Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS' EQUITY

v3.20.2
STOCKHOLDERS' EQUITY
9 Months Ended
Sep. 30, 2020
STOCKHOLDERS' EQUITY  
STOCKHOLDERS' EQUITY

NOTE 6 – STOCKHOLDERS’ EQUITY

Initial Public Offering

On August 14, 2020, the Company consummated its IPO of 2,500,000 units (the "Units") at a price of $5.00 per Unit, which resulted in aggregate gross and net proceeds of approximately $12.5 million and $10.6 million, respectively. Each Unit consisted of one share of common stock, par value $0.00001 per share and one warrant to purchase one share of common stock (the "Warrants"). The Warrants are exercisable immediately upon issuance and at any time up to the date that is five years from the date of issuance and will have an exercise price of $5.50 per share.

Also on August 14, 2020, the Company consummated the closing of a partial exercise of the over-allotment option granted to the underwriters in connection with its IPO to purchase 375,000 additional common stock purchase warrants at a price of $0.01 per warrant for aggregate proceeds of $3,750.

Further on August 14, 2020, the Company issued to the underwrites in connection with its IPO warrants to purchase 125,000 shares of common stock at $6.25 per share. The warrants are exercisable at any time for cash or on a cashless basis during the four and one half year period commencing 180 days from the effective date of the Company’s Registration Statement. The warrants had an issuance date fair value of $225,850 that was recorded as a debit and credit to additional paid-in capital.

See Note 5 - Notes Payable for additional details.

Founder Employee Incentive Program

On July 2, 2020, the Company's board of directors adopted the Founder Employee Incentive Program (the "Founder Program") under the 2017 Plan. The purposes of the Founder Program are to offer near-term and long-term incentives to founder employees of the Company that are intended to keep such employees in the employ of the Company, and that are based on individual performance, the achievement of financial goals of the Company and the total return to the Company's stockholders.

Stock-Based Compensation

During the three months ended September 30, 2020 and 2019, the Company recognized aggregate stock-based compensation expense (benefit) of $(5,465) (($10,641) related to common stock that was not issued as of September 30, 2020 and, accordingly, was included in accrued expenses and other current liabilities and $5,176 related to stock options) and $35,934 ($30,800 related to common stock and $5,134 related to stock options), respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized aggregate stock-based compensation expense of $78,477 ($12,000 related to common stock, $50,484 related to common stock that was not issued as of September 30, 2020 and, accordingly, was included in accrued expenses and other current liabilities and $15,993 related to stock options) and $46,694 ($30,800 related to common stock and $15,894 related to stock options), respectively. As of September 30, 2020, there was $10,790 of unrecognized stock-based compensation expense, which will be recognized over approximately 2.2 years.

Common Stock

During the nine months ended September 30, 2020, the Company issued an aggregate of 4,446 shares of immediately vested common stock, respectively under the Company’s 2017 Plan to two employees and two non-employee service providers. The shares had an issuance date fair value of an aggregate of $12,000, which was recognized immediately.

See Note 5 - Notes Payable for additional details related to common stock issuances.

Stock Warrants

See Note 5 - Notes Payable - Convertible Notes Payable and Note 6 - Stockholder's Equity - Initial Public Offering for details regarding the issuance of warrants during the nine months ended September 30, 2020.

 The Company used the following approximate assumptions in connection with its estimation of fair value of warrants:

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

    

2020

    

2019

    

2020

    

2019

 

Expected term (years)

 

3.86

 

n/a

 

3.86

 

5.00

 

Expected volatility

 

61.2

%  

n/a

 

61.2

%  

55.8%-56.1

%

Risk free interest rate

 

0.24

%  

n/a

 

0.24

%  

1.75%-2.32

%

Expected dividends

 

0.00

%  

n/a

 

0.00

%  

0.00

%

 

A summary of the warrant activity during the nine months ended September 30, 2020 is presented below:

 

 

 

 

 

 

 

 

 

 

 

 

    

    

    

    

 

    

Weighted

    

    

 

 

 

 

 

Weighted

 

Average

 

 

 

 

 

 

 

Average

 

Remaining

 

 

 

 

 

Number of

 

Exercise

 

Life

 

Intrinsic

 

 

Warrants

 

Price

 

In Years

 

Value

Outstanding, January 1, 2020

 

1,138,557

 

$

4.95

 

  

 

 

  

Issued

 

4,854,718

 

 

5.30

 

  

 

 

  

Warrant adjustment [1]

 

 —

 

 

(0.89)

 

  

 

 

  

Exercised

 

 —

 

 

 —

 

  

 

 

  

Expired

 

 —

 

 

 —

 

  

 

 

  

Outstanding, September 30, 2020 [2]

 

5,993,275

 

$

5.23

 

4.5

 

$

 —

 

 

 

 

 

 

 

  

 

 

  

Exercisable, September 30, 2020

 

5,452,953

 

$

5.28

 

4.6

 

$

 —


[1] Effect of down round triggered in connection with closing of IPO. See Note 5 - Notes Payable for additional details.

[2] Excludes five-year warrants to purchase 1,235,977 shares of common stock at an exercise price of $5.50 per share that are issuable upon exercise of certain warrants. See Note 5 - Notes Payable for additional details.

The following table presents information related to stock warrants as of September 30, 2020:

 

 

 

 

 

 

 

 

Warrants Outstanding

 

Warrants Exercisable

 

 

 

 

 

Weighted

 

 

 

 

 

Outstanding

 

Average

 

Exercisable

Exercise

 

Number of

 

Remaining Life

 

Number of

Price

    

Warrants

    

In Years

    

Warrants

 

 

 

 

 

 

 

 

$

4.20

 

1,235,997

 

3.6

 

857,141

$

4.95

 

177,223

 

2.5

 

177,223

$

5.50

 

4,455,055

 

4.8

 

4,418,589

$

6.25

 

125,000

 

 —

 

 —

 

 

 

5,993,275

 

4.6

 

5,452,953