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Note 7 - Stockholders' Equity | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Preferred Stock [Text Block] | 7 . Stockholders’ Equity Preferred Stock Summary -- We are authorized to issue up to 10,000,000 shares of our Preferred Stock, $.01 par value, which may be issued in one or more series. The table below presents our issued and outstanding series of preferred stock as of December 31, 2019 and 2018. Each series of our outstanding preferred stock has a stated value of $ 1,000 per share. Further details concerning each series of preferred stock, and the changes in each series during the years ended December 31, 2019 and 2018 are discussed in the sections that follow the table.
|  | December 31, 2019 |  |  | December 31, 2018 |
|  |  |  |  |  | Carrying |  |  |  |  |  |  | Carrying |
|  | Shares |  |  | Value |  |  | Shares |  |  | Value |
Series B Convertible Preferred Stock |  |  | 100 |  |  | $ | 76,095 |  |  |  | 100 |  |  | $ | 76,095 |
Series C Convertible Preferred Stock |  |  | - |  |  |  | - |  |  |  | 2,150 |  |  |  | 705,238 |
Series E Convertible Preferred Stock |  |  | - |  |  |  | - |  |  |  | 1,200 |  |  |  | 1,190,000 |
Series H Convertible Preferred Stock |  |  | 1,686 |  |  |  | 1,156,338 |  |  |  | - |  |  |  | - |
Series I Convertible Preferred Stock |  |  | 700 |  |  |  | 700,000 |  |  |  | - |  |  |  | - |
Total |  |  | 2,486 |  |  | $ | 1,932,433 |  |  |  | 3,450 |  |  | $ | 1,971,333 |
Series B Convertible Preferred Stock – Our Series B Convertible Preferred Stock, $1,000 stated value (“Series B Preferred Stock”), has rights and privileges as set forth in the pertinent Certificate of Designation of Preferences, Rights and Limitations, including a liquidation preference equal to the stated value per share. The Series B Preferred Stock has no voting rights and is not entitled to a dividend. As of December 31, 2019, there were 100 shares of Series B Preferred Stock outstanding, convertible at any time at the option of the holder into shares of common stock at a fixed conversion price of $350,000 per common share. There were no transactions involving our Series B Preferred Stock during the years ended December 31, 2019 and 2018. Series C Convertible Preferred Stock – Our Series C Convertible Preferred Stock, $1,000 stated value (“Series C Preferred Stock”), has rights and privileges as set forth in the pertinent Certificate of Designation of Preferences, Rights and Limitations, including a liquidation preference equal to the stated value per share. The Series C Preferred Stock has no voting rights and is not entitled to a dividend. During 2018, 420 shares of Series C Preferred Stock were converted into 28 shares of common stock. During January and February 2019, 587 shares of our Series C Convertible Preferred Stock (“Series C Preferred Stock”) were converted into 39 shares of our common stock. As discussed below, during February 2019, all remaining outstanding shares of Series C Preferred Stock ( 1,563 shares) were exchanged for Series F Preferred Stock. Series D Convertible Preferred Stock – In May 2017, we issued 1,000 shares of our Series D Convertible Preferred Stock, $1,000 stated value (“Series D Preferred Stock”), for net proceeds, after deduction of certain expenses, of $980,000. Our Series D Preferred Stock has rights and privileges as set forth in the pertinent Certificate of Designation of Preferences, Rights and Limitations, including a liquidation preference equal to the stated value per share. The Series D Preferred Stock has no voting rights and is not entitled to a dividend. During 2018, all outstanding shares of Series D Preferred Stock were converted into 67 shares of common stock. Series E Convertible Preferred Stock – In March 2018, we issued 600 shares of our Series E Convertible Preferred Stock, $1,000 stated value, (“Series E Preferred Stock”) for net proceeds, after deduction of certain expenses, of $590,000. In September 2018, we issued an additional 600 shares of Series E Preferred Stock for net proceeds of $600,000. Our Series E Preferred Stock has rights and privileges as set forth in the pertinent Certificate of Designation of Preferences, Rights and Limitations, including a liquidation preference equal to the stated value per share. The Series E Preferred Stock has no voting rights and is not entitled to a dividend. As discussed below, during February 2019, all outstanding shares of Series E Preferred Stock ( 1,200 shares) were exchanged for Series F Preferred Stock. Series F Preferred Stock – In February 2019, we entered into Exchange Agreements with holders of our Series C and Series E Preferred Stock, pursuant to which the holders exchanged all shares of Series C and Series E Preferred Stock held by them for an aggregate of 2,763 shares of Series F Convertible Preferred Stock (“Series F Preferred Stock”). Our Series F Preferred Stock has rights and privileges as set forth in the pertinent Certificate of Designation of Preferences, Rights and Limitations, including a liquidation preference equal to the stated value per share. The Series F Preferred Stock has no voting rights and is not entitled to a dividend. During 2019, 507 shares of Series F Preferred Stock were converted into 191 shares of our common stock. As discussed below, during July 2019, all remaining outstanding shares of Series F Preferred Stock ( 2,256 shares) were exchanged for Series H Preferred Stock. Series G Preferred Stock – In February 2019, we entered into a Securities Purchase Agreement with the purchasers identified therein (the “Purchasers”) providing for sale to the Purchasers of an aggregate of up to 1,000 shares of our Series G Convertible Preferred Stock (“Series G Preferred Stock”) and related warrants for gross proceeds of up to $1.0 million, which was funded at three different closings. Our Series G Preferred Stock has rights and privileges as set forth in the pertinent Certificate of Designation of Preferences, Rights and Limitations, including a liquidation preference equal to the stated value per share. The Series G Preferred Stock has no voting rights and is not entitled to a dividend. At the first closing, which occurred in February 2019, we issued 500 shares of Series G Preferred Stock in exchange for the payment by the Purchasers of $250,000 in the aggregate, plus the cancellation of Term Notes held by the Purchasers (see Note 5 ) in the amount of $250,000. At the second and third closings, which occurred in April and June 2019, we issued an aggregate of 500 additional shares of Series G Preferred Stock in exchange for the payment by the Purchasers of a total of $ 500,000 . As discussed below, during July 2019, all outstanding shares of Series G Preferred Stock ( 1,000 shares) were exchanged for Series H Preferred Stock. Series H Preferred Stock – In July 2019, we entered into Exchange Agreements with holders of our Series F and Series G Preferred Stock, pursuant to which the holders exchanged all shares of Series F and Series G Preferred Stock held by them for an aggregate of 3,257 shares of Series H Convertible Preferred Stock (“Series H Preferred Stock”). Our Series H Preferred Stock has rights and privileges as set forth in the pertinent Certificate of Designation of Preferences, Rights and Limitations, including a liquidation preference equal to the stated value per share. The Series H Preferred Stock has no voting rights and is not entitled to a dividend. The Series H Preferred Stock is convertible at any time at the option of the holders into shares of our common stock, at a conversion price equal to the lesser of (i) $15,000 per common share and (ii) 80% of the lowest volume weighted average price of the common stock during the ten trading days immediately preceding the delivery of a notice of conversion. The Series H Preferred Stock contains price adjustment provisions, which may, under certain circumstances reduce the conversion price to match if we sell or grant options to purchase, including rights to reprice, our common stock or common stock equivalents at a price lower than the then conversion price of the Series H Preferred Stock. During 2019, 1,570 shares of Series H Preferred Stock were converted into 296,160 shares of our common stock. Series I Preferred Stock – In July 2019, we entered into a Securities Purchase Agreement with the purchasers identified therein (the “Purchasers”) providing for sale to the Purchasers of an aggregate of 700 shares of our Series I Convertible Preferred Stock (“Series I Preferred Stock”) for gross proceeds of $700,000. Our Series I Preferred Stock has rights and privileges as set forth in the pertinent Certificate of Designation of Preferences, Rights and Limitations, including a liquidation preference equal to the stated value per share. The Series I Preferred Stock has no voting rights and is not entitled to a dividend. The Series I Preferred Stock is convertible at any time at the option of the holders into shares of our common stock, at a conversion price equal to the lesser of (i) $15,000 per common share and (ii) 80% of the lowest volume weighted average price of the common stock during the ten trading days immediately preceding the delivery of a notice of conversion. The Series I Preferred Stock contains price adjustment provisions, which may, under certain circumstances reduce the conversion price to match if we sell or grant options to purchase, including rights to reprice, our common stock or common stock equivalents at a price lower than the then conversion price of the Series I Preferred Stock. During 2019, there were no conversions of our Series I Preferred Stock. Common Stock Reverse Stock Split – Following approval by our shareholders at a meeting held on April 15, 2019, on April 30, 2019, we effected a one -for- five hundred reverse split of our common stock by the filing of an amendment to our certificate of incorporation with the State of Delaware. During 2019 and 2018 we issued an aggregate of 296,390 and 95 shares of our common stock, respectively, pursuant to the conversion of several series of our Convertible Preferred Stock as discussed above. During 2019, we issued an aggregate of 3,224 shares of our common stock pursuant to a consulting agreement; for which we recognized $24,000 of expense. During 2018, we issued an aggregate of 17 shares of our common stock pursuant to certain consulting and investment banking agreements. We assigned an aggregate value to these shares of $513,500, $314,419 of which was expensed during 2018. The remaining $199,080 was recorded as a prepaid expense as of December 31, 2018 and recognized as expense during 2019 over the terms of the related agreements. Stock Option s We have a stock-based incentive plan pursuant to which our Board of Directors may grant stock options to our employees. The exercise price for any option granted may not be less than fair value ( 110% of fair value for ISO’s granted to certain employees). Options have a maximum ten -year term and generally vest over three years. There were no grants of stock options during the year ended December 31, 2019. As a result of the reverse stock splits enacted in April 2019 and in January 2020, we have made adjustments and retroactive restatements to all of our outstanding stock options such that the balances as of December 31, 2019 and 2018 are negligible. We use the Black-Scholes model for determining the grant date fair value of our stock option grants. This model utilizes certain information, such as the interest rate on a risk-free security with a term generally equivalent to the expected life of the option being valued and requires certain other assumptions, such as the expected amount of time an option will be outstanding until it is exercised or expired, to calculate the fair value of stock options granted. The significant assumptions we used in our fair value calculations were as follows:
|  | 2019 |  |  | 2018
Weighted average risk-free interest rates |  |  | N/A |  |  |  | 2.79 | %
Expected dividend yield |  |  | N/A |  |  |  | 0.0 | %
Expected life of option (yrs) |  |  | N/A |  |  |  | 7.0 |
Expected volatility |  |  | N/A |  |  |  | 71.34 | %
Total employee and director stock-based compensation expense recognized in the consolidated statement of operations for the years ended December 31, 2019 and 2018 was $104,420 and $155,304, respectively, of which $43,801 and $41,998 was included in research and development expenses and $60,619 and $113,306 was included in general and administrative expenses, respectively. As of December 31, 2019, there is $99,975 of unrecognized compensation expense related to employee and director stock-based compensation arrangements. Stock Purchase Warrants The following table summarizes our warrants outstanding as of December 31, 2019:
| Expiration Date |  | Exercise Price |  |  | Number of Warrants |
Series G | September 2021 |  | $ | 25,440 |  |  |  | 48 |
Series H | December 2021 |  |  | 1.15 |  |  |  | 217,392 |
Series I | Aug-Dec 2024 |  |  | 15,000 |  |  |  | 48 |
During 2019, in connection with the sale of our Series G Preferred Stock, we issued Series I Warrants to purchase an aggregate of 48 shares of our common stock with an exercise price of $15,000 per share. All of the outstanding warrants contain anti-dilution and price adjustment provisions, which may, under certain circumstances reduce the exercise price to match if we sell or grant options to purchase, including rights to reprice, our common stock or common stock equivalents at a price lower than the then exercise price of the warrants. Such provisions as to the Series G and Series H Warrants apply to the exercise price only, with no effect on the number of shares subject to the warrants. Such provisions as to the Series I Warrants apply to both the exercise price and the number of shares subject to the warrants, so that the number of warrants will be increased such that the aggregate exercise price, after taking into account the decrease in the exercise price, will be equal to the aggregate exercise price prior to the adjustment. The Series H Warrants have an additional price adjustment provision requiring a similar adjustment to the exercise price and number of warrants following a reverse stock split of our common stock; such adjustments occurred in connection with our April 30, 2019 reverse stock split and our January 21, 2020 reverse stock split (see Note 11 ), which is retroactively reflected in the table above.

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