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 February 2018, the Company completed an underwritten public offering of shares of common stock at a sales price of $2.25 per share (the Stock Offering) wherby 5,750,000 shares of common stock were issued. Gross proceeds from the Stock Offering totaled $12.9 million and net cash proceeds approximated $11.9 million.

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 March 31, 2018, the number of shares of common stock reserved for issuance under the Plan totaled 1,662,780. 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. As a result, the number of shares reserved for issuance under the Plan at April 1, 2018 totaled 2,238,030 shares.

Outstanding stock option grants at March 31, 2018 and December 31, 2017 totaled 969,384 shares and 993,860 shares, respectively, with the right to purchase 769,233 shares and 754,989 shares being vested and exercisable at March 31, 2018 and December 31, 2017, respectively. The recognized compensation expense associated with these grants for the three months ended March 31, 2018 and 2017 totaled $50,000 and $143,000, respectively. At March 31, 2018 and April 1, 2018, the number of shares reserved under the Plan but unissued totaled 216,372 and 791,622, respectively. At March 31, 2018, there was $329,000 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 2.3 years.

There were no stock options granted during the three months ended March 31, 2018.

Consultant Stock Plan

The Company has a 2013 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 March 31, 2018 totaled 142,434 with 96,684 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 will recognize in general and administrative expense on a pro-rated quarterly basis. The Consultant Plan expense for the three months ended March 31, 2018 and 2017 was $9,000 and $12,000, respectively.

Warrants

The Company has the following warrants outstanding at March 31, 2018:

		Total Outstanding Warrants
				Wtd. Avg.		Remaining
				Exercise		Life
Exercise Price		Warrants		Price		(in years)
$	1.80		80,000	$	1.80		2.88
$	4.00		2,395,471	$	4.00		0.82
$	10.00		20,313	$	10.00		0.93
			2,495,784	$	3.98