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Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

NOTE 7 – STOCKHOLDERS' EQUITY

Initial Public Offering

During February 2019, the Company completed its initial public offering in which the Company sold 1,020,820 shares of its common stock for gross proceeds of $8,166,560 (net proceeds of $7,251,142).

April and May 2019 Stock Sale

During April and May 2019, the Company sold 522,212 shares of its common stock to certain investors for cash proceeds of $4,727,879, of which the Company's CEO purchased 11,100 shares for $119,325 of cash and the Company's CFO purchased 5,000 shares for $53,550 of cash.

Lincoln Park

On May 15, 2019, the Company entered into both a securities purchase agreement and registration rights agreement with Lincoln Park Capital Fund, LLC ("Lincoln Park"). Under the terms and subject to the conditions of the securities purchase agreement, the Company has the right to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to $20.0 million in shares of the Company's common stock, subject to certain limitations, from time to time, over the 24-month period that commenced on May 15, 2019. During May 2019, the Company issued 70,000 shares of the Company's common stock to Lincoln Park as consideration for Lincoln Park's commitment to purchase shares of the Company's common stock under the agreement, and 30,000 shares of common stock were sold to Lincoln Park in an initial purchase for an aggregate gross purchase price of $300,000 ($230,000 net of offering costs).

During the six months ended June 30, 2020, the Company issued 196,000 shares of its common stock to Lincoln Park for $1,002,644 of cash. At June 30, 2020, Lincoln Park is obligated to purchase up to $18.7 million worth of the Company's common stock.

As contemplated by the securities purchase agreement with Lincoln Park, and so long as the closing price of the Company's common stock exceeds $3.50 per share, then the Company may direct Lincoln Park, at its sole discretion to purchase up to 20,000 shares of its common stock on any business day. The purchase price will be based on the market prices of the common stock at the time of such purchases as set forth in the securities purchase agreement.

In addition to regular purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional purchases if the closing sale price of the common stock exceeds certain threshold prices as set forth in the purchase agreement. There are no trading volume requirements or restrictions under the purchase agreement nor any upper limits on the price per share that Lincoln Park must pay for shares of common stock.

Purchase and retirement of common stock

During January 2020, the Company purchased and cancelled 220,000 shares of its common stock from a shareholder in exchange for $1,012,000 of cash. Immediately following the purchase, the investor owned less than 10% of the outstanding common stock of the Company.

Common Stock – At the Market Offering

During April 2020, the Company entered into a sales agreement with BTIG, LLC ("BTIG"), as sales agent, to establish an At-The-Market ("ATM") offering program. The Company was required to pay BTIG a commission of 3% of the gross proceeds from the sale of shares. The ATM program will remain in full force and effect until the earlier of the sale of all of the shares under the ATM program or the termination of the sales agreement by the Company or BTIG. From the inception of the agreement through June 30, 2020, the Company sold 150,682 shares of common stock at an average price of $5.44 per share for gross proceeds of approximately $0.8 million (net proceeds of $0.7 million).

Common Stock Issuable

Pacific Seaboard Consulting Agreement

On May 16, 2018, the Company entered into a consulting agreement with Pacific Seaboard Investments Ltd. ("Pacific Seaboard") for corporate governance, compliance services regarding the filing of a listing application and assist with activities related to its initial public offering. In consideration of the consultant's services, the Company agreed to issue 600,000 shares of its restricted common stock. Pursuant to this agreement, the Company recorded $4,626,000 as common stock issuable for the 600,000 shares of common stock to be issued. During June 2019, the Company issued 400,000 shares of its common stock to Pacific Seaboard, whereby the Company was initially required to issue 600,000 shares to Pacific Seaboard, but subsequently received a waiver from Pacific Seaboard during April 2019 permanently waiving the last 200,000 shares owed.

Settlement

In November 2016, the Company entered into a settlement agreement whereby the Company agreed to issue 33,335 shares of the Company's common stock to an individual to settle a claim in full. The Company assessed the value of the common stock owed form the most readily determinable value of the shares of the Company's common stock issuable as a part of this settlement. These shares have not been issued and are subject to a restriction on transfer for a period of two years from the date the Company completed its initial public offering, which occurred during February 2019, after which the Company will deliver the shares to the individual. The obligation was recorded as common stock issuable of $50,000 as of June 30, 2020 and December 31, 2019, respectively, pending delivery of the shares to the individual after the restriction period expires.

Stock options

The following table summarizes stock option activity during the six months ended June 30, 2020:

		Number of Shares				Weighted- average Exercise Price				Weighted-average Remaining Contractual Term (years)				Aggregate Intrinsic Value
Outstanding at January 1, 2020			3,417,000			$	5.77				9.03				-
Options granted			-			$	-				-				-
Options exercised			-			$	-				-				-
Options cancelled			-			$	-				-				-
Outstanding at June 30, 2020			3,417,000			$	5.77				8.53			$	2,391,900
Exercisable at June 30, 2020			1,824,951			$	7.16				7.86			$	403,275

During the six months ended June 30, 2020 and 2019, the Company recognized stock-based compensation expense of $1,363,410 and $1,949,395, respectively, related to stock options. As of June 30, 2020, there was $5,129,479 of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.24 years.

Warrants

In connection with the Company's initial public offering in February 2019, the Company issued warrants to the placement agents to purchase 40,982 shares of the Company's common stock at an exercise price of $9.60 per common share, which warrants are exercisable until December 19, 2023. These warrants had no intrinsic value as of June 30, 2020.

In October 2017, in connection with the Xencor License Agreement, the Company issued fully vested warrants to purchase an additional number of shares of common stock equal to 10% of the fully diluted Company shares immediately following such purchase. See Note 4. These warrants had no intrinsic value as of June 30, 2020.

On June 30, 2017, the Company issued fully vested warrants with a maturity date of June 30, 2022 and an exercise price of $1.50 to purchase 31,667 shares of the Company's common stock to a third party in conjunction with common stock sold for cash. These warrants had an intrinsic value of $118,751 as of June 30, 2020.

Stock-based Compensation by Class of Expense

The following summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 respectively:

		Three Months Ended June 30, 2020				Three Months Ended June 30, 2019				Six Months Ended June 30, 2020				Six Months Ended June 30, 2019
Research and development		$	138,609			$	426,308			$	277,218			$	852,616
General and administrative			543,096				548,388				1,086,192				1,096,779
Total		$	681,705			$	974,696			$	1,363,410			$	1,949,395