Stockholders' Equity

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

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 5,750,000 shares of common stock at a price of $2.25 per share. Gross proceeds from the offering totaled $12.9 million and net cash proceeds approximated $11.9 million.

As detailed in Note 8 to these Consolidated Financial Statements, in July of 2018 the Company completed a private offering of shares of common stock.

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 June 30, 2018, the number of shares of common stock reserved for issuance under the Plan totaled 2,238,030. 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 the three months ended June 30, 2018, the Company granted 174,000 stock options under the Plan to employees. The stock options have exercise prices at the grant date fair value ranging from $1.85 to $1.90 per share, contractual lives of 10 years, and vest over 4 years. The fair value of the stock options estimated on the date of grant using the Black-Scholes option valuation model was $186,000. The recognized compensation expense associated with these grants for the three months ended June 30, 2018 was $12,000. 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		71%
Forfeiture rate		13%
Weighted average risk-free interest rate		2.74%
Expected dividend rate		0%

In May 2018, the Company authorized 108,108 shares of common stock to be issued under the Plan to its four independent directors in accordance with board agreements and which will be earned quarterly for service in 2018. The fair value of the stock at the time of grant was $1.85 per share for a total value of $200,000. The Company recognized $100,000, represented by 54,056 shares, in general and administrative expense for the six months ended June 30, 2018 and will recognize the remaining $100,000 in the remainder of 2018.

Outstanding stock option grants at June 30, 2018 and December 31, 2017 totaled 1,004,835 shares and 993,860 shares, respectively, with the right to purchase 664,982 shares and 754,989 shares being vested and exercisable at June 30, 2018 and December 31, 2017, respectively. The recognized compensation expense associated with these grants for the three and six months ended June 30, 2018 and 2017 totaled $61,000, $111,000, $76,000 and $219,000, respectively. On July 1, 2018 the number of shares reserved under the Plan but unissued totaled 702,375. At June 30, 2018, there was $451,000 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 2.7 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 June 30, 2018 totaled 199,959 with 151,709 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 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 six months ended June 30, 2018 and 2017 was $8,000 and $17,000 and $12,000 and $24,000, respectively.

Warrants

The Company has the following warrants outstanding at June 30, 2018:

Total Outstanding Warrants
Exercise Price		Warrants		Wtd. Avg. Exercise Price		Remaining Life (in years)
$	1.80		80,000	$	1.80		2.64
$	4.00		2,395,471	$	4.00		0.57
$	10.00		20,313	$	10.00		0.68
			2,495,784	$	3.98

The intrinsic value of the outstanding warrants was $16,000 at June 30, 2018.