7.	Stockholders ' Equity

Preferred Stock

June 2021,

we repurchased the remaining

100

shares of our Series B convertible preferred stock for a total price of

$1,000.

As of

December 31, 2021,

there are

shares of our preferred stock outstanding.

Common Stock

2020

Public Offering

–

September 29, 2020,

we closed an underwritten public offering (the

“2020

Offering”) of an aggregate of

2,560,000

units of our equity securities (the “Units”) with gross proceeds to us of approximately

$12.8

million. Net proceeds after deducting underwriting discounts and commissions and other offering expenses were approximately

$11.2

million. Each Unit sold in the offering consisted of

one

share of our common stock (or a pre-funded warrant to purchase

one

share of common stock, all of which were fully exercised during

2020

), and a warrant to purchase

one

share of common stock (“Unit Warrant”), exercisable at an exercise price of

$5.00

per share and with a

five

-year expiration date.

From

2016

through

August 2020,

to help conserve the Company's cash resources, our executive officers and non-employee directors agreed to defer receipt of all or a portion of their respective cash compensation. Upon consummation of the

2020

Offering,

$1,500,000

of accumulated deferrals were converted at the

$5.00

offering price, resulting in the issuance of

300,001

units substantially similar to the units sold in the public offering, with each unit consisting of

one

share of our common stock and

one

warrant substantially similar to a Unit Warrant.

Upon consummation of the

2020

Offering, we issued an aggregate of

177,626

shares of our common stock,

126,042

pre-funded warrants to purchase common stock, and

303,668

warrants substantially similar to a Unit Warrant upon the mandatory conversion of

$1,214,667

of convertible debentures and accrued interest.

2021

Public Offering

–

February 11, 2021,

we closed an underwritten public offering of

1,644,000

shares of our common stock, with gross proceeds to us of approximately

$10.3

million. Net proceeds after deducting underwriting discounts and commissions and other offering expenses were approximately

$9.4

million.

Warrant exercises

– During

2021,

740,034

Unit Warrants were exercised for cash, resulting in gross proceeds to us of approximately

$3.7

million; net proceeds after deducting commissions owed to the underwriter of the

2020

Offering were approximately

$3.4

million. During

2021,

an aggregate of

215,672

warrants were exercised using the cashless exercise feature of the warrants, resulting in the issuance of an aggregate of

149,705

shares of our common stock. During

2020,

54,557

warrants were exercised using the cashless exercise feature of the warrants, resulting in the issuance of an aggregate of

36,902

shares of our common stock

Other Common Stock Transactions

– During

2021

and

2020

we issued

13,707

and

26,581

shares, respectively, of our common stock pursuant to consulting agreements. During

2020

we issued an aggregate of

716,790

shares of our common stock, pursuant to the conversion of Series H and Series I convertible preferred stock.

Stock Option Plan

We have a stock-based incentive plan (the

“2020

Plan”) pursuant to which our Board of Directors

may

grant stock options to our employees. A total of

1,500,000

shares of our common stock are reserved for issuance pursuant to the

2020

Plan. 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.

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:

	2021			2020
Weighted average risk-free interest rates		1.43	%		0.69	%
Expected dividend yield		0.0	%		0.0	%
Expected life of option (in years)		7.0			7.0
Expected volatility		84.80	%		38.16	%

A summary of stock option activity under the

2020

Plan as of

December 31, 2021,

and changes during the year then ended is presented below.

	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (yrs)		Aggregate Intrinsic Value
Outstanding at December 31, 2020		602,000	$	2.79
Granted		360,300		3.82
Exercised		-		-
Forfeited or expired		-		-
Outstanding at December 31, 2021		962,300	$	3.18		9.31	$	499,660
Exercisable at December 31, 2021		200,661	$	2.79		8.93	$	166,549

The weighted-average grant date fair values of options granted during

2021

and

2020

were

$2.87

and

$1.12,

respectively. Total stock option compensation expense recognized in the consolidated statement of operations for the years ended

December 31, 2021

and

2020

was

$269,427

and

$18,730,

respectively. As of

December 31, 2021,

there is

$1,420,144

of unrecognized compensation expense that will be recognized over a weighted-average period of

2.2

years.

Stock Purchase Warrants

Summary of Warrants Outstanding

– The table below presents summary information about our warrants outstanding as of

December 31, 2021.

Additional information concerning the warrants follows the table.

Warrant Description	Number of Shares		Exercise Price		Expiration
2020 Warrants		120,000		5.00	Jun 2025
2020 Unit Warrants		2,396,631		5.00	Sep 2025
2020 Representative Warrants		128,000		5.50	Mar 2024
2021 Representative Warrants		72,000		6.875	Aug 2024
2021 Warrants		100,000		13.00	Sep 2026
Total Warrants Outstanding at December 31, 2021		2,816,631

Weighted-Average Exercise Price	$	5.35
Weighted-Average Remaining Life (in years)		3.7

2020

Warrants

– In

June 2020,

in connection with the issuance of convertible debentures, we issued warrants to purchase

120,000

shares of common stock, with a

five

-year term and an exercise price of

$10.00.

As a result of the

2020

Public Offering, in

September 2020

the exercise price was reduced to

$5.00.

2020

Unit Warrants

– In

September 2020,

in connection with the

2020

Public Offering, we issued

303,668

warrants upon the conversion of convertible debentures,

300,001

warrants upon the conversion of amounts owed to current and former executive officers and directors, and

2,560,000

warrants to other investors in the

2020

Public Offering, with each of the warrants having a

five

-year term and an exercise price of

$5.00.

During

2021,

740,034

of these warrants were exercised for cash and

27,004

were exercised using the cashless exercise feature of the warrant.

2020

Representative Warrants

– In

September 2020,

we issued

128,000

warrants to the underwriter of the

2020

Public Offering, with a

-month term and an exercise price of

$5.50.

2021

Representative Warrants

– In

February 2021,

we issued

72,000

warrants to the underwriter of the

2021

Public Offering, with a

-month term and an exercise price of

$6.875.

2021

Warrants

– In

September 2021,

in connection with a technology licensing agreement, we issued

100,000

warrants, with a

five

-year term and an exercise price of

$13.00.

Additional Stock-Based Compensation Expense

In addition to stock-based compensation expense related to the

2020

Plan (see

Stock Options

above), during the years ended

December 31, 2021

and

2020,

we recognized

$100,560

and

$45,733,

respectively, of expense related to the issuance of our common stock pursuant to consulting and investment banking agreements. As of

December 31, 2021,

there is

$19,947

recorded as a prepaid expense for these arrangements, which will be recognized as expense during

2022

over the term of the related agreement.