| Stockholders' Equity | NOTE 5 - Stockholders’ Equity Common Stock Effective March 5, 2018, the Articles of Incorporation
were amended to increase the authorized number of shares of common stock to 15,000,000. Effective October 18, 2018 the Articles of
Incorporation were amended to increase the authorized number of shares of common stock to 22,500,000. In 2017, the Company issued 40,934 shares of
common stock to directors at an average value of $2.09 per share, or $85,408. Also in 2017, 7,750 shares previously issued to a
director and 750 shares previously issued to an employee, with a combined carrying value of $9,830, were forfeited. In January 2018, the Company issued 23,256
shares of common stock to directors valued at $1.72 per share, or $40,000. In April 2018, the Company issued 176,744 shares
of common stock to directors valued at $1.2236 per share, or $216,264. Between May 29, 2018 and June 1, 2018, we issued
an aggregate of 1,000,000 shares of common stock upon conversion of the 1,000 shares of Series B Preferred Stock issued on April
6, 2018 (as described below under “Preferred Stock”). On June 26, 2018, as part of its public offering
of equity securities described in Note 1, the Company issued 2,040,000 shares of common stock and warrants to purchase a total
of 717,000 shares of common stock (including the warrants described under “Preferred Stock” below that were issued
on June 26, 2018). Each warrant has an initial price of $1.08 per share. The net proceeds to the company were approximately $2,068,900
after commissions and other offering expenses. The Company also issued Dawson James Securities, Inc., its placement agent in the
public offering, a Unit Purchase Option to acquire up to 191,200 Units, at an exercise price of $1.25 per Unit, consisting of 191,200
shares of common stock and warrants to purchase up to 57,360 shares of common stock at an exercise price of $1.08 as compensation. On August 31, 2018, the Company issued 100,000
shares of common stock upon conversion of 100 shares of Series C Preferred Stock issued on June 26, 2018 (as described below under
“Preferred Stock”). Deferred Compensation In previous years and in the nine months ended
September 30, 2018, the Company issued to various employees, directors, and contractors shares of the Company’s common stock,
subject to restrictions, pursuant to the 2013 Equity Incentive Plan (the “2013 Plan”). Such shares were valued at the
fair value at the date of issue. The fair value was expensed as compensation over the vesting period and recorded as a reduction
of stockholders’ equity. During the nine months ended September 30, 2018 and September 30, 2017, $213,449 and $192,248 respectively
of the unvested compensation cost related to these issues was recognized. As of September 30, 2018 and December 31, 2017,
the balance of unvested compensation to be recognized was $64,066 and $31,576, respectively and is recorded as prepaid stock compensation
as of those dates. Preferred Stock The Company is authorized to issue 10,000,000
shares of preferred stock, $0.001 par value. 250 and 0 shares of preferred stock were issued and outstanding at September 30, 2018
and December 31, 2017, respectively. On April 6, 2018, Sigma issued 1,000 shares
of the Company’s newly-created non-voting Series B Convertible Preferred Stock, which were convertible into 1,000,000 shares
of common stock and warrants to purchase an aggregate of 750,000 shares of the Company’s common stock, for an aggregate purchase
price of $1,000,000. The warrants have an initial exercise price of $1.47 per share, the closing price of the Company’s Common
Stock reported on The NASDAQ Capital Market on April 6, 2018, subject to adjustment in certain circumstances. The net proceeds
to the company were approximately $877,500 after commissions and other offering expenses. Sigma also issued Dawson James Securities,
Inc., its placement agent in the foregoing private placement, warrants to purchase up to 140,000 shares of common stock, at an
exercise price of $1.47 per share, as compensation. On June 26, 2018, as part of the public offering
described in Note 1, the Company issued 350 of the Company’s newly-created non-voting Series C Convertible Preferred Stock,
which were convertible into 350,000 shares of common stock, and warrants to purchase an aggregate of 105,000 shares of the Company’s
common stock. The warrants have an initial exercise price of $1.08 per share, 11% above the closing price of the Company’s
Common Stock reported on The NASDAQ Capital Market on June 26, 2018, subject to adjustment in certain circumstances. Stock Options As of September 30, 2018, an aggregate of 750
shares and 697,207 shares of common stock were reserved for issuance under the 2011 and the 2013 Plans, respectively. On February 21, 2018, the Company granted Mark
Cola, a former officer of the company, two ten-year options under the 2013 Plan to purchase an aggregate of 61,750 shares of common
stock each, with each option having an exercise price of $1.49 per share. Pursuant to Mr. Cola’s employment agreement, one
of the options became fully-vested on the October 10, 2018 date that Mr. Cola retired from the Company, and the other option vests
and becomes exercisable ratably over 17 monthly installments on the 15th day of each month commencing on March 15, 2018, subject
in each case to Mr. Cola’s continuing employment as a consultant. On February 26, 2018, the Company granted nine
employees ten-year options under the 2013 Equity Incentive Plan to purchase an aggregate of 70,188 shares of common stock, with
each option having an exercise price of $1.56 per share, and with vesting periods ranging from 3 to 4 years beginning February
26, 2019. On April 19, 2018, Sigma granted John Rice,
our President and Chief Executive Officer, three options to purchase up to 20,000 shares of our common stock under our 2013 Plan.
In addition, on each of April 30, May 31, June 30, 2018 and July 31, 2018, Sigma granted Mr. Rice an option to purchase up to 20,000
shares of our common stock under our 2013 Plan. The foregoing options have an exercise price per share equal to $1.88, $1.54, $1.48,
$1.26, $1.47, $1.19 and $.87 respectively, which is at least the closing price of our common stock on the respective date of grant,
and each is fully vested as of the respective grant date. On April 19, 2018, Sigma granted Ron Fisher,
our Vice President of Business Development, a five-year option to purchase an aggregate of 28,750 shares of common stock, with
such option having an exercise price of $1.22 per share, and with 1,438 shares vesting upon grant and the balance vesting in four
annual installments over four years following the date of grant (1,366 shares, 4,097 shares, 6,828 shares and 15,021 shares, respectively). During the nine months ended September 30,
2018, options to purchase 288,076 shares of common stock vested, and $569,718 of compensation cost was recognized. As of September
30, 2018, there were options to purchase 697,207 shares issued and outstanding under the 2013 Plan. Of this amount, there are vested
options exercisable for 373,689 shares of common stock. No options were exercised during the nine months or the quarter ended September
30, 2018. The Company generally grants stock options
to employees and directors at exercise prices equal to the fair market value of the Company’s stock on the dates of grant.
Stock options are typically granted throughout the year and generally vest over four years of service and expire ten years from
the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock
options over the requisite service period for each stock option award. Total share-based compensation expense included
in the condensed statements of operations for the nine months ended September 30, 2018 and 2017 is $783,167 and $505,630, of which
$569,718 and $313,382 is related to stock options, respectively. There was no capitalized share-based compensation cost as of September
30, 2018 and 2017. The fair value of share-based awards was estimated
using the Black-Scholes model with the following weighted-average assumptions for the nine months ended September 30, 2018 and
2017:
2018 2017
Dividend yield 0.00 0.00
Risk-free interest rate 2.68-3.05 % 1.89-2.45 %
Expected volatility 111.4-137.3 % 116.3-139.0 %
Expected life (in years) 5-10 5-10 Warrants At September 30, 2018, the Company had outstanding
warrants to purchase a total of 3,228,500 shares of common stock; 1,621,500 warrants at an exercise price of $4.00 per share, which
if not exercised, will expire on February 21, 2022, 890,000 warrants at an exercise price of $1.47 per share, which if not exercised,
will expire on October 07, 2023, and 717,000 warrants at an exercise price of $1.08 per share, which if not exercised, will expire
on June 26, 2023. On May 31, 2018, 24,000 warrants with an exercise
price of $2.00 were exercised in a cashless exchange transaction resulting in the issuance of 4,800 shares of the Company’s
common stock. |
