Note 6 – Stockholders’ Equity

Common Stock and Preferred Stock

The Company is authorized to issue 62,500,000 shares of common stock and 2,000,000 shares of preferred stock. Preferences, limitations, voting powers and relative rights of any preferred stock to be issued may be determined by the Company’s Board of Directors. The Company has not issued any shares of preferred stock.

In January 2017, the Company completed a rights offering and public offering of units comprised of common stock and warrants at $4.00 per unit (the Rights Offering) whereby 2,395,471 shares of common stock and warrants for the purchase of 2,395,471 shares of common stock were issued. The warrants allow each holder to purchase one share of common stock at an exercise price of $4.00 per share, are non-callable, expire on January 25, 2019, and are publicly traded on the NASDAQ Capital Market under the symbol “CLIRW”. Gross proceeds from the Rights Offering totaled $9.6 million and net cash proceeds approximated $8.7 million. Expenses of the Rights Offering approximated $915,000, including dealer-manager and placement agent fees of $575,000 paid to MDB Capital Group LLC (MDB) and MDB’s legal fees of $60,000.

Equity Incentive Plan

The Company has an Equity Incentive Plan (the Plan) which provides for the granting of options to purchase shares of common stock, stock awards to purchase shares at no less than 85% of the value of the shares, and stock bonuses to officers, employees, board members, consultants, and advisors. The Compensation Committee of the Board of Directors is authorized to administer the Plan and establish the grant terms, including the grant price, vesting period and exercise date. As of September 30, 2017, the number of shares of common stock reserved for issuance under the Plan totaled 1,657,972. The Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 10% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine.

In February 2017, the Company issued 83,334 shares of common stock under the Plan to its three independent directors in accordance with agreements entered into with each director. The common stock is subject to repurchase rights by the Company at $0.0001 per share through February 10, 2018 upon the termination of the individual’s services as a director or other circumstances as set forth in the award agreements. The fair value of the stock at the time of grant was $3.60 per share for a total value of $300,000. The Company recognized $225,000 in general and administrative expense for the nine months ended September 30, 2017 and will recognize the remaining $75,000 during the remainder of 2017.

In the nine months ended September 30, 2017, the Company granted 107,000 stock options under the Plan to employees. The stock options have exercise prices at the grant date fair value of $3.80 per share, contractual lives of 10 years, and vest over 4 years. The fair value of stock options granted estimated on the date of grant using the Black-Scholes option valuation model was $224,000. The recognized compensation expense associated with these grants for the nine months ended September 30, 2017 was $28,000. The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:

Expected life	6.25 years
Weighted average volatility	69	%
Forfeiture rate	13	%
Weighted average risk-free interest rate	1.90	%
Expected dividend rate	0	%

Outstanding stock option grants at September 30, 2017 and December 31, 2016 totaled 978,310 shares and 882,815 shares, respectively, with the right to purchase 720,643 shares and 547,532 shares being vested and exercisable at September 30, 2017 and December 31, 2016, respectively. The intrinsic value of the exerciseable shares was $194,000 as of September 30, 2017. The recognized compensation expense associated with these grants for the three and nine months ended September 30, 2017 and 2016 totaled $140,000, $509,000, $199,000 and $604,000, respectively. At September 30, 2017 the number of shares reserved under the Plan but unissued totaled 202,648. At September 30, 2017, in addition to the $75,000 of director share-based compensation to be recognized in 2017, there was $499,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.6 years.

Consultant Stock Plan

The Company has a Consultant Stock Plan (the Consultant Plan) which provides for the granting of shares of common stock to consultants who provide services related to capital raising, investor relations, and making a market in or promoting the Company’s securities. The Company’s officers, employees, and board members are not entitled to receive grants from the Consultant Plan. The Compensation Committee of the Board of Directors is authorized to administer the Consultant Plan and establish the grant terms. The number of shares reserved for issuance under the Consultant Plan on September 30, 2017 totaled 142,384 with 101,634 of those shares unissued. The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine. In August 2017, the Company granted 10,000 shares of common stock under the Consultant Stock Plan to a consultant for services from June 2017 to May 2018 and subject to completion of service each quarter. The fair value of the stock at the time of grant was $3.50 per share for a total value of $35,000 which the Company recognizes in general and administrative expense on a pro-rated quarterly basis. The Consultant Plan expense for the three and nine months ended September 30, 2017 and 2016 was $9,000 and $33,000 and $12,000 and $32,000, respectively.

Warrants

The Company has the following warrants outstanding at September 30, 2017:

		Total Outstanding Warrants
Exercise Price		Warrants		Wtd. Avg. Exercise Price		Remaining Life (in years)
$	1.80		80,000	$	1.80		3.38
$	4.00		2,395,471	$	4.00		1.32
$	10.00		20,313	$	10.00		1.43
			2,495,784	$	3.98

The intrinsic value of the outstanding warrants was $140,000 as of September 30, 2017.