Stockholders' Equity | Note 11 – Stockholders’ Equity Authorized Capital The Company is authorized to issue 90,000,000 shares of common stock, par value of $0.0001 per share, and 6,000,000 shares of preferred stock, par value of $0.0001 per share. The holders of the Company’s common stock are entitled to one vote per share. The Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, redemption, voting or other rights. Equity Incentive Plans On April 7, 2020, the Company’s Board of Directors approved the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan (the “Restated Plan”), which stockholders approved on June 30, 2020. The Restated Plan makes certain changes to the Company’s 2018 Omnibus Stock Incentive Plan, as amended (the “2018 Plan, as amended”). The Restated Plan increases the number of shares of the Company’s common stock reserved for issuance under the 2018 Plan, as amended to 2,950,000 shares. The Restated Plan requires that all equity awards issued under the Restated Plan vest at least twelve months from the applicable grant date, subject to accelerated vesting, and provides that no dividend or dividend equivalent will be paid on any unvested equity award, although dividends with respect to unvested portions of equity may accrue and be paid when, and if, the awards later vest and the shares are actually issued to the grantee. In addition, the Restated Plan sets an annual limit on the grant date fair value of awards to any non-employee director, together with any cash fees paid during the year, of $150,000, subject to certain exceptions for a non-executive chair of the Board. Finally, the Restated Plan made several administrative changes to the 2018 Plan, as amended, including to clarify that awards made under the Restated Plan are intended to be exempt from or comply with Section 409(A) of the Internal Revenue Code of 1986, as amended. The Restated Plan was further amended (the “Amended Restated Plan”) on June 30, 2021 to increase the number of shares of the Company’s common stock reserved for future issuance under the Restated Plan to 4,200,000 shares. As of December 31, 2021, the number of securities remaining available for future issuance under equity compensation plans was 700,741. Warrants A summary of the warrant activity during the year ended December 31, 2021 is presented below: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Warrants Price In Years Value Outstanding January 1, 2021 2,011,313 $ 2.43 Granted 91,884 4.76 Exercised (885,482) 2.40 Outstanding December 31, 2021 1,217,715 $ 2.69 3.7 $ 1,667,925 Exercisable December 31, 2021 1,217,715 $ 2.69 3.7 $ 1,667,925 The following table presents information related to warrants as of December 31, 2021: Warrants Outstanding Warants Exercisable Weighted Outstanding Average Exercisable Exercise Number of Remaining Life Number of Price Warrants In Years Warrants $2.4696 909,451 3.2 909,451 $2.7240 216,380 3.2 216,380 $4.7600 91,884 9.3 91,884 1,217,715 3.7 1,217,715 During the year ended December 31, 2021, warrants for the purchase of 885,482 shares of the Company’s common stock with exercise prices between $2.058 and $2.4696 per share, respectively, were exercised for aggregate proceeds of approximately $2.1 million. Securities Purchase Agreement On March 24, 2020, the Company closed on a private placement of approximately $6.0 million of Units. Each Unit consists of (i) one In connection with the private placement, on March 23, 2020, the Company also entered into a Registration Rights Agreement with the investors. Pursuant to the Registration Rights Agreement, the Company agreed to file with the SEC, no later than 30 days following the date on which the Company filed its Form 10-¬K for the year ended December 31, 2019 with the SEC, a registration statement on Form S-3 covering the shares of common stock issued in the offering and the shares of common stock underlying the Warrants. The Company timely filed the registration statement on Form S-3 (Registration Statement No. 333¬237790), which was declared effective on May 13, 2020 and remains in effect. Underwritten Public Offering On August 19, 2020, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with several underwriters (the “Underwriters”) in connection with the public offering (the “Offering”) of 3,333,334 shares of the Company’s common stock at a price of $3.60 per share, less underwriting discounts and commissions. In addition, pursuant to the terms of the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to an additional 500,000 shares of the Company’s common stock at the same price. The Underwriting Agreement contains customary representations, warranties and covenants of the Company and also provides for customary indemnification by the Company and the Underwriters against certain liabilities and customary contribution provisions in respect of those liabilities. The closing of the Offering occurred on August 21, 2020. At closing, the Company issued 3,833,334 shares of common stock and received net proceeds of approximately $12.5 million after deducting underwriting discounts and commissions and offering expenses of approximately $1.2 million. The Offering was made pursuant to the Company’s effective registration statement on Form S-3 (Registration Statement No. 333-229365), including the prospectus dated February 12, 2019, as supplemented by the prospectus supplement dated August 19, 2020. Stock-Based Compensation Expense The Company records stock-based compensation expense related to stock options and restricted stock units (“RSUs”). For the years ended December 31, 2021 and 2020, the Company recorded expense of $2,886,102 ($1,612,942 of which was included within research and development expenses and $1,273,160 was included within general and administrative expenses on the statements of operations) and $2,483,172 ($1,350,894 of which was included within research and development expenses and $1,132,278 was included within general and administrative expenses on the statements of operations), respectively. Restricted Stock Units A summary of the restricted stock units activity during the year ended December 31, 2021 is presented below: Weighted Average Number of Exercise RSUs Price RSUs non-vested January 1, 2021 104,083 $ 3.84 Granted 49,964 3.59 Vested (105,306) 3.86 Forfeited (6,963) 3.59 RSUs non-vested December 31, 2021 41,778 $ 3.59 On September 11, 2020, the Company granted members of its Board of Directors an aggregate of 43,728 RSUs under the Restated Plan. Each RSU is subject to settlement into one share of the Company’s common stock. The RSUs vested on the earlier of (i) the one-year anniversary of the date of grant and (ii) the date of the 2021 annual stockholders meeting, subject to the grantee remaining on the Board until then. The RSUs had a grant date fair value of $150,000, which will be recognized over the vesting period. Between March 31, 2021 and November 17, 2021 the Company granted members of its Board of Directors an aggregate of 49,964 RSUs under the Restated Plan. Each RSU is subject to settlement into one share of the Company’s common stock. The RSUs vest on the earlier of (i) the one-year anniversary of the date of grant and (ii) the date of the 2022 annual stockholders meeting, subject to the grantee remaining on the Board until then. The RSUs had a grant date fair value of $181,200, which will be recognized over the vesting period. As of December 31, 2021, there was $121,875 of unrecognized stock-based compensation expense related to RSUs which will be recognized over a weighted average period of 0.9 years. At-The-Market Offering May 2021 Sales Agreement On May 14, 2021, the Company entered into a Sales Agreement (the “May 2021 Sales Agreement”) with SVB Leerink LLC (“SVB Leerink”) under which the Company was able to offer and sell, from time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $30 million through SVB Leerink as its sales agent. Subject to the terms and conditions of the May 2021 Sales Agreement, SVB Leerink was able to sell the common stock by any method permitted by law deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended. SVB Leerink was obligated to use commercially reasonable efforts to sell the common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company had to pay SVB Leerink a commission equal to three percent (3.0)% of the gross sales proceeds of any common stock sold through SVB Leerink under the May 2021 Sales Agreement. Pursuant to the May 2021 Sales Agreement, the Company commenced sales of its common stock on October 6, 2021. During the year ended December 31, 2021, the Company received approximately $12.8 million in gross proceeds and $12.4 million in net proceeds from the sale of 2,435,604 shares of its common stock under the May 2021 Sales Agreement. December 2021 Sales Agreement On December 14, 2021, the Company entered into a Sales Agreement (the “December 2021 Sales Agreement”) with SVB Leerink under which the Company may offer and sell, from time to time at its sole discretion, shares of common stock for gross proceeds of up to $50.0 million through SVB Leerink as its sales agent (the “Offering”). The May 2021 Sales Agreement was terminated upon the effectiveness of the December 2021 Sales Agreement. The issuance and sale of shares, if any, of common stock by the Company under the December 2021 Sales Agreement will be pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-261638) filed with the SEC on December 14, 2021 (the “Registration Statement”), and the prospectus relating to the Offering filed therewith that forms a part of the Registration Statement. Subject to the terms and conditions of the December 2021 Sales Agreement, SVB Leerink may sell the common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended. SVB Leerink will use commercially reasonable efforts to sell the common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay SVB Leerink a commission equal to three percent (3.0)% of the gross sales proceeds of any common stock sold through SVB Leerink under the December 2021 Sales Agreement, and also has provided SVB Leerink with certain indemnification rights. The Company did not sell any shares of its Common Stock pursuant to the December 2021 Sales Agreement during the fiscal year ended December 31, 2021. Stock Option Exercises During the year ended December 31, 2021, stock options for the purchase of an aggregate of 121,261 shares of common stock, with exercise prices ranging from $1.95 to $3.11 per share, were exercised. One of the exercises was a cashless exercise, whereby 13,675 shares were withheld and not issued, to cover the cost to exercise and payroll taxes. Consequently, the exercises resulted in the issuance of 107,586 shares of common stock and the receipt of $203,125 of cash proceeds. Stock Options In applying the Black-Scholes option pricing model to stock options granted, the Company used the following approximate assumptions: For the Year Ended December 31, 2021 2020 Expected term (years) 5.85 - 10.00 5.85 - 10.00 Risk free interest rate 0.45% - 1.58% 0.26% -1.32% Expected volatility 92% - 94% 96% - 99% Expected dividends 0.00% 0.00% The Company has computed the fair value of stock options granted using the Black-Scholes option pricing model. Option forfeitures are accounted for at the time of occurrence. The expected term used for options issued is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” option grants. The Company does not currently have a sufficient trading history to support its historical volatility calculations. Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of three comparable entities over a period of time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. The Company has not declared dividends, is currently in the development stage and has no plan to declare future dividends at this time. The weighted average estimated grant date fair value of the stock options granted for the years ended December 31, 2021 and 2020 was approximately $5.39 and $3.01 per share, respectively. A summary of the option activity during the year ended December 31, 2021 is presented below: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Options Price In Years Value Outstanding, January 1, 2021 3,427,705 $ 3.37 Granted 1,106,107 5.39 Exercised (121,261) 2.07 Forfeited (35,153) 3.67 Outstanding, December 31, 2021 4,377,398 $ 3.89 7.6 $ 3,809,684 Exercisable, December 31, 2021 2,525,368 $ 3.48 6.6 $ 3,003,992 The following table presents information related to stock options as of December 31, 2021: Options Outstanding Options Exercisable Weighted Outstanding Average Exercisable Exercise Number of Remaining Life Number of Price Options In Years Options $1.24 260,000 3.2 260,000 $1.95 567,636 5.5 567,636 $2.72 764,419 8.4 382,210 $2.74 667 7.0 500 $2.89 249,751 8.4 128,868 $3.11 656,078 7.6 519,514 $3.43 58,920 8.7 24,554 $3.48 35,000 8.7 14,584 $3.59 57,918 — — $3.71 43,000 8.6 20,306 $4.00 2,000 6.9 2,000 $4.06 35,000 — — $4.53 127,000 — — $4.68 20,000 8.1 12,223 $4.81 219,000 — — $5.10 6,000 6.7 5,833 $5.11 1,637 — — $5.19 16,500 6.7 16,500 $5.25 26,668 4.8 26,668 $5.77 50,000 9.0 16,667 $6.01 652,899 — — $6.20 300,387 6.6 300,387 $6.30 60,000 6.5 60,000 $8.72 166,918 6.3 166,918 4,377,398 6.6 2,525,368 As of December 31, 2021, there was $5,260,000 of unrecognized stock-based compensation expense related to stock options which will be recognized over a weighted average period of 1.9 years. |