Note 4 - Lincoln Park Financing

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Stock Purchase Agreement [Text Block]

Note

4.

Lincoln Park Financing

On

August 25, 2017,

we entered into a stock purchase agreement (“LPC Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park agreed to purchase from us at our request up to an aggregate of

$10,000,000

of our common stock (subject to certain limitations) from time to time over a period of

three

years. Concurrently, we entered into a registration rights agreement with Lincoln Park (“LPC RRA”), pursuant to which we were required to file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-

1

to register for resale under the Securities Act of

1933,

as amended, the shares of common stock that have been or

may

be issued to Lincoln Park under the LPC Purchase Agreement. The registration statement was filed, and on

September 22, 2017,

it was deemed effective by the SEC. The LPC Purchase Agreement allows us, from time to time and at our sole discretion, to direct Lincoln Park to purchase shares of our common stock, subject to limitations in both volume and dollar amount. The volume of shares is limited to a maximum of

50,000

shares if our stock closes at less than

$0.50

per share,

75,000

if it closes from

$0.50

to

$0.74

per share,

100,000

if it closes from

$0.75

to

$1.24

per share, and

200,000

if it closes at or above

$1.25

per share. The maximum dollar amount for any single purchase is

$500,000.

There are

no

trading volume requirements under the LPC Purchase Agreement, and we alone control the timing and amount of any sales of our common stock to Lincoln Park. The purchase price of the shares that

may

be sold to Lincoln Park under the Purchase Agreement is the lower of (i) the lowest sale price on the date of purchase, or (ii) the average of the

three

lowest closing prices in the prior

12

business days. The purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during the business days used to compute such price. We

may

at any time in our sole discretion terminate the LPC Purchase Agreement without fee, penalty or cost upon

one

business day notice. There are

no

restrictions on future financings, rights of

first

refusal, participation rights, penalties or liquidated damages in the LPC Purchase Agreement or LPC RRA other than a prohibition on entering into a “Variable Rate Transaction,” as defined in the Purchase Agreement. Lincoln Park

may

not

assign or transfer its rights and obligations under the Purchase Agreement.

In consideration for entering into the LPC Purchase Agreement, on

August 25, 2017,

we issued to Lincoln Park

488,998

shares of common stock as an “initial commitment fee.” For

no

additional consideration, when and if Lincoln Park purchases (at the Company’s discretion) any portion of the

$10,000,000

aggregate commitment, we are required to issue up to

488,998

shares, pro-rata, as “additional commitment shares”. For example, if we elect, at our sole discretion, to require Lincoln Park to purchase

$25,000

of our stock, then we would issue

1,222

additional commitment shares, which is the product of

$25,000

(the amount we have elected to sell) divided by

$10,000,000

(total amount we can sell Lincoln Park pursuant to the LPC Purchase Agreement) multiplied by

488,998

(the total number of additional commitment shares). The additional commitment shares will only be issued pursuant to this formula as and when we elect at our discretion to sell stock to Lincoln Park.

From inception of the contract in

August 2017 

through

March 31, 2018,

we elected to sell Lincoln Park shares of our common stock for which we received

$679,305,

and issued Lincoln Park

1,825,000

shares, and

33,217

“additional commitment shares”. We recorded the stock sale in our equity statement and the additional shares issued as a fee for the transaction was offset against the shares issued.

During the

three

-months ended

March 31, 2018,

we elected to sell to Lincoln Park

650,000

shares of our common stock for which we received

$168,220.

Additionally, we issued Lincoln Park

8,226

“additional commitment” shares.