Note

– Equity

Initial Public Offering

April 3, 2018,

the Company completed its IPO, whereby the Company sold an aggregate of

1,280,000

shares of its common stock, at

$5.00

per share, resulting in estimated net proceeds of

$5,025,000

after underwriting discounts, commissions and estimated offering expenses of

$895,000.

Additionally, the underwriters have been issued warrants to purchase common stock equal to

of the securities sold in the IPO, or

38,400

shares of Common Stock.

Private Investment

May 9, 2018,

the Company completed a private placement, whereby the Company sold to investors an aggregate of

828,500

shares of its common stock at

$12.07

per share and warrants to purchase up to

621,376

shares of the Company’s common stock with an initial exercise price equal to

$15.62

per share. The per share price and warrant exercise price were subject to automatic adjustment, if applicable, based on the volume weighted average daily prices on the

three

days after the registration statement registering the resale of the shares of common stock sold to the investors and the shares of the common stock issuable upon exercise of the warrant was declared effective and the Company's shareholders approved the transaction. In

event would the purchase price or warrant exercise price be less than

$4.25

per share. The Company received net proceeds of

$9,250,000

after commissions and expenses.

August 1, 2018,

following the effectiveness of our Registration Statement on Form S-

(File

No.

333

225090

) and pursuant to the terms of the Purchase Agreement and Warrants, we issued to the original investors of the private placement an aggregate of

1,174,440

additional shares of our common stock and the Warrants became exercisable for a total of

2,283,740

shares of our common stock with an exercise price equal to

$4.25

per share.

Registered Direct Offering

November 22, 2019,

the Company completed a registered direct offering (“RDO”), whereby the Company sold to investors an aggregate of

3,167,986

shares of the Company’s common stock at

$0.40

per share and warrants to purchase up to

3,167,986

shares of the Company’s common stock at an exercise price of

$0.46

per share. The warrants are

first

exercisable on

May 22, 2020.

The Company received net proceeds of approximately

$1,093,000

after commissions and expenses. Additionally, the underwriters have been issued warrants to purchase common stock equal to

of the aggregate number of shares of Common Stock issued and issuable pursuant to the RDO (including shares underlying any warrants and options), or

443,518

shares of Common Stock at an exercise price of

125%

of the RDO price per share, or

$0.58

per share.

In connection with the closing of the Company’s RDO, the Company further adjusted the warrants to purchase up to

2,283,740

shares of the Company's common stock, that had been issued as part of the

May 9, 2018

Private Placement and adjusted in

August 2018

to (i) reduce the exercise price for each share from

$4.25

per share to

$0.46

per share, (ii) extended the exercisable date of these warrants to

May

22,

2020,

and (iii) extended the termination date of the warrants by

six

months and

one

day.

Stock Issuances

During the year ended

December 31, 2019

, we issued (i)

3,167,986

shares of Common Stock from the Company’s RDO for cash of

$1,267,194,

(ii)

506,707

shares of Common Stock for service provided to us, valued at

$469,588,

and (iii) we issued

350,000

shares of Common Stock held in abeyance for an investor in the Private Placement.

During the year ended

December 31, 2018

, we issued (i)

200,009

shares of Common Stock, taking into account the forward-split ratio from the Company’s IPO, for service provided to us, valued at

$553,303,

and we issued (ii)

3,282,940

shares of Common Stock in the Company’s IPO and Private Placement for cash of

$16,400,000.

Preferred Stock

In connection with the Company’s IPO, all Preferred Stock included in Series A through Series G, totaling

1,394,953

shares at

December 31, 2018

, were converted into

9,324,177

shares of Common Stock in association with the forward-split (See Capital Stock Note). Upon the completion of the IPO, the Company is authorized to issue

10,000,000

shares of Preferred Stock at a par value of

$0.001

per share,

none

of which are outstanding as of

December 31, 2019

Common Stock

Upon the completion of the IPO, all of the Company’s non-voting Common Stock automatically converted into Voting Common Stock on a

one

-to-

one

basis. Immediately following the completion of the IPO, the Company is authorized to issue

200,000,000

shares of Common Stock at a par value of

$0.001

per share, all of which is Voting Common Stock. There were

19,263,841

shares of Common Stock outstanding at

December 31, 2019

Common Stock Purchase Warrants

Common Stock purchase warrant activity for the years ended

December 31, 2019

and

2018

respectively are as follows:

	Number of Warrants			Weighted Avg. Exercise Price
Outstanding at January 1, 2018		748,060		$	5.17
Issued		3,166,492			1.74
Cancelled or expired		(15,385	)		—
Exercised		(34,615	)		—
Outstanding at December 31, 2018		3,864,552		$	2.36
Issued		3,611,504			0.47
Cancelled or expired		—			—
Exercised		—			—
Outstanding at December 31, 2019		7,476,056		$	1.45

In the year ending

December 31, 2019

, we (i) issued warrants to purchase

3,167,986

shares of our Common Stock at

$0.46

per share to the investors in the Company’s RDO, (ii) issued warrants to purchase

443,518

shares of our Common Stock at

$0.58

per share to the underwriter of the Company’s RDO, and (iii) reduced the purchase price of the warrants, issued to investors in the Company’s Private Placement in

May 2018,

to purchase

2,283,740

shares of the Company’s common stock from

$4.25

per share to

$0.46

per share.

In the year ended

December

31,

2018,

we granted (i) warrants to purchase

38,400

shares of our Common Stock at

$6.25

per share to the underwriter of the Company’s IPO and (ii) warrants to purchase

2,283,740

shares of our Common Stock at

$4.25

per share to the investors in the Company’s private placement. We also granted warrants to purchase up to

844,352

shares of Common Stock in consideration of services valued at

$2,203,506

including (i) warrants to purchase up to

425,000

shares of Common Stock to Cancer Revolution, LLC, (ii) warrants to purchase up to

225,000

shares of Common Stock to Cancer Biotech, LLC, (iii) warrants to purchase up to

144,352

shares of Common Stock to Inception Capital Management, LLC, and (iv) warrants to purchase up to

50,000

shares of Common Stock to World Wide Holdings, LLC at

$5.00

per share.

January 29, 2018,

the Company entered into an agreement with a consultant whereby the Company agreed to grant warrants to purchase

6,000

shares of our Common Stock at

$5.00

per share in consideration of services valued at

$30,000

provided to the company. As of

December 31, 2019,

the Company has

not

issued these warrant shares.

September 20, 2018,

World Wide Holdings, LLC exercised its warrant to purchase

50,000

shares of our Common Stock via a cashless exercise option. As a result, the Company issued

34,615

shares of Common Stock to World Wide Holdings in exchange for the cashless exercise of the warrant and the remaining

15,385

shares of Common Stock were cancelled.

2018

Equity Incentive Plan

The Company’s board of directors and stockholders have approved and adopted the Company’s

2018

Equity Incentive Plan (

“2018

Plan”), which became effective on the completion of the IPO on

April 3, 2018.

The

2018

Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, other forms of equity compensation and performance cash awards. ISOs

may

be granted only to employees. All other awards

may

be granted to employees, including officers, and to the Company’s non-employee directors and consultants, and affiliates.

A total of

4,160,000

shares of Common Stock are available under the

2018

Plan, which includes

554,963

shares of Common Stock reserved for issuance under our

2009

Equity Incentive Plan that were added to the

2018

Plan.

further grants will be made under the

2009

Plan and any shares subject to outstanding stock options under the

2009

Plan that would otherwise be returned to the

2009

Plan will instead be added to the shares initially reserved under the

2018

Plan.

In addition, the number of shares of Common Stock reserved for issuance under the

2018

Plan will automatically increase on

January 1

of each year, beginning on

January 1, 2019

of the total number of shares of the Company’s Common Stock outstanding on

December 31

of the preceding calendar year, or a lesser number of shares determined by the administrator of the

2018

Plan. On

January 1, 2019

and

2020,

the number of shares of common stock reserved for issuance under the

2018

Plan was increased by an aggregate of

761,957

and

963,192

shares, respectively.

2018

Employee Stock Purchase Plan

The Company’s board of directors and stockholders have approved and adopted the Company’s

2018

Employee Stock Purchase Plan (“ESPP”), which became effective on the completion of the IPO on

April 3, 2018.

The ESPP authorizes the issuance of

208,500

shares of the Company’s common stock pursuant to purchase rights granted to our eligible employees. The number of shares of common stock reserved for issuance will automatically increase on

January 1

of each calendar year, from

January 1, 2019

by the lesser of

of the total number of shares of our common stock outstanding on

December 31

of the preceding calendar year or a number determined by the administrator of the ESPP. The administrator of the ESPP, which is our Board of Directors, determined

not

to increase the number of shares for issuance under the ESPP on

January 1, 2019

January 1, 2020

due to the ESPP

not

currently being utilized.

Stock Options

As of

December 31, 2019,

the Company has outstanding stock options to purchase

5,982,923

shares of Common Stock that have been granted to various employees, vendors and independent contractors. These options can vest immediately or over periods ranging from

twelve

(

) to

forty-eight

(

) months, are exercisable for a period of

ten

years, and enable the holders to purchase shares of our Common Stock at exercise prices ranging from

$0.001

$9.80.

The per-share fair values of these options range from

$0.001

$7.93,

based on Black-Scholes-Merton pricing models with the following assumptions:

Expected term:		10 years
Risk-free rate:		1.51% – 2.63%
Volatility:		75.98% – 79.89%
Dividend yield:		0%

In the year ending

December 31, 2019,

Company granted stock options to employees and consultants to purchase

1,744,300

shares of Common Stock with exercise prices ranging from

$0.30

$1.62

per share and cancelled options to purchase

297,058

shares of Common Stock due to the inactivity of service providers.

In the year ended

December 31, 2018,

the Company granted stock options to employees and consultants to purchase

2,034,525

shares of Common Stock with exercise prices ranging from

$2.15

$9.80

per share and cancelled options to purchase

127,593

shares of Common Stock due to the inactivity of the service providers.

The weighted average remaining contractual term for the outstanding options at

December 31, 2019

and

2018

7.45

and

7.74

years, respectively.

Stock option activity for the years ended

December 31, 2019

and

2018

, respectively, is as follows:

	Number of Shares			Weighted Avg. Exercise Price
Outstanding at January 1, 2018		2,628,749		$	1.31
Options granted		2,034,525			6.21
Options exercised		—			—
Options expired		(127,593	)		—
Outstanding at December 31, 2018		4,535,681		$	3.31
Options granted		1,744,300			1.48
Options exercised		—			—
Options expired		(297,058	)		—
Outstanding at December 31, 2019		5,982,923		$	2.66

Share-Based Compensation

As of

December 31, 2019,

the Company’s total compensation cost related to nonvested time-based stock option awards granted to employees and board members and

not

yet recognized was approximately

$4.5

million. The Company expects to record this stock-based compensation expense over the next

two

years, in the amount of

$4.3

million with respect to stock option awards using a graded vesting method and

$0.2

million with respect to stock option awards using a cliff vesting method. As of

December 31, 2019,

the weighted average term over which these expenses are expected to be recognized are

1.86

years and

0.47

years, for stock options granted using a graded vesting method and a cliff vesting method respectively.

As of

December 31, 2019,

the Company’s total compensation cost related to nonvested performance-based stock option awards granted to an employee and

not

yet recognized was approximately

$1.3

million. The entirety of this award

may

be recognized and recorded, upon the achievement of certain milestones, within

1.35

years from

December 31, 2019.

In the year ended

December 31, 2019,

the Company's total share-based compensation was approximately

$3.5

million with approximately

$3.0

million representing the vesting of options issued to service providers, employees, and board members.