Quarterly report pursuant to Section 13 or 15(d)

Note 4 - Stockholders' Equity

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Note 4 - Stockholders' Equity
3 Months Ended
Mar. 31, 2019
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]
Note
4.
   Stockholders’ Equity
 
We have granted share-based compensation awards to employees, board members and service providers. Awards
may
consist of common stock, restricted common stock, restricted common stock units, common stock purchase warrants, or common stock purchase options. Our common stock purchase options and stock purchase warrants have lives of up to
ten
years from the grant date. Awards vest either upon the grant date or over varying periods of time. The stock options provide for exercise prices equal to or greater than the fair value of the common stock at the date of the grant. Restricted stock units grant the holder the right to receive fully paid common shares with various restrictions on the holder’s ability to transfer the shares. As of
March 31, 2019,
we have approximately
10.9
million shares of common stock reserved for issuance upon the granting of awards under our equity incentive plans and the exercise of outstanding equity-linked instruments.
 
We typically record share-based compensation expense on a straight-line basis over the requisite service period. Share-based compensation expenses included in the statements of operations are as follows:
 
    Three Months Ended March 31
      2019       2018  
         
Research and development expenses   $
200,337
    $
64,583
 
General and administrative expenses    
137,629
     
174,252
 
Total   $
337,966
    $
238,835
 
 
Stock Options
A summary of stock option activity and related information for the
three
months ended
March 31, 2019
follows:
 
      Number of Options       Weighted-Average Exercise Price      
Weighted-Average Remaining Contractual
Life (in years)
      Aggregate Intrinsic Value  
                 
Outstanding at January 1, 2019    
1,632,662
    $
10.78
     
5.1
    $
-
 
Granted    
800,000
    $
0.43
     
 
 
Exercised    
-
    $
-
     
 
    $
-
 
Forfeited    
-
    $
-
           
 
 
Outstanding at March 31 2019    
2,432,662
    $
7.37
     
6.4
    $
19,040
 
                                 
Exercisable at March 31, 2019    
1,795,786
    $
9.78
     
5.3
    $
5,712
 
 
Range of Exercise Prices     Number of Options Outstanding       Weighted-Average Exercise Price      
Weighted-Average Remaining Contractual
Life (in years)
      Aggregate Intrinsic Value  
$0.40
-
$0.50
   
800,000
    $
0.43
     
9.7
    $
19,040
 
$1.00
-
$3.50
   
588,640
    $
1.15
     
7.1
   
-
 
$3.51
-
$13.00
   
532,236
    $
9.76
     
4.1
     
-
 
$13.01
-
$26.00
   
343,782
    $
14.79
     
2.8
     
-
 
$26.01
-
$39.00
   
65,504
    $
30.85
     
2.2
     
-
 
$39.01
-
$56.00
   
102,500
    $
45.03
     
4.3
     
-
 
 
   
2,432,662
    $
7.37
     
6.4
    $
19,040
 
 
The Company uses the Black-Scholes option pricing model for “plain vanilla” options and other pricing models as appropriate to calculate the fair value of options. The Company generally uses the “simplified method” to estimate expected life. Significant assumptions used in these models include:
 
      Three Months Ended March 31, 2019
     
Annual dividend    
 
-
 
Expected life (in years)    
5.4
-
5.5 
Risk free interest rate    
2.4%
-
2.5% 
Expected volatility    
 
97%
 
 
 
Options granted in the
three
months ended
March 31, 2019,
had a weighted average grant date fair value of
$0.34
per share. There were
no
options granted in the
three
months ended
March 31, 2018.
 
Unrecognized compensation cost for unvested stock option awards outstanding at
March 31, 2019
was approximately
$250,000
to be recognized over approximately
0.8
years.
 
In the
three
months ended
March 31, 2019,
the Company modified certain awards in conjunction with an employee’s termination. The modification provided for the accelerated vesting of all unvested awards and the extension of the post-employment exercise period. The modifications resulted in approximately
$102,000
of additional research and development expenses in the
three
months ended
March 31, 2019.
 
RSUs
We have granted restricted stock units (RSUs) to certain employees and board members that entitle the holders to receive shares of our common stock upon vesting and subject to certain restrictions regarding the exercise of the RSUs. The grant date fair value of RSUs is based upon the market price of the underlying common stock on the date of grant.
 
No
RSU’s were granted in either of the
three
months ended
March 31, 2019
or
2018.
 
No
RSUs vested in the
three
months ended
March 31, 2019.
 
At
March 31, 2019,
we had
33,758
outstanding RSUs with a weighted average grant date fair value of
$4.66
and a total intrinsic value of approximately
$15,200.
No
RSUs were converted in the
three
months ended
March 31, 2019.
All outstanding RSU’s were fully vested at
March 31, 2019.
 
Restricted Stock
We have granted restricted stock to certain board members that vest quarterly over the grant year. The grant date fair value of the restricted stock is based upon the market price of the common stock on the date of grant.
 
No
restricted stock was granted in either of the
three
months ended
March 31, 2019
or
2018.
 
Restricted stock vesting in the
three
months ending
March 31, 2019,
had a weighted average grant date fair value of
$1.11
and a total intrinsic value of approximately
$5,100.
 
At
March 31, 2019,
we had
11,262
shares of restricted stock outstanding with a weighted average grant date fair value of
$1.11.
Unrecognized compensation cost for unvested restricted stock awards at
March 31, 2019
was approximately
$12,500
to be recognized over approximately
0.25
years.
 
Stock Purchase Warrants.
We have issued warrants to purchase common stock to certain officers, directors, stockholders and service providers as well as in conjunction with debt and equity offerings and at various times replacement warrants were issued as an inducement for warrant exercises.
 
In
May 2016
and
August 2017,
we issued a total of
1,746,173
and
2,250,000
common stock purchase warrants, respectively in conjunction with our offerings. Such warrants are classified as liabilities due to the existence of certain net cash settlement provisions
contained in the warrants. At
March 31, 2019,
after giving effect to exercises,
2,982,709
of these common stock purchase warrants remain outstanding and are recorded at fair value as mark-to-market liabilities (see Note
3
).
 
In the
three
months ended
March 31, 2019,
we granted
500,000
warrants to an outside
third
party as partial compensation for services. The warrants have an exercise price of
$0.30,
expire
January 2024
and have a grant date fair value of
$0.19
per warrant. The warrants vest
25%
on grant and
75%
on completion of initial services; the warrants were fully vested as of
March 31, 2019.
The warrants were valued using the Black-Scholes option pricing model with the following inputs:
no
annual dividend, expected life of
2.5
years, risk-free rate of
2.5%
and expected volatility of
110%.
 
A summary of outstanding warrants at
March 31, 2019
follows:
 
  Range of Exercise Prices       Number of Warrants Outstanding       Range of Expiration Dates  
  $0.30
-
$0.875
     
6,662,709
     
May 2021 - August 2024
 
  $1.11
-
$5.79
     
34,617
     
May 2021 - May 2023
 
  $12.80
-
$12.90
     
39,296
     
January 2022
 
  $16.20
-
$16.30
     
174,544
     
March 2020
 
  $22.10
-
$27.90
     
44,233
     
December 2019 - January 2021
 
  $34.50
-
$39.20
     
236,556
     
October 2019 - October 2021
 
$52.31
     
11,539
       
July 2019
 
 
 
 
     
7,203,494
     
 
 
 
Preferred and Common Stock
We have outstanding
1,000,000
shares of Series A
4.5%
Convertible Preferred Stock issued in
December 2016.
Shares of the Series A
4.5%
Convertible Preferred Stock are convertible into
3,887,387
shares of the Company’s common stock subject to certain ownership restrictions. In
April 2019,
465,191
Series A
4.5%
Convertible Preferred Stock shares were converted into
1,808,377
shares of common stock in accordance with their terms.