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