Note 5 - Equity Transactions

9 Months Ended

12 Months Ended

Sep. 30, 2020

Dec. 31, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

(

5

) EQUITY TRANSACTIONS:

The Company expensed

$5,320

and

$19,380

in employee and board member stock compensation for the

three

and

nine

months ended

September 

30,

2020.

The Company expensed

$97,250

and

$159,380

in employee and board member stock compensation for the

three

and

nine

months ended

September 

30,

2019.

These shares were valued using quoted market values. The Company accrues stock compensation expense over the period earned for employees and board members. This expense is then trued up at the time the shares are issued based on the trading price at the time of issuance. Stock compensation expense for board members is included in “Board of Directors fees and costs” on our statement of operations, and stock compensation expense for officers and employees that are

not

board members is included in “Personnel” on our statement of operations. 

On

May 31, 2019,

the Company completed a private placement of its securities to a group of accredited investors that included several directors of the Company and members of management. Investors in the private placement purchased a total of

29,770,000

units at a price per unit of

$0.25,

each unit consisting of

one

share of common stock and

one

warrant to purchase a share of common stock, resulting in gross proceeds to the Company of

$7,442,500,

before deducting placement agent fees and offering expenses of

$452,900

resulting in net cash proceeds of

$6,989,600.

The warrants are exercisable immediately upon issuance at an exercise price of

$0.30

per share and expire on the

66

th

 month anniversary of the issuance date.  The Company paid a cash fee to its placement agent of

$452,900

and issued warrants to the placement agent and its designees to purchase an aggregate of

1,359,000

shares of common stock with the same terms as the warrants issued to the investors.  The Company filed a registration statement with the Securities and Exchange Commission to register the resale of the outstanding common stock and the shares of common stock underlying the warrants and the warrants issued to the placement agent, which was declared effective on

July 12, 2019.

In addition, the Company's directors and officers entered into Lock-Up Agreements at the closing under which they have agreed

not

to sell any of their securities of the Company until the earliest of (i)

270

days after the effective date of the Registration Statement, (ii)

365

days after the closing, and (iii)

120

days after the listing of Company's common stock on a national securities exchange. 

Pursuant to terms of the Placement Agency Agreement between the Company and ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”), entered into in connection with Company's

May 2019

private placement (the

“May

Placement”), the Company paid ThinkEquity (i) a cash fee in the amount of

$29,637,

representing

8%

of the gross proceeds in the Private Placement received from investors that were

first

introduced to the Company by ThinkEquity in connection with the

May

Placement, and (ii) a warrant to purchase

222,282

shares of Common Stock, representing

6%

of the shares of Common Stock purchased by such investors in the Private Placement, at an exercise price of

$0.11

per share (

110%

of the price per share paid by investors in the Private Placement).

On

April 24, 2020,

the Company completed a private placement of common stock to a group of accredited investors that included several directors of the Company and members of management. Investors in the private placement purchased a total of

20

million shares of common stock at a price of

$0.10

per share, resulting in gross proceeds to the Company of

$2,000,000.

On

August 27, 2020,

the Company completed a private placement of its securities to a group of accredited investors that included several directors of the Company and members of management. Investors in the private placement purchased a total of

28,311,140

units at a price of

$0.10

per unit, resulting in gross proceeds to the Company of

$2,831,114.

Each unit consisted of

one

share of common stock and a

seven

-year warrant to purchase

one

share of common stock at an exercise price of

$0.15

per share.

As of

September 

30,

2020,

the Company had warrants outstanding to purchase

91,854,716

shares of common stock at exercise prices of

$0.11

-

$1.00

per share that expire at various dates through

2027.

 In addition, there are

seven

-year warrants outstanding at

September 

30,

2020

to purchase

480,000

Units sold in our

May 2016

private placement at an exercise price of

$0.25

per Unit,

164,074

Units sold in our

February 2017

private placement at an exercise price of

$0.35

per Unit, and

600

Units sold in our

October 2017

private placement at an exercise price of

$100

per Unit. 

(

8

) EQUITY TRANSACTIONS:

The Company expensed

$168,120

and

$83,420

in employee and board member stock compensation in

2019

and

2018,

respectively. These shares were valued using quoted market values. The Company accrues stock compensation expense over the period earned for employees and board members. Stock compensation expense for board members is included in “Board of Directors fees and costs” on our statement of operations, and stock compensation expense for officers and employees that are

not

board members is included in “Personnel” on our statement of operations. In

2019,

the Company issued

450,000

shares of Common Stock to employees as a bonus with a value of

$87,750,

and issued

241,666

shares as a bonus to advisory board members with a value of

$109,908.

In addition, the Company issued

344,000

shares of Common Stock in

2019

to board members and officers with a value of

$158,670

at the time of issuance, with respect to which compensation expense had been accrued with respect to

172,000

of such shares in

2018

and

172,000

of such shares in

2017.

In

2018,

the Company did

not

issue shares of Common Stock for compensation.

In

April 2014,

we entered into a

one

-year agreement with Scarsdale Equities, LLC (“Scarsdale”), which was subsequently extended, to act as our financial advisor and exclusive placement agent. Under the agreement, Scarsdale is entitled to a fee with respect to each private placement of debt or equity securities of the Company in an amount equal to

6%

of the proceeds of such financing raised by Scarsdale, and a

seven

-year warrant to purchase

6%

of the securities issued as a part of such financing raised by Scarsdale, with an exercise price equal to

100%

of the offering price of the securities sold during the term of the agreement. The foregoing compensation terms were modified for private placements effected in

2017,

resulting in the compensation described in more detail below. The agreement also provides for payment of the above fees for any financing within

one

year of the expiration of the term, with investors identified by Scarsdale during the term. N. Scott Fine, the Company's Chief Executive Officer and Chairman of the Board, was a principal of Scarsdale at the time we initially retained Scarsdale as our financial adviser, and his son, Joshua M. Fine, was employed by Scarsdale at the time of its initial engagement by us and active on our account until his appointment as our Chief Financial Officer in

June 2019.

In 

April 2018,

the Company completed a private placement of

20,100

“Units”, at a price of

$100

per Unit, resulting in gross proceeds to the Company of

$2,010,000.

Each Unit consisted of

one

share of Series B Convertible Preferred Stock (“Series B Preferred Stock”) convertible into

400

shares of Common Stock, and

seven

-year warrants to purchase

400

shares of Common Stock at an exercise price of

$0.25

per share. Prior to

March 31, 2018,

the Company received

$74,983

in advance from these investors. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of

$50,000.

On

May 23, 2018,

at a special meeting of stockholders, the Company's stockholders approved amendments to the Company's Articles of Incorporation increasing the number of authorized shares of Common Stock from

100,000,000

shares to

500,000,000

shares, and deleting references to the Series A Preferred Stock, which was

no

longer outstanding. Following the meeting, the Company filed Articles of Amendment to its Article of Incorporation which resulted in the automatic conversion of each outstanding share of Series B Preferred Stock into

400

shares of Common Stock, increasing the number of outstanding shares of Common Stock by

14,240,000.

In

December 2018,

the Company completed a private placement of

3,519,963

common stock “Units” at a price of

$0.65

per Unit, resulting in gross proceeds to the Company of

$2,342,034,

of which

$130,063

was received in

January 2019

and is reflected in the accompanying balance sheet as a stock subscription receivable. Each Unit consisted of

one

share of common stock and a

seven

-year warrant to purchase

one

share of common stock at an exercise price of

$0.65

per share.

On

May 31, 2019,

the Company completed a private placement of its securities to a group of accredited investors that included several directors of the Company and members of management. Investors in the private placement purchased a total of

29,770,000

units at a price per unit of

$0.25,

each unit consisting of

one

share of common stock and

one

warrant to purchase a share of common stock, resulting in gross proceeds to the Company of

$7,442,500,

before deducting placement agent fees and offering expenses of

$452,900

resulting in cash proceeds of

$6,989,600.

The warrants are exercisable immediately upon issuance at an exercise price of

$0.30

per share and expire on the

66

th

 month anniversary of the issuance date.  The Company paid a cash fee to its placement agent of

$452,900

and issued warrants to the placement agent and its designees to purchase an aggregate of

1,359,000

shares of common stock with the same terms as the warrants issued to the investors.  The Company filed a registration statement with the Securities and Exchange Commission to register the resale of the outstanding common stock and the shares of common stock underlying the warrants and the warrants issued to the placement agent, which was declared effective on

July 12, 2019.

In addition, the Company's directors and officers entered into Lock-Up Agreements at the closing under which they have agreed

not

to sell any of their securities of the Company until the earliest of (i)

270

days after the effective date of the Registration Statement, (ii)

365

days after the closing, and (iii)

120

days after the listing of Company's common stock on a national securities exchange.

The following table presents the number of Common Stock warrants outstanding:

Warrants outstanding, December 31, 2017	20,632,331
Issued	11,559,963
Exercised	-
Expired	-
Warrants outstanding, December 31, 2018	32,192,294
Issued	31,129,000
Exercised	-
Expired	-
Warrants outstanding, December 31, 2019	63,321,294

The following table presents the number of Common Stock warrants outstanding, their exercise price, and expiration dates at

December 31, 2019:

Warrants Issued	Exercise Price		Expiration Date
240,000	$	0.25	April 2021
103,500	$	1.00	July 2021
156,000	$	0.50	July 2022
78,000	$	0.50	August 2022
8,100,000	$	0.25	June 2023
5,754,831	$	0.35	February 2024
6,200,000	$	0.25	October 2024
31,129,000	$	0.30	November 2024
8,040,000	$	0.25	April 2025
3,519,963	$	0.65	December 2025
63,321,294

In addition, there are

seven

-year warrants outstanding at

December 31, 2019

to purchase

480,000

Units sold in our

May 2016

private placement at an exercise price of

$0.25

per Unit,

164,074

Units sold in our

February 2017

private placement at an exercise price of

$0.35

per Unit, and

600

Units sold in our

October 2017

private placement at an exercise price of

$100

per Unit.