Note 10 - Stockholders’ Equity

Authorized Capital

The Company has authorized the issuance and sale of up to 80,000,000 shares of stock, consisting of 75,000,000 shares of common stock having a par value of $0.001 and 5,000,000 shares of Preferred Stock having a par value of $0.001 per share. As of December 31, 2018, and 2017, there were no shares of Preferred Stock outstanding and there were no declared but unpaid dividends or undeclared dividend arrearages on any shares of the Company’s capital stock.

Controlled Equity Offering

During the year ended December 31, 2018, the Company entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. as sales agent. The Company issued 2,186,855 shares of its common stock under the Controlled Equity Offering program for proceeds of $19,304,081, net of commissions and professional fees of $95,778.

Private Offering

During the year ended December 31, 2017, the Company completed a private offering for total net proceeds of approximately $5,026,181 (“Private Offering”). The Company issued an aggregate of 3,438,053 units at a price of $1.50 per unit, of which 289,334 units were sold to officers and directors. Each unit consists of one share of the Company’s common stock and one common stock purchase warrant (see “Warrants”). Each warrant can be exercised at any time prior to June 30, 2020 for the purchase of one share of the Company’s common stock at an exercise price of $2.25.

Stock Options

The Company has an incentive stock plan, the Amended and Restated 2011 Equity Incentive Plan, as amended (the “2011 Plan”), and has granted stock options to employees, non-employee directors and consultants from the 2011 Plan. Options granted under the 2011 Plan may be Incentive Stock Options or Non-statutory Stock Options, as determined by the Administrator at the time of grant. On June 19, 2018, the Company’s stockholders approved an amendment to the 2011 Plan previously adopted by the Company’s board of directors on April 20, 2018 (the “2018 Amendment”). The 2018 Amendment increased the number of shares authorized for issuance under the 2011 Plan to a total of 10,000,000. As of December 31, 2018, there were 3,775,852 shares remaining available for issuance under the 2011 Plan.

During the year ended December 31, 2018, the Company granted stock options to employees to purchase 860,000 shares of the Company’s common stock at an exercise prices that ranged between $3.57 to $8.86 per share. The options have terms of ten years. The stock options have an aggregate grant date fair value of $3,337,752.

Due to the commencement of the clinical study during the quarter ended September 30, 2018, stock options to purchase 726,000 shares of the Company’s common stock granted to its employees in January 2017 met the performance conditions applicable to such options and began vesting. Upon certification of achievement of the performance condition by the compensation committee of the Company’s board of directors on July 18, 2018, 50% of the options became vested. The remaining shares subject to the stock options will vest over a period of 24 months subject to the continuous service of the applicable optionee. The stock options have an exercise price of $2.40 and an aggregate grant date fair value of $2,759,453.

During the year ended December 31, 2018, 602,533 stock options were exercised for cash proceeds of $494,866 and the Company cancelled 460,599 stock options.

During the year ended December 31, 2017, the Company granted stock options to two consultants to purchase a total of 85,000 shares of the Company’s common stock. The stock options have an exercise price of $2.02 per share, are exercisable during a ten-year term, are subject to vesting over periods of three and four years and have an aggregate measurement date fair value of $269,416.

During the year ended December 31, 2017, the Company granted stock options to employees to purchase 1,031,000 shares of the Company’s common stock at an exercise price of $2.40 per share. The options have terms of ten years. Of the 1,031,000 stock options granted, 300,000 are subject to vesting based on continuous service over periods between zero and four years from the date of grant. The balance of the grants, comprising stock options to purchase an aggregate of 731,000 shares, have performance-based vesting conditions and will be valued at the time the milestones are reached. The stock options have an aggregate grant date fair value of $528,580.

During the year ended December 31, 2017, the Company granted stock options to a new member of its Board of Directors to purchase 200,000 shares of the Company’s common stock. The stock options have an exercise price of $4.60 per share, are exercisable during a ten-year term, are subject to vesting over four years and have an aggregate grant date fair value of $719,360.

During the year ended December 31, 2017, 123,333 stock options were exercised for cash proceeds of $129,255 and the Company cancelled 153,750 stock options.

The Company recorded stock-based compensation as follows:

The following table represents stock option activity for the years ended December 31, 2018 and 2017:

The following table summarizes information on stock options outstanding and exercisable as of December 31, 2018:

Warrants

During the year ended December 31, 2018, warrants to purchase up to an aggregate of 780,500 shares of the Company’s common stock were issued in the Company’s Notes offering. The Warrants had a fair value of $1,253,390 (see Note 7 “Notes Payable”).

During the year ended December 31, 2018, warrants to purchase 349,315 shares of the Company’s common stock were exercised for aggregate cash proceeds of $678,240.

In January 2017, a total of 926,588 common stock purchase warrants were exercised for aggregate cash proceeds of $1,853,176. Additional proceeds in the amount of $522,326 were received in January 2017 from warrants exercised in December 2016. During the year ended December 31, 2017, unexercised warrants to purchase 4,695,846 shares of common stock expired.

During the year ended December 31, 2017, an additional 143,650 warrants were exercised for aggregate cash proceeds of $111,994.

During the year ended December 31, 2017, the Company issued warrants to two consultants. The warrants are exercisable any time prior to August 7, 2022 for the purchase of an aggregate of 180,000 shares of common stock at an exercise price of $1.99 per share.

The following table represents warrant activity for the years ended December 31, 2018 and 2017: