XML 28 R18.htm IDEA: XBRL DOCUMENT v3.22.2.2
Note 10 - Stockholders' Equity
 9 Months Ended
Sep. 30, 2022
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

NOTE 10 - STOCKHOLDERS' EQUITY

 

Common Stock -- The Company has 100,000,000 authorized shares of common stock, $0.001 par value ("Common Stock"). As of September 30, 2022 and 2021, there were 43,896,871 and 21,285,706 shares of Common Stock issued and outstanding, respectively.

 

Voting -- Holders of common stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do not have any right to cumulate votes in the election of directors. 

 

Dividends -- Subject to the rights and preferences of the holders of any series of preferred stock, if any, which may at the time be outstanding, holders of Common Stock are entitled to receive ratably such dividends as our Board of Directors from time to time may declare out of funds legally available.  

 

Liquidation Rights -- In the event of any liquidation, dissolution or winding-up of affairs, after payment of all of our debts and liabilities and subject to the rights and preferences of the holders of any outstanding shares of any series of our preferred stock, the holders of Common Stock will be entitled to share ratably in the distribution of any of our remaining assets.  

 

Other Matters -- Holders of common stock have no conversion, preemptive or other subscription rights, and there are no redemption rights or sinking fund provisions with respect to our common stock. All of the issued and outstanding shares of common stock on the date of this Annual Report are validly issued, fully paid and non-assessable.

 

Preferred Stock -- Our Board of Directors has the authority to issue preferred stock in one or more classes or series and to fix the designations, powers, preferences and rights, qualifications, limitations, or restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, without further vote or action by the stockholders. The issuance of preferred stock may have the effect of delaying, deferring, or preventing a change in control without further action by the stockholders and may adversely affect the voting and other rights of the holders of Common Stock.

 

The Company has 2,500,000 authorized shares of preferred stock, $0.001 par value. As of September 30, 2022, there were no shares of preferred stock issued and outstanding.

 

Stock Issuance 

 

Since  January 1, 2022, the Company has made the following issuances of Common Stock: 

 

On January 3, 2022, the Company issued 18,641 shares of Common Stock to settle RSUs for services provided by the Board of Directors in 2021. 

 

On January 3, 2022, the Company issued 48,341 shares of Common Stock to settle RSUs for services provided by management in 2021.

 

On May 17, 2022, the Company issued 15,635,850 shares of Common Stock as part of the $23,000,000 public offering of common stock and 30,425,000 prefunded warrants to fund working capital, general corporate purposes, and partial repayment of its Senior Convertible Note.

 

On May 19, 2022, the Company exercised in full the option to issue 6,900,000 shares of Common Stock as part of the overallotment of $3,450,000, resulting in the closing of its previously announced public offering of $26,450,000 to fund working capital, general corporate purposes, and partial repayment of its Senior Convertible Note. Total transaction costs related to the combined public offering of $26,450,000 amounted to $1,996,472.

 

On August 25, 2022, the Company issued 8,333 shares of Common Stock to settle RSUs for services provided by the Board of Directors. 

 

Warrants 

 

On August 17, 2021, the Company entered an exchange agreement with an existing shareholder to exchange an aggregate of 500,000 shares of Common Stock for equivalent shares of prefunded warrants (the “Exchange Agreement”). The prefunded warrants will be exercisable at an exercise price of $0.001 per share, subject to adjustments as provided under the terms of the prefunded warrants. The prefunded warrants will be exercisable at any time on or after the closing date. The Exchange Agreement contained additional terms typical of exchange agreements including representations and warranties of the parties. In connection with and as of the date of the Exchange Agreement, the Company issued the prefunded warrants to the shareholder, and the prefunded warrants are exercisable on August 17, 2021, subject to the limitations on exercise and conditions set forth by the prefunded warrants. The prefunded warrants became subject to customary adjustments in the event of stock splits and dividends, fundamental transactions, and subsequent offerings of rights to purchase stock.

 

On May 17, 2022, the Company entered a warrant purchase agreement with existing shareholders to purchase 30,425,000 shares of common stock at an offering price of $0.499 per prefunded warrant, which represents the offering price of $0.50 per share of the Company’s common stock less the $0.001 per share exercise price for each pre-funded warrant, for total gross proceeds of approximately $15,182,075 as part of the Company’s public offering of common stock and pre-funded warrants totaling $23,000,000 before underwriting discounts, commissions and offering expenses payable by the Company. 

 

On June 23, 2022, the Company completed a private placement of Senior Notes in an aggregate principal amount of $6,000,000 and warrants to purchase 4,250,000 shares of common stock of the Company to affiliates of Bleichroeder L.P., 21 April Fund, L.P., and 21 April Fund, Ltd. (together, the "Purchasers"), pursuant to a note and warrant purchase agreement. Additionally, as part of the transaction, the Company issued 230,000 warrants to the placement agent. All warrants issued in this transaction have an exercise price of $0.65 per share, a term of five years and are exercisable for cash at any time. 

 

Below is a summary of the periodic changes in warrants outstanding for the nine months ended September 30, 2022 and 2021:

 

  

2022

  

2021

 

Warrants outstanding at January 1

  1,015,000   515,000 

Warrants issued in connection with public offering and private placement

  34,905,000   - 

Common stock exchanged to prefunded warrant

     500,000 

Exercises and conversions

  -   - 

Warrants outstanding at September 30

  35,920,000   1,015,000 

 

Stock-based Compensation 

 

In 2013, the Company’s Board of Directors adopted a Share Incentive Plan (the “Incentive Plan”). Under the terms and conditions of the Incentive Plan, the Board of Directors is empowered to grant RSUs to officers and directors of the Company. At September 30, 2022, 2,504,340 RSUs were granted and outstanding under the Incentive Plan. Directors of the Company receive share compensation as follows: an initial grant of 25,000 RSUs of Common Stock that vest over a three-year period upon appointment to the Board, followed by an annual grant of $36,750 ($73,500 for the Chairman of the Board) in RSUs per annum after full vesting of the initial grant. Further, the Company has granted shares of Common Stock in the third quarter to management as part of the Incentive Plan, totaling 722,456 shares of which 97,456 shares vest in January 2023 (part of Interim CEO agreement amended on September 13, 2022) and the remaining shares vest over a three-year period.

 

The Company recognizes compensation costs for RSU grants to directors and management based on the stock price on the date of the grant.

 

The Company recognized stock-based compensation expense related to RSU grants of $382,111 and $127,519 for the three-month periods ended September 30, 2022 and 2021, respectively. For the nine months periods ended September 30, 2022, and 2021, the stock-based compensation related to share grants was $782,360 and $354,983, respectively. On September 30, 2022, the Company had $827,939 of unrecognized compensation cost related to non-vested stock grants.

 

A summary of the status of the RSUs as of September 30, 2022 and changes during the period are presented below:

 

  

September 30, 2022

 
  

Number of

units

  

Weighted

Average
Grant-Date

Fair value

  

Aggregated

Intrinsic
Value

 
             

Outstanding, December 31, 2021

  149,636  $6.59  $- 

Granted

  2,574,871   0.77   - 

Vested and settled with share issuance

  (75,315

)

  (6.59

)

  - 

Forfeited

  (144,853

)

  (6.22

)

  - 

Outstanding, September 30, 2022

  2,504,340  $0.63  $-