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STOCKHOLDERS’ EQUITY
 3 Months Ended
Mar. 31, 2022
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 4 – STOCKHOLDERS’ EQUITY

 

Common stock

 

The common stock confers upon the holders the right to receive notice to participate and vote in general meetings of the Company, and the right to receive dividends, if declared, and to participate in the distribution of the surplus assets and funds of the Company in the event of liquidation, dissolution or winding up of the Company.

 

On March 3, 2021, the Company filed a proxy statement in connection with a special meeting of stockholders to was to be held on March 31, 2021, but postponed until May 6, 2021 to (i) ratify the increase in the number of authorized shares of common stock from 20,000,000 to 24,109,635 and the issuance of such 4,109,635 shares of common stock, and (ii) further increase the number of our authorized shares of common stock. On May 6, 2021, the Company’s stockholders voted to approve the ratification of the increase in the number of authorized shares of common stock from 20,000,000 to 24,109,635 and the issuance of such 4,109,635 shares of common stock to be effective as of December 4, 2020, but the stockholders did not approve a further increase in the number of its authorized shares of common stock.

 

On August 17, 2021, the Company’s stockholders voted to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of shares of the Company’s Common Stock authorized for issuance from 24,109,635 shares to 40,000,000 shares. As a result of the vote to increase the number of shares authorized for issuance, the warrants that were previously accounted for as derivative liabilities were marked to market through the date of approval and then reclassified to additional paid in capital (equity), as the Company had sufficient authorized shares to settle the exercise of the warrants.

 

Stock-based compensation and Options

 

During the three-month period ended March 31, 2022 and 2021, 120,000 and 180,000 options were granted, respectively. The options were granted to employees and board members and were recorded at a fair value and vested over three years. During the three-month periods ended March 31, 2022 and 2021, stock-based compensation expense of $86 and $109 was recorded for options that vested, respectively.

 

The fair value for options granted in the first quarter of 2022 and 2021 is estimated at the date of grant using a Black-Scholes-Merton options pricing model with the following underlying assumptions:

 

   2022   2021 
Price at valuation  $0.78   $1.04 
Exercise price  $0.78   $1.04 
Risk free interest   2.32%   0.49%
Expected term (in years)   5    5 
Volatility   127.9%   81.5%

 

 

The total stock-based expense recognized in the financial statements for services received from employees and non-employees is shown in the following table.

 

  

Three Months Ended

March 31,

 
   2022   2021 
         
Research and development   2    5 
Selling and marketing   6    21 
General and administrative   78    83 
Total  $86   $109 

 

As of March 31, 2022, the total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was $554, which is expected to be recognized over a weighted average period of approximately 2.05 years.

 

Warrant exercises and modification

 

On December 2, 2020, we entered into a Securities Purchase Agreement with certain institutional and accredited investors pursuant to which the Company issued and sold to such investors in a private placement an aggregate of (i) 5,914,285 shares of the Company’s common stock at an offering price of $0.70 per share and (ii) pre-funded warrants to purchase up to 2,657,144 shares of common stock at a purchase price of $0.699 per pre-funded warrant, for gross proceeds of approximately $6.0 million, and net proceeds of approximately $5.4 million. In January 2021, two investors exercised an aggregate of 1,657,144 warrants at $0.001 per share.

 

On January 21, 2021, Company entered into letter agreements (the “Letter Agreements”) with certain existing accredited investors to exercise certain outstanding warrants (the “Existing Warrants”) to purchase up to an aggregate of 1,205,968 shares of the Company’s common stock at an exercise price per share of $1.165 (the “Exercise”). Certain of the Existing Warrants (the “Registered Existing Warrants”) and the shares of common stock underlying the Registered Existing Warrants have been registered pursuant to a registration statement on Form S-3 (File No. 333-251264) and a registration statement on Form S-1 (File No. 333-218871). In consideration for the exercise of the Existing Warrants for cash, the exercising holders will receive new unregistered warrants to purchase up to an aggregate of 1,205,967 shares of common stock (the “New Warrants”) at an exercise price of $1.04 per share and with an exercise period of seven years from the initial closing date. The gross proceeds to the Company from the Exercise were approximately $1.4 million.

 

The New Warrants were accounted for in warrant modification expense, which was measured at the amount equal to the incremental value reflecting the change in the fair value of the warrants before and after the Warrant Amendment. Accordingly, warrant modification expense in the amount of $0 and $1,627 was recorded for the quarters ended March 31, 2022 and 2021, respectively, with a corresponding increase in additional paid in capital.

 

In estimating the warrants’ fair value, the Company used the following assumptions:

 

Risk free interest   1.44%
Dividend yield   0%
Volatility   138.4%
Contractual term (in years)   0.79 – 2.67