Note 9 - Stockholders' Equity

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE 9 — STOCKHOLDERS’ EQUITY

Public Offering and Private Placement

In the second quarter of 2020, the Company completed two public offerings. In April 2020, a Common Stock offering generated gross proceeds of approximately $5.1 million (5,420,000 common shares and 2,710,000 warrants). The combined price of the shares and warrants was $0.95 per share. The warrants are exercisable at a price of $1.20 per share and have an expiration of three years from the issue date. In June 2020, the Company completed a second Common Stock offering generating gross proceeds of approximately $14.6 million (6,770,000 common shares and 3,749,000 warrants). The combined price of the shares and warrants was $2.15 per share. The warrants are exercisable at $2.60 and expire three years from the issue date.

Warrants

The following table summarizes information about shares issuable under warrants outstanding as of September 30, 2021 :

	Warrant shares outstanding			Weighted Average exercise price		Weighted Average remaining life		Intrinsic value
Outstanding at January 1, 2021		6,369,396		$	1.97	$	2.48	$	2,784,117
Issued		-
Exercised		(2,004,926	)		1.57		-		-
Expired or cancelled		-			-		-		-
Outstanding and exercisable at September 30, 2021		4,364,470		$	2.15	$	1.76	$	1,088,192

The following table summarizes information about shares issuable under warrants outstanding as of  September 30, 2020

	Warrant shares outstanding			Weighted Average exercise price		Weighted Average remaining life		Intrinsic value
Outstanding at January 1, 2020		1,074,171		$	0.50	$	4.10	$	956,012
Issued		6,459,000			2.01		3.00		-
Exercised		(1,133,975	)		0.87		-		-
Expired or cancelled		-			-		-		-
Outstanding and exercisable at September 30, 2020		6,399,196		$	1.95	$	2.73	$	880,449

Shares to Be Issued

As of September 30, 2021 and 2020, there were 1,861,639 and 2,202,229 shares, respectively, the issuance of which has been deferred to certain executives and employees of Milestone Scientific.  

As of September 30, 2021 and 2020, there were 144,024 and 149,498 shares, respectively, to be issued to non-employees, that will be issued for services rendered. In each case, the number of shares was fixed at the date of grant and were fully vested upon grant date.

The following table summarizes information about shares to be issued on September 30, 2021 and 2020, respectively:

	September 30, 2021			September 30, 2020
Shares-to-be-issued, outstanding January 1, 2021 and 2020, respectively		2,428,329			2,375,762
Granted in current period		33,238			363,956
Issued in current period		(455,906	)		(387,991	)
Shares-to be issued outstanding September 30, 2021 and 2020, respectively		2,005,661			2,351,727

Stock Option Plans

In June 2011, the stockholders of Milestone Scientific approved the 2011 Stock Option Plan (the "2011 Plan") which originally provided for stock options to our employees, directors and consultants to purchase, and restricted common stock, restricted stock units, and other awards for, up to 2,000,000 shares of common stock and was later amended in 2016 to increase the maximum number of shares reserved for grant to 4,000,000. Generally, options become exercisable over a three-year period from the grant date and expire five years after the date of grant. As of September 30, 2021 and December 31, 2020, the Company had 2,471,659, and 424,425, respectively, remaining options available for grants under the 2011 Plan.

The Milestone Scientific Inc. 2020 Equity Compensation Plan, as amended and restated (the "2020 Plan"), provides for awards of restricted common, stock restricted stock units, options to purchase and other awards, up to a maximum 4,000,000 shares of common stock and expires in June 2031. Options may be granted to employees, directors, and consultants of Milestone Scientific for the purchase of shares of common stock at a price not less than the fair market value of common stock on the date of grant. In general, options become exercisable over a three-year period from the grant date and expire five years after the date of grant. 

On April 8, 2021, as part of its Succession Plan going into effect on April 23, 2021, the Company announced that Leonard Osser, the Interim Chief Executive Officer, would be accepting the role of Vice Chairman of the Board of Directors. As part of accepting this role, he would be granted options to purchase 2,000,000 shares of common stock, exercisable at the fair market value of the common stock on the date of grant, vesting over the five-year period after he steps down as Interim Chief Executive Officer of the Company or ten years from the date of grant, whichever shall end first. The options were issued pursuant to the 2020 Plan.

Milestone Scientific recognizes compensation expense over the requisite service period and in the case of performance-based options over the period of the expected performance. For the nine months ended September 30, 2021 and 2020, Milestone Scientific recognized approximately $451,000 and $68,000 of total employee compensation cost, respectively. As of September 30, 2021 there was approximately $3.3 million of total unrecognized compensation cost related to non-vested options. Milestone Scientific expects to recognize these costs over a weighted average period of 4.1 years.

A summary of option activity for employees under the plans and changes during the nine months ended September 30, 2021 and 2020 is presented below:     

	Number of Options			Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Options outstanding January 1, 2021		1,953,443			1.88		3.09		476,964
Granted		2,032,175			2.48		9.48		-
Exercised during 2021		(485,247	)		1.59		-		-
Forfeited or expired		(351,759	)		1.99		-		-
Options outstanding September 30, 2021		3,148,612			2.30		7.14		35,776
Exercisable, September 30, 2021		604,817			1.95		1.90		35,776

	Number of Options			Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Options outstanding January 1, 2020		1,212,442			1.61		2.00		-
Granted		80,000			-		-		-
Exercised during 2020		-			-		-		-
Forfeited or expired		(289,464	)		3.89		-		-
		1,002,978			1.56		1.59		114,570
Exercisable, September 30, 2020		828,370			1.55		1.38		88,983

The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the nine month period ended September 30, 2021 risk free interest rate of 0.19%-1.15% , Volatility of 69.1%-94% (which is based on the Company’s historical volatility over the expected term), expected term of 3-6.5 years, 0% dividend rate and closing price of the stock of $2.46-$3.79.

A summary of option activity for non-employees under the plans and changes during the nine months ended September 30, 2021 and 2020 is presented below:   

	Number of Options			Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Options outstanding January 1, 2021		74,997			1.41		3.18		54,748
Granted		16,666			3.94		4.48
Exercised during 2021		(8,333	)		2.34		2.34		-
Options outstanding September 30, 2021		83,330			1.83		3.09		38,082
Exercisable, September 30, 2021		55,553			1.09		2.19		32,860

	Number of Options		Weighted Averaged Exercise Price $		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Options Value $
Options outstanding January 1, 2020		49,998		1.43		2.94		19,333
Granted		24,999		1.70		3.00		-
Exercised during 2020		-		-		-		-
Options outstanding September 30, 2020		74,997		1.52		2.86		19,333
Exercisable, September 30, 2020		52,776		1.57		2.24		14,666

The fair value of the non-employee options was estimated on the date of grant using the Black Scholes option-pricing model at the date of grant. For the nine months ended  September 30, 2021, Milestone Scientific recognized approximately $20,000 expense related to non-employee options. For the nine months ended  September 30, 2020, Milestone Scientific recognized approximately $9,000 and expense related to non-employee options.

The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the nine month ended September 30, 2021, risk free interest rate of 0.3 %, Volatility of 97.69% to 98.09%, expected term of 2.9 years, 0%  dividend rate and closing price of the stock of $3.57 to $4.30. 

The information below summarizes the restricted stock activity for the nine months ended September 30, 2021:

Restricted Stock Awards	Shares			Weighted Average Grant-Date Fair Value per Award
Non-vested as December 31, 2020		-		$	-
Granted		89,285			2.52
Vested		-			-
Cancelled		(11,458	)		-
Non-vested as September 30, 2021		77,827		$	2.52

For the three and nine months ended September 30, 2021, stock compensation expense for restricted stock was $16,667 and $37,500, respectively.