UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
OR
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated Filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of July 21, 2021, the issuer had shares of common stock outstanding.
SIGMA LABS, INC.
FORM 10-Q
TABLE OF CONTENTS
| 2 |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Sigma Labs, Inc.
Condensed Balance Sheets
(Unaudited)
| June 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid Assets | ||||||||
| Total Current Assets | ||||||||
| Other Assets: | ||||||||
| Property and Equipment, net | ||||||||
| Intangible Assets, net | ||||||||
| Long-Term Prepaid Asset | - | |||||||
| Total Other Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts Payable | $ | $ | ||||||
| Deferred Revenue | ||||||||
| Accrued Expenses | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Liabilities: | ||||||||
| Stock Appreciation Rights | ||||||||
| CARES Act Deferred Payroll Tax Liability | ||||||||
| Total Long-Term Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred Stock, $ par; shares authorized; and issued and outstanding, respectively | ||||||||
| Common Stock, $ par; shares authorized; and issued and outstanding, respectively | ||||||||
| Additional Paid-In Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to condensed financial statements.
| 3 |
Sigma Labs, Inc.
Condensed Statements of Operations
(Unaudited)
| Three
Months Ended June 30, | Six
Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| REVENUES | $ | $ | $ | $ | ||||||||||||
| COST OF REVENUE | ||||||||||||||||
| GROSS PROFIT (LOSS) | ||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Salaries & Benefits | ||||||||||||||||
| Stock-Based Compensation | ||||||||||||||||
| Operating R&D Costs | ||||||||||||||||
| Investor & Public Relations | ||||||||||||||||
| Organization Costs | ||||||||||||||||
| Legal & Professional Service Fees | ||||||||||||||||
| Office Expenses | ||||||||||||||||
| Depreciation & Amortization | ||||||||||||||||
| Other Operating Expenses | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest Income | ||||||||||||||||
| State Incentives | - | - | ||||||||||||||
| Exchange Rate Gain (Loss) | ( | ) | ( | ) | ||||||||||||
| Interest Expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on Dissolution of Joint Venture | - | ( | ) | - | ( | ) | ||||||||||
| Other Income | ||||||||||||||||
| Total Other Income (Expense) | ||||||||||||||||
| LOSS BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income Taxes | - | - | - | - | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Preferred Dividends | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss Applicable to Common Stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss per Common Share – Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Number of Shares Outstanding – Basic and Diluted | ||||||||||||||||
See accompanying notes to condensed financial statements.
| 4 |
Sigma Labs, Inc.
Statement of Stockholders’ Equity
For the Three and Six Months Ended June 30, 2021 and 2020
(Unaudited)
For the Three Months Ended June 30, 2021 and June 30, 2020
| Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||
| Shares Outstanding | Preferred Stock | Shares Outstanding | Common Stock | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balances, March 31, 2021 | $ | | $ | $ | | $ | ( | ) | $ | | ||||||||||||||||||
| Net Loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Extinguishment of Derivative Liability | - | - | - | - | - | |||||||||||||||||||||||
| Preferred Stock Dividends | - | - | ( | ) | - | |||||||||||||||||||||||
| Securities Issued for Third Party Services | - | - | - | |||||||||||||||||||||||||
| Stock Options Awarded to Employees | - | - | - | |||||||||||||||||||||||||
| Stock Options Awarded to Directors | - | - | - | |||||||||||||||||||||||||
| Balances, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||
| Shares Outstanding | Preferred Stock | Shares Outstanding | Common Stock | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balances, March 31, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net Loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Common Shares Sold in Public Offering | - | - | - | |||||||||||||||||||||||||
| Preferred Stock Dividends | - | - | ( | ) | - | |||||||||||||||||||||||
| Common Shares issued for Conversion of Preferred Shares | ( | ) | ( | ) | ( | ) | - | - | ||||||||||||||||||||
| Preferred Shares issued for Exercise of Preferred Warrants | - | - | - | |||||||||||||||||||||||||
| Securities Issued for Third Party Services | - | - | - | - | - | |||||||||||||||||||||||
| Stock Options Awarded to Employees | - | - | - | - | - | |||||||||||||||||||||||
| Common Shares Awarded to Employees | - | - | - | |||||||||||||||||||||||||
| Offering Costs | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
| Balances, June 30, 2020 | $ | | $ | $ | | $ | ( | ) | $ | |||||||||||||||||||
For the Six Months Ended June 30, 2021 and June 30, 2020
| Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||
| Shares Outstanding | Preferred Stock | Shares Outstanding | Common Stock | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balances, December 31, 2020 | $ | $ | $ | $ | ( |
) | $ | |||||||||||||||||||||
| Net Loss | - | - | - | - | - | ( |
) | ( |
) | |||||||||||||||||||
| Common Shares Sold in Public Offerings | - | - | - | |||||||||||||||||||||||||
| Extinguishment of Derivative Liability | - | - | - | - | ( |
) | - | ( |
) | |||||||||||||||||||
| Preferred Stock Dividends | - | - | ( |
) | - | |||||||||||||||||||||||
| Common Shares issued for Conversion of Preferred Shares | ( |
) | - | ( |
) | - | - | |||||||||||||||||||||
| Common Shares issued for Exercise of Common Warrants | - | - | - | |||||||||||||||||||||||||
| Securities Issued for Third Party Services | - | - | - | |||||||||||||||||||||||||
| Stock Options Awarded to Employees | - | - | - | - | - | |||||||||||||||||||||||
| Stock Options Awarded to Directors | - | - | - | - | - | |||||||||||||||||||||||
| Offering Costs | - | - | - | - | ( |
) | - | ( |
) | |||||||||||||||||||
| Balances, June 30, 2021 | $ | |
$ | $ | |
$ | ( |
) | $ | |
||||||||||||||||||
| Preferred Stock | Common Stock | Additional | ||||||||||||||||||||||||||
| Shares Outstanding | Preferred Stock | Shares Outstanding | Common Stock | Paid-in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balances, December 31, 2019 | - | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net Loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Common Shares Sold in Public Offering | - | - | - | |||||||||||||||||||||||||
| Preferred Shares Sold in Private Offering | - | - | ||||||||||||||||||||||||||
| Preferred Stock Dividends | - | - | ( | ) | - | |||||||||||||||||||||||
| Common Shares issued for Conversion of Preferred Shares | ( | ) | ( | ) | ( | ) | - | - | ||||||||||||||||||||
| Preferred Shares issued for Exercise of Preferred Warrants | - | - | - | |||||||||||||||||||||||||
| Securities Issued for Third Party Services | - | - | - | |||||||||||||||||||||||||
| Stock Options Awarded to Employees | - | - | - | - | ||||||||||||||||||||||||
| Common Shares Awarded to Employees | - | - | - | |||||||||||||||||||||||||
| Offering Costs | ( | ) | - | ( | ) | |||||||||||||||||||||||
| Issuance of Fractional Shares from Reverse Split | - | - | ( | ) | - | - | ||||||||||||||||||||||
| Balances, June 30, 2020 | $ | | $ | $ | | $ | ( | ) | $ | |||||||||||||||||||
See accompanying notes to condensed financial statements.
| 5 |
Sigma Labs, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| Six Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile Net Loss to Net Cash used in operating activities: | ||||||||
| Noncash Expenses: | ||||||||
| Depreciation and Amortization | ||||||||
| Gain on Derivative Liability | ( | ) | - | |||||
| Stock Based Compensation - Employees | ||||||||
| Stock Based Compensation - Third Party Services | ||||||||
| Stock Based Compensation - Directors | - | |||||||
| Change in assets and liabilities: | ||||||||
| Accounts Receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaid Assets | ( | ) | ||||||
| Accounts Payable | ( | ) | ||||||
| Deferred Revenue | ( | ) | ( | ) | ||||
| Accrued Expenses | ( | ) | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES | ||||||||
| Purchase of Property and Equipment | ( | ) | ( | ) | ||||
| Purchase of Intangible Assets | ( | ) | ( | ) | ||||
| Dissolution of Joint Venture | - | |||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES | ||||||||
| Gross Proceeds from Public and Private Issuances of Securities | ||||||||
| Less Offering Costs | ( | ) | ( | ) | ||||
| Payment of Note Payable | - | ( | ) | |||||
| Proceeds from Exercise of Warrants | ||||||||
| Deferral of Payroll Taxes under the CARES Act | - | |||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET CHANGE IN CASH FOR PERIOD | ||||||||
| CASH AT BEGINNING OF PERIOD | ||||||||
| CASH AT END OF PERIOD | $ | $ | ||||||
| Supplemental Disclosures: | ||||||||
| Noncash investing and financing activities disclosure: | ||||||||
| Issuance of Common Shares for Preferred Dividends | $ | | $ | |||||
| Issuance of Securities for services | $ | $ | ||||||
| Disclosure of cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income Taxes | $ | $ | ||||||
See accompanying notes to condensed financial statements.
| 6 |
SIGMA LABS, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2021
(Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Nature of Business -Sigma Labs, Inc., formerly named Framewaves, Inc., a Nevada corporation, was founded by a group of scientists, engineers and businessmen to develop and commercialize novel and unique manufacturing and materials technologies. Sigma believes that some of these technologies will fundamentally redefine conventional quality assurance and process control practices by embedding them into the manufacturing processes in real time, enabling process intervention and ultimately leading to closed loop process control. The Company anticipates that its core technologies will allow its clientele to combine advanced manufacturing quality assurance and process control protocols with novel materials to achieve breakthrough product potential in many industries including aerospace, defense, oil and gas, bio-medical, and power generation. The terms the “Company,” “Sigma,” “we,” “us” and “our” refer to Sigma Labs, Inc.
Basis of Presentation - The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2021 and 2020 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. The Company suggests these condensed financial statements be read in conjunction with the December 31, 2020 audited financial statements and notes thereto included in the Company’s Form 10-K. The results of operations for the periods ended June 30, 2021 and 2020 are not necessarily indicative of the operating results for the full year.
Reclassification - Certain amounts in prior-period financial statements have been reclassified for comparative purposes to conform to presentation in the current-period financial statements.
Fair Value of Financial Instruments - The Company applies ASC 820, “Fair Value Measurements.” This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
| ● | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
| ● | Level 3 - inputs to valuation methodology are unobservable and significant to the fair measurement. |
| 7 |
The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables, accounts payable, and accrued liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
The
Company does not use derivative instruments for hedging of market risk or for trading or speculative purposes. On March 26, 2021, the
Company closed an offering in which it issued warrants to purchase an aggregate of
Pursuant to ASC 815-40-25-10, because the Company did not have sufficient authorized and unissued shares of common stock available to settle the warrants at the issue date, such warrants were accounted for as a derivative liability. On May 24, 2021, upon receiving shareholder approval to increase its authorized common shares, the Company reclassified the warrant liability to equity pursuant to ASC 815.40.35.8.
The fair value of the warrant liability measured on a recurring basis is as follows:
| June 30, 2021 | Date of Issuance March 26, 2021 | |||||||||||||||
| Fair Value | Input Level | Fair Value | Input Level | |||||||||||||
| Derivative Liability - Warrants | $ | - | $ | Level 3 | ||||||||||||
The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3):
| Warrants | ||||
| Fair Value on Issuance Date | $ | |||
| Change in Fair Value | ( | ) | ||
| Fair Value on May 24, 2021 | ||||
| Extinguishment of Derivative Liability | ( | ) | ||
| Fair Value on June 30, 2021 | $ | |||
| Six Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Warrants | ||||||||
| Preferred Stock Warrants | ||||||||
| Stock Options | ||||||||
| Preferred Stock | ||||||||
| Total Underlying Common Shares | ||||||||
| 8 |
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net Loss per Common Share - Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss from continuing | ||||||||||||||||
| Operations available to Common stockholders (numerator) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares Outstanding used in loss per share during the Period (denominator) | ||||||||||||||||
Recently Enacted Accounting Standards - The FASB established the ASC as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants.
Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated by management. Significant accounting estimates that may materially change in the near future are impairment of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts and inventory obsolescence.
NOTE 2 – Inventory
At June 30, 2021 and December 31, 2020, the Company’s inventory was comprised of:
| June 30, 2021 | December 31, 2020 | |||||||
| Raw Materials | $ | $ | ||||||
| Work in Process | ||||||||
| Finished Goods | ||||||||
| Total Inventory | $ | $ | ||||||
NOTE 3 – Deferral of Social Security Tax Payments
| 9 |
NOTE 4 - Derivative Liability
On
March 26, 2021 (the “Issuance Date”), the Company issued warrants to purchase an aggregate of
At a Special Stockholders Meeting held on May 24, 2021, the Company received approval to increase its authorized common shares from to . Pursuant to ASC 815-40-35-8, the Company reclassified the warrant liability to equity as of such date.
The fair value of the derivative liability presented below was measured using the Black Scholes valuation model. Significant inputs into the model for the six months ended June 30, 2021 are as follows:
| June 30, 2021 | ||||
| Dividend yield | % | |||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Expected life (in years) | ||||
The warrants outstanding and fair values at each of the respective valuation dates are summarized below:
| Warrant Liability | Warrants Outstanding | Fair Value Per Share | Fair Value | |||||||||
| Fair Value at initial measurement date of March 26, 2021 | $ | $ | ||||||||||
| (Gain) on change in Fair Value of Warrant Liability | $ | ( | ) | |||||||||
| Fair Value as of May 24, 2021 | $ | |||||||||||
| Extinguishment of Derivative Liability | ( | ) | $ | ( | ) | |||||||
| Fair Value as of June 30, 2021 | $ | |||||||||||
The Company has presented the fair value measurement as a Level 3 measurement, relying on unobservable inputs reflecting management’s assumptions. Level 3 measurements, which are not based on quoted prices in active markets, introduce a higher degree of subjectivity and may be more sensitive to fluctuations in stock prices, volatility rates and U.S. Treasury Bond rates and could have a material impact on future fair value measurements.
The Company uses the Black Scholes model, based on the adjusted historical volatility rates for fair value measurements through the date of stockholder approval (i.e., May 24, 2021). Management has determined the Black Scholes model to be the most reliable and least volatile determinate of the current fair value of the warrants. It is the Company’s expectation to maximize on all observable market inputs for the warrants and calibrate the model to incorporate relevant observable market data into the fair value measurement at each future measurement date, if applicable.
During
the six months ended June 30, 2021, the Company recognized a gain of $
| 10 |
NOTE 5 - Stockholders’ Equity
Common Stock
On May 24, 2021, at a Special Stockholders Meeting, our authorized shares of common stock were increased from to .
In
January 2021, the Company closed a public offering of its securities in which it issued shares of common stock at $per share, resulting in net proceeds of approximately
$
In February 2021, the Company issued shares of common stock pursuant to the exercise of warrants issued in our January 2020 private placement.
In March 2021, the Company issued shares of common stock in exchange for the conversion of shares of Series D Convertible Preferred Stock, including shares of common stock as in-kind payment of preferred stock dividends. Also in March 2021, the Company issued shares of common stock pursuant to the exercise of warrants issued in our April 2020 offering, and shares of common stock issued pursuant to the cashless exercise of placement agent warrants.
In
March 2021, the Company closed a public offering of its securities in which it issued shares of common stock at $ per
share, resulting in net proceeds to the Company of approximately $
In March 2021, Company issued shares of common stock valued at $ per share to CorProminence, an investor relations firm previously engaged by the Company as partial compensation for services previously rendered.
On
April 6, 2020, the Company closed a public offering of equity securities in which it issued shares of common stock and pre-funded
warrants to purchase up to
In the second quarter of 2020, the Company issued shares of common stock in exchange for the conversion of shares of Series D Convertible Preferred stock, including shares of common stock as in-kind payment of preferred stock dividends.
In April 2020, the Company granted shares of common stock to employees under the 2013 Equity Incentive Plan. Such shares vested on December 31, 2020.
In the first quarter of 2020, the Company issued shares of common stock in exchange for the conversion of shares of Series D Convertible Preferred stock, including shares of common stock as in-kind payment of preferred stock dividends.
In February 2020, the Company issued shares of common stock valued at $ per share to MHZCI, LLC, an investor relations firm engaged by the Company, as partial compensation for services to be rendered.
| 11 |
Preferred Stock
The Company is authorized to issue shares of preferred stock, $ par value. and shares of preferred stock were issued and outstanding at June 30, 2021 and 2020, respectively.
In
January 2020, the Company entered into a Securities Purchase Agreement (the “Institutional SPA”) with certain
institutional investors (the “Institutional Private Placement”). Pursuant to the Institutional SPA, the Company issued
and sold
shares of the Company’s newly created Series D Convertible Preferred Stock (the “Series D Preferred Stock”). Under
the Certificate of Designations for the Series D Preferred Stock, the Series D Preferred Stock has an initial stated value of $
per share (the “Stated Value”). Dividends accrue at a dividend rate of
At
June 30, 2021 there were shares of Series D Convertible Preferred stock outstanding, which if converted at the Conversion Price of
$
At June 30, 2021, all of the issued Series E Convertible Preferred Stock were outstanding, which if converted as of June 30, 2021, including the make-whole dividends, would have resulted in the issuance of shares of common stock.
Deferred Compensation
In previous years and in the six months ended June 30, 2021, the Company issued to various employees, directors, and contractors shares of the Company’s common stock, subject to restrictions, pursuant to the 2013 Equity Incentive Plan (the “2013 Plan”). Such shares are valued at the fair value at the date of issue. The fair value is expensed as compensation over the vesting period and recorded as an increase to stockholders’ equity. During the six months ended June 30, 2021 and June 30, 2020, $ and $, respectively, of the unvested compensation cost related to these issues was recognized.
At
June 30, 2021, there was $
| 12 |
Stock Options
As of June 30, 2021, an aggregate of shares of common stock were reserved for issuance under the 2013 Plan.
During the six months ended June 30, 2021, the Company granted options to purchase a total of shares of common stock to 5 employees, 4 directors and 3 consultants with vesting periods ranging from immediately upon issuance to years beginning January 4, 2021.
During the six months ended June 30, 2020, the Company granted options to purchase a total of shares of common stock to 19 employees and 4 consultants with vesting periods ranging from immediately upon issuance to years beginning June 15, 2020.
The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company’s stock on the dates of grant. Stock options are typically granted throughout the year and generally vest over four years of service and expire five years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.
Total share-based compensation expense included in the statements of operations for the six months ended June 30, 2021 and 2020 is $ and $ of which $ and $ is related to stock options, respectively.
Assumptions:
| 2021 | 2020 | |||||||
| Dividend yield | ||||||||
| Risk-free interest rate | - | % | - | % | ||||
| Expected volatility | - | % | - | % | ||||
| Expected life (in years) | ||||||||
| 13 |
| Weighted Average | Weighted Average | |||||||||||||||
| Exercise | Remaining | Aggregate | ||||||||||||||
| Price | Contractual | Intrinsic | ||||||||||||||
| Options | ($) | Life (Yrs.) | Value ($) | |||||||||||||
| Options outstanding at December 31, 2019 | ||||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited or cancelled | ( | ) | ||||||||||||||
| Options outstanding at December 31, 2020 | ||||||||||||||||