9. STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

Stockholders' Equity:

STOCKHOLDERS' EQUITY

The Company’s authorized capital consists of 150,000,000 shares of Common Stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”).

2018 Private Offering

On October 30, 2018 the Company consummated a private offering of 4,561,074 units (“Units”) for $3.00 per Unit. Each Unit consists of one share of common stock and one detachable two-year warrant to purchase one share of common stock at an exercise price of $5.00 per share. The offering resulted in the receipt of gross cash proceeds of $13,683,222 and net cash proceeds of $12,140,786 after deduction of commissions and offering costs. One officer, Elwood G. Norris, purchased 333,334 of the Units for cash of $1,000,000 on the same terms.

In connection with the offering the Company also issued placement agent warrants exercisable for 456,107 shares of common stock for two years at an exercise price of $3.00 per share. The estimated fair value of these warrants was $664,427, as determined using the Black-Scholes methodology (assuming estimated volatility of 49%, risk-free interest rate of 2.84%, and expected dividend yield of 0.0%). This amount was recorded as both an increase to additional paid in capital and as a non-cash issuance cost of the offering.

2019 Follow-On Public Offering

On June 18, 2019, the Company consummated the June 2019 Follow-On Offering, pursuant to which a total of 1,923,076 Units were offered and sold at the public offering price of $6.50 per Unit. Each Unit sold consisted of one share of Common Stock and one detachable two-year warrant to purchase one share of Common Stock at an exercise price of $6.50 per share. The offering resulted in the Company’s receipt of gross cash proceeds of $12.5 million, or net cash proceeds of $11.35 million after deduction of commissions and offering costs.

In connection with the June 2019 Follow-On Offering, the Company also issued placement agent warrants exercisable for 153,846 shares of Common Stock for two years at an exercise price of $8.125 per share. The estimated fair value of these warrants was $205,894, as determined using the Black-Scholes methodology (assuming estimated volatility of 49%, risk-free interest rate of 1.86%, and expected dividend yield of 0.0%). This amount was recorded as both an increase to additional paid in capital and as a non-cash issuance cost of the offering.

Summary of Stock Purchase Warrants

The following table summarizes warrant activity during the years ended December 31, 2018 and 2019:

	Number			Average Purchase Price Per Share
Stock purchase warrants issued October 30, 2018		5,017,181		$	4.82
Stock purchase warrants exercised		-
Shares purchasable under outstanding warrants at December 31, 2018		5,017,181		$	4.82
Stock purchase warrants issued		2,076,922		$	6.62
Stock purchase warrants exercised		(473,483	)	$	4.46
Shares purchasable under outstanding warrants at December 31, 2019		6,620,620		$	5.41

The Company determined that the warrants issued in connection with the 2018 Private Offering and the June 2019 Follow-On Offering should be classified as equity in accordance with ASC 480. However, changes in director and officer ownership or other factors in future periods could require reclassification of outstanding warrants as a liability with changes in value thereafter reflected in the statement of operations.

The Company has outstanding Common Stock purchase warrants as of December 31, 2019 as follows:

	Number of		Exercise Price
Description	Common Shares		Per Share		Expiration Date
Purchase Warrants (1)		4,215,240	$	5.00	October 30, 2020
Agent Warrants		328,458	$	3.00	October 30, 2020
Purchase Warrants		1,923,076	$	6.50	June 18, 2021
Agent Warrants		153,846	$	8.125	June 18, 2021

(1)333,334 warrants are held by a family trust of officer Elwood G. Norris.

Subsequent to December 31, 2019 a total of 129,950 warrants were exercised for cash proceeds of $628,650.