Quarterly report pursuant to Section 13 or 15(d)

Equity

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Equity
3 Months Ended
Mar. 31, 2020
Equity [Abstract]  
EQUITY

NOTE 8 – EQUITY

 

Common Shares Sold for Cash

 

On December 13, 2019, the Company entered into an Open Market Sale AgreementSM (the "Sales Agreement") with Jefferies LLC, as sales agent ("Jefferies"), pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of its common stock, par value $0.0001 per share, having an aggregate offering price of up to $20.0 million. On April 6, 2020, the date on which the Company filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, the Company's registration statement became subject to the offering limits set forth in General Instruction I.B.6 of Form S-3. 

 

During the first quarter of 2020, Jefferies sold an aggregate of 980,358 shares of common stock at an average price of $1.66 per share to investors. The Company recorded net proceeds of $1,539,251, net of commission and other offering costs of $84,333. 

 

Common Shares Issued for Services

 

During the first quarter of 2020, the Company issued a total of 222,577 shares of its common stock for services rendered and to be rendered. The shares of common stock were issued under the 2019 Incentive Stock Plan. These shares were valued at $213,300, the fair market values on the grant dates using the reported closing share prices on the dates of grant and the Company recorded stock-based compensation expense of $156,093 for the quarter ended March 31, 2020 and recorded prepaid expense of $57,207 as of March 31, 2020 which will be amortized over the rest of corresponding service periods.

 

Options

 

The following table summarizes the shares of the Company's common stock issuable upon exercise of options outstanding at March 31, 2020:

 

Options Outstanding     Options Exercisable  
Range of
Exercise Price
    Number Outstanding at March 31, 2020     Range of Weighted Average Remaining Contractual Life (Years)     Weighted Average Exercise Price     Number Exercisable at March 31, 2020     Weighted Average Exercise Price  
$ 0.50       2,000,000       6.86     $ 0.50       2,000,000     $ 0.50  
  1.00 – 1.93       2,030,000       0.59 – 9.89       1.43       855,833       1.29  
  2.00 – 2.80       2,740,000       2.08 – 3.76       2.17       2,650,000       2.16  
  4.76       30,000       4.01       4.76       30,000       4.76  
$ 0.50 – 4.76       6,800,000       5.49     $ 1.47       5,535,833     $ 1.44  

 

The stock options issued during the three months ended March 31, 2020 were issued under the 2019 Stock Incentive Plan. Stock option activities for the three months ended March 31, 2020 were as follows:

 

    Number of Options     Weighted Average Exercise Price  
Outstanding at January 1, 2020     5,260,000     $ 1.45  
Granted     1,540,000       1.53  
Terminated / Exercised     -       -  
Outstanding at March 31, 2020     6,800,000     $ 1.47  
Options exercisable at March 31, 2020     5,535,833     $ 1.44  
Options expected to vest     1,264,167     $ 1.60  

 

The aggregate intrinsic values of stock options outstanding and stock options exercisable at March 31, 2020 was $2,364,900 and $2,330,100, respectively.

 

The fair values of options granted during the three months ended March 31, 2020 were estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: volatility of 137.42% - 139.58%, risk-free rate of 1.39% - 1.67%, annual dividend yield of 0% and expected life of 5.00 – 10.00 years. The aggregate fair value of the options granted during the three months ended March 31, 2020 was $2,422,225.

 

Stock-based compensation expense associated with stock options granted amounted to $785,350 and $2,272,747 for the three months ended March 31, 2020 and 2019, respectively.

 

A summary of the status of the Company's nonvested stock options granted as of March 31, 2020 and changes during the three months ended March 31, 2020 is presented below:

 

    Number of Options     Weighted Average Exercise Price  
Nonvested at January 1, 2020     264,723     $ 2.00  
Granted     1,540,000       1.53  
Vested     (540,556 )     (1.59 )
Nonvested at March 31, 2020     1,264,167     $ 1.60