVB Warrants		29,251		-		29,251	$	6.41		5.4	$	-
Total Warrants		6,596,096		-		6,596,096	$	4.47		4.2		-

Stock Options

The following is a summary of stock option activity for the three months ended March 31, 2022:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2021		3,498,297		$	10.07		7.27	$	7,456
Granted		760,000			5.07
Exercised, cancelled, or forfeited		(69,291	)		14.44
Outstanding, March 31, 2022		4,189,006		$	9.08		7.64	$	946
Exercisable, March 31, 2022		2,116,338		$	10.75		6.1	$	629

On September 13, 2018, the Company’s stockholders approved the 2018 Incentive Plan (as amended from time to time, the “2018 Plan”). The 2018 Plan provides that the Company may grant equity interests to employees, consultants, and members of the Board of Directors in the form of incentive and nonqualified stock options, restricted stock and restricted stock units, stock appreciation rights and various other forms of stock-based awards. On November 10, 2020, the Company held its 2020 annual meeting of stockholders at which the Company’s stockholders approved an amendment to the 2018 Plan, to increase the number of shares of the Company’s common stock issuable under the 2018 Plan by 1,750,000 shares. On November 9, 2021, the Company held its 2021 annual meeting of stockholders at which the Company’s stockholders approved an amendment to the 2018 Plan to increase the number of shares of the Company’s common stock issuable under the 2018 Plan by 4,000,000 shares (the “Plan Amendment”). The Board of Directors of the Company previously approved the Plan Amendment on August 3, 2021, subject to stockholder approval. There are 7,000,000 shares authorized for issuance pursuant to the 2018 Plan, of which 3,669,650 shares are available for issuance under the 2018 Plan.

Prior to the approval of the 2018 Plan, the Company granted options to employees, directors, advisors, and consultants from two former plans – the Old PLx Omnibus Stock Option Plan and the Dipexium 2013 Equity Incentive Plan (the “Prior Plans”). Upon the adoption of the 2018 Plan, the Prior Plans were frozen, and no new awards can be issued pursuant to the Prior Plans. The Company is no longer authorized to grant awards under these two plans.

The Company granted 760,000 options during the three months ended March 31, 2022 with an aggregate fair value of $2.7 million calculated using the Black-Scholes model on the grant date. Variables used in the Black-Scholes model include: (1) discount rate ranging from 1.6% - 1.9%, (2) expected life of 6 years, (3) expected volatility of 82%, and (4) zero expected dividends. As of March 31, 2022, the Company had $9.0 million in unamortized expense related to unvested options which is expected to be expensed over a weighted average of 2.2 years.

During the three months ended March 31, 2022 and 2021, the Company recorded $1.1 million and $0.6 million, respectively, in total stock-based compensation expense related to the stock options. Substantially all stock-based compensation expense is classified as selling, marketing and administrative expenses in the accompanying unaudited consolidated statements of operations.