Quarterly report pursuant to Section 13 or 15(d)

Note 9 - Stockholders' Equity

v3.21.2
Note 9 - Stockholders' Equity
6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

NOTE 9 — STOCKHOLDERS’ EQUITY

 

Public Offering and Private Placement

 

In the second quarter of 2020, the Company completed two public offerings. In April 2020, a Common Stock offering generating gross proceeds of approximately $5.1 million (5,420,000 common shares and 2,710,000 warrants). The combined price of the shares and warrants was $0.95 per share. The warrants are exercisable at a price of $1.20 per share and have an expiration of three years from the issue date. In June 2020, the Company completed a second Common Stock offering generating gross proceeds of approximately $14.6 million (6,770,000 common shares and 3,749,000 warrants). The combined price of the shares and warrants was $2.15 per share. The warrants are exercisable at $2.60 and expire three years from the issue date.

 

Warrants

 

The following table summarizes information about shares issuable under warrants outstanding as of June 30, 2021 :

 

    Warrant shares outstanding     Weighted Average exercise price     Weighted Average remaining life    

Intrinsic value

 
                                 

Outstanding at January 1, 2021

    6,369,396     $ 1.97     $ 2.48     $ 2,784,117  

Issued

    -                        

Exercised

    (2,004,926 )     1.57       -          

Expired or cancelled

    -       -       -       -  

Outstanding and exercisable at June 30, 2021

    4,364,470     $ 2.15     $ 2.01     $ 1,796,413  

 

The following table summarizes information about shares issuable under warrants outstanding as of  June 30, 2020

 

    Warrant shares outstanding     Weighted Average exercise price     Weighted Average remaining life    

Intrinsic value

 
                                 

Outstanding at January 1, 2020

    1,074,171     $ 0.50     $ 4.10     $ 956,012  

Issued

    6,459,000       2.01       3.00       -  

Exercised

    (1,081,475 )     0.88       -       -  

Expired or cancelled

    -       -       -       -  

Outstanding and exercisable at June 30, 2020

    6,451,696     $ 1.95     $ 2.98     $ 2,430,184  

 

Shares to Be Issued

 

As of June 30, 2021 and 2020, there were 2,264,127 and 2,370,345 shares to be issued whose issuance has been deferred to the certain executives and employees of Milestone Scientific, respectively.  

 

As of June 30, 2021 and 2020, there were 144,024 and 149,285 shares, respectively, to be issued to non-employees, that will be issued for services rendered. The number of shares was fixed at the date of grant and were fully vested upon grant date.

 

The following table summarizes information about shares to be issued on June 30, 2021 and 2020, respectively.

 

   

June 30, 2021

   

June 30, 2020

 
                 

Shares-to-be-issued, outstanding January 1, 2021 and 2020, respectively

    2,428,329       2,375,760  

Granted in current period

    33,238       358,482  

Issued in current period

    (53,416 )     (214,612 )

Shares-to be issued outstanding June 30, 2021 and 2020, respectively

    2,408,151       2,519,630  

 

Stock Option Plans

 

In June 2011, the stockholders of Milestone Scientific approved the 2011 Stock Option Plan (the "2011 Plan") which originally provided for stock options to our employees, directors and consultants to purchase, and restricted common stock, restricted stock units, and other awards for, up to 2,000,000 shares of common stock and was later amended in 2016 to increase the maximum number of shares reserved for grant to 4,000,000. Generally, options become exercisable over a three-year period from the grant date and expire five years after the date of grant. As of June 30, 2021, and December 31, 2020, the Company had 2,471,659, and 424,425, respectively, remaining options available for grants.

 

The Milestone Scientific Inc. 2020 Equity Compensation Plan, as amended and restated (the "2020 Plan"), provides for awards of restricted common, stock restricted stock units, and other awards for options to purchase, up to a maximum 4,000,000 shares of common stock and expires in June 2031. Options may be granted to employees, directors, and consultants of Milestone Scientific for the purchase of shares of common stock at a price not less than the fair market value of common stock on the date of grant. In general, options become exercisable over a three-year period from the grant date and expire five years after the date of grant. 

 

On April 8, 2021, as part of its Succession Plan going into effect on April 23, 2021, the Company announced that Leonard Osser, the Interim Chief Executive Officer, would be accepting the role of Vice Chairman of the Board of Directors. As part of accepting this role, he would be granted options to purchase 2,000,000 shares of common stock, exercisable at the fair market value of the common stock on the date of grant, vesting over the five-year period after he steps down as Chief Executive Officer of the Company or ten years from the date of grant, whichever shall end first. The options were issued pursuant to the 2020 Plan.

 

Milestone Scientific recognizes compensation expense over the requisite service period and in the case of performance-based options over the period of the expected performance. For the six  months ended June  30, 2021 and 2020, Milestone Scientific recognized approximately $286,00 and $48,000 of total employee compensation cost, respectively. As of June 30, 2021 there was approximately $3.5 million of total unrecognized compensation cost related to non- vested options. Milestone Scientific expects to recognize these costs over a weighted average period of 4.4 years.

 

A summary of option activity for employees under the plans and changes during the six months ended June 30, 2021 and 2020 is presented below:     

   

   

Number of Options

   

Weighted Averaged Exercise Price $

   

Weighted Average Remaining Contractual Life (Years)

   

Aggregate Intrinsic Options Value $

 

Options outstanding January 1, 2021

    1,953,443       1.88       3.09       476,964  

Granted

    2,032,175       2.48       -       -  

Exercised during 2021

    (435,558 )     1.58       -       -  

Forfeited or expired

    -       -       -       -  

Options outstanding June 30, 2021

    3,550,060       2.26       7.00       188,018  

Exercisable, June 30, 2021

    745,092       1.93       2.41       124,701  

 

   

Number of Options

   

Weighted Averaged Exercise Price $

   

Weighted Average Remaining Contractual Life (Years)

   

Aggregate Intrinsic Options Value $

 

Options outstanding January 1, 2020

    1,212,442       1.71       2.40       -  

Granted

    -       -       -       -  

Exercised during 2020

    -       -       -       -  

Forfeited or expired

    -       -       -       -  
      1,212,442       1.71       2.40       -  

Exercisable, June 30, 2020

    1,117,829       1.84       1.84       -  

 

The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the six month period ended June 30, 2021 risk free interest rate of .19%-1.15% , Volatility of 69.1%-94% (which is based on the Company’s historical volatility over the expected term), expected term of 3-6.5 years, 0% dividend rate and closing price of the stock of $2.46-$3.79.

 

A summary of option activity for non-employees under the plans and changes during the six months ended June 30, 2021 and 2020 is presented below:   

 

   

Number of Options

   

Weighted Averaged Exercise Price $

   

Weighted Average Remaining Contractual Life (Years)

   

Aggregate Intrinsic Options Value $

 

Options outstanding January 1, 2021

    74,997       1.41       3.18       54,748  

Granted

    16,666       4.30                  

Exercised during 2021

    -       -       -       -  

Options outstanding June 30, 2021

    91,663       1.69       2.87       77664  

Exercisable, June 30, 2021

    52,769       1.68       2.12       50,658  

 

   

Number of Options

   

Weighted Averaged Exercise Price $

   

Weighted Average Remaining Contractual Life (Years)

   

Aggregate Intrinsic Options Value $

 

Options outstanding January 1, 2020

    49,998       1.87       2.94       -  

Granted

    8,333       1.65               -  

Exercised during 2020

    -       -       -       -  

Options outstanding June 30, 2020

    58,331       1.87       2.94          

Exercisable, June 30, 2020

    41,663       1.71       2.03       84,579  

 

The fair value of the non-employee options was estimated on the date of grant using the Black Scholes option-pricing model at the date of grant. For the three and six months ended  June 30, 2021, Milestone Scientific recognized approximately $4,800 and $15,000 expense related to non-employee options, respectively. For the six months ended  June 30, 2020, Milestone Scientific recognized approximately $7,000 expense related to non-employee options, respectively.

 

The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the six month ended June 30, 2021, risk free interest rate of 0.3 %, Volatility of 86.97% to 94.05%, expected term of 5 years, 0%  dividend rate and closing price of the stock of $3.57 to $4.30. 

 

The information below summarizes the restricted stock activity for the six months ended June 30, 2021:

 

Restricted Stock Awards

 

Shares

   

Weighted Average
Grant-Date Fair
Value per Award

 
                 

Non-vested as December 31, 2020

    -     $ -  

Granted

    79,365       2.52  

Vested

    -       -  

Non-vested as June 30, 2021

    79,365     $ 2.52  

 

For the three and six months ended June 30, 2021, stock compensation expense for restricted stock was $20,833.