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STOCKHOLDERS’ EQUITY
6 Months Ended
Jun. 30, 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.

 

Stock-based compensation and options

 

During the six-month period ended June 30, 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 vest over three years. During the three and six-month period ended June 30, 2022, stock-based compensation expense of $220 and $306 was recorded for options that vested, respectively. During the three and six-month period ended June 30, 2021, there was stock-based compensation expense of $99 and $208, respectively. During the second quarter of 2022 and 2021, 0 and 13,845 options expired, respectively.

 

The fair value for options granted in the second 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.

 

   2022   2021   2022   2020 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2020 
                 
Research and development   1    5    3    10 
Selling and marketing   6    10    12    31 
General and administrative   213    84    291    167 
                     
Total  $220   $99   $306   $208 

 

As of June 30, 2022, the total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was $390, which is expected to be recognized over a weighted average period of approximately 2.5 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 received 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 $1,627 was recorded with a corresponding increase in additional paid in capital in the second quarter of 2021.

 

On June 14, 2022, the Company issued warrants to two sales consultants to purchase 250,000 shares of common stock which will expire on June 14, 2029 and have an exercise price of $1.00 per share. Accordingly, expense related to these warrants in the amount of $135,000 was recorded 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 - 3.49 %
Dividend yield     0 %
Volatility     137.7 - 147.6 %
Contractual term (in years)     0.34 - 6.96