Shareholders' Equity

6 Months Ended

Jun. 30, 2020

Stockholders' Equity Note [Abstract]

Shareholders’ Equity

Note 7. Shareholders’ Equity

Preferred Stock

The Company has 350,000 shares of preferred stock authorized, none of which are issued or outstanding.

Common Stock

The following items represent transactions in the Company’s common stock for the six months ended June 30, 2020:

● On January 8, 2020, the Company issued 2,189 shares of common stock as a result of an option exercise. The exercise price of the option was $0.86 per share. The cash exercise price for those shares was received in December 2019.

● The Company issued a vendor 10,000 shares of common stock with a fair value of $1.68 per share on January 8, 2020, another 10,000 shares of common stock with a fair value of $2.25 per share on February 10, 2020 and another 10,000 shares of common stock with a fair value of $1.97 per share on March 12, 2020, in each case as partial consideration for its service performed. The shares were fully vested on the date of grant and resulted in the recognition of $59,000 of expense during the six months ended June 30, 2020.

● On February 20, 2020, the Company issued 206 shares of common stock as a result of a cashless exercise of warrants. The exercise price of the warrants was $2.50.

● On March 23, 2020, the Company issued 1,956,182 shares of common stock for payment on an achieved milestone. The fair value of the shares was $2.56 per share based upon a formula set forth in the asset purchase agreement.

● During the six months ended June 30, 2020, the Company issued 304,615 shares of common stock as a result of warrant exercises. The exercise price of the warrants was $2.25 per share.

● During the six months ended June 30, 2020, the Company sold 4,545,116 shares of common stock pursuant to the FBR Sales Agreement at a weighted average price of $2.08 per share.

The issuances of the Company’s common stock to vendors and as a result of option exercises described above were issued under the 2015 Plan and are registered on a Registration Statement on Form S-8. However, as shares of common stock are not covered by a reoffer prospectus, the certificates evidencing such shares reflect a Securities Act restrictive legend.

The issuances of the Company’s common stock (a) as a result of warrant exercises described above, other than upon cashless exercise, were registered on a Registration Statement on Form S-1, (b) for payment on an achieved milestone described above were registered on a Registration Statement on Form S-3 and (c) pursuant to the FBR Sales Agreement described above were registered on a Registration Statement on Form S-3.

The Company’s common stock issued as a result of the cashless exercise of the warrants described above were exempt from registration pursuant to Section 3(a)(9) of the Securities Act.

FBR At Market Issuance Sales Agreement

On August 11, 2017, the Company entered into the FBR Sales Agreement to sell shares of the Company’s common stock from time to time, through an “at-the-market” equity offering program under which FBR acts as sales agent. Under the FBR Sales Agreement, the Company sets the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales may be requested to be made, limitation on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made. The FBR Sales Agreement provides that FBR is entitled to compensation for its services in an amount equal to 3% of the gross proceeds from the sale of shares sold under the FBR Sale Agreement. The Company has no obligation to sell any shares under the FBR Sales Agreement, and may suspend solicitation and offers under the FBR Sales Agreement at any time.

The Company’s shelf registration statement on Form S-3 (File No. 333- 217738) filed on May 5, 2017 (the “May 2017 Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) expired on August 10, 2020, but which may be utilized for a period up to six months or until a new shelf registration statement is declared effective, whichever occurs first. All sales under the FBR Sales Agreement from August 11, 2017 through August 10, 2020 were made pursuant to the May 2017 Registration Statement.

Future sales of common stock made pursuant to the FBR Sales Agreement, if any, will be made pursuant to the May 2017 Registration Statement or, once declared effective, the Company’s shelf registration statement on Form S-3 (File No. 333- 239928) filed on July 17, 2020 with the SEC, and any amendments thereto, the base prospectus filed as part of such registration statement, and any prospectus supplements. Through July 28, 2020, the shares sold pursuant to the FBR Sales Agreement were issued pursuant to General Instruction I.B.6 of Form S-3, which permits the Company to sell shelf securities in a public primary offering with a value not exceeding one-third of the average market value of the Company’s voting and non-voting common equity held by non-affiliates in any 12-month period as long as the aggregate market value of the Company’s outstanding voting and non-voting common equity held by non-affiliates is less than $75 million. As of July 28, 2020, the Company’s outstanding voting and non-voting common equity held by non-affiliates exceeded $75 million.

As of August 10, 2020, there was $1.5 million available for the sale of common stock under the FBR Sales Agreement.