AT-THE-MARKET OFFERING

On April 17, 2020, the Company entered into a sales agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”) to conduct an “at-the-market” equity offering program (the “ATM”), pursuant to which the Company may issue and sell from time to time shares of its common stock having an aggregate offering price of up to $20,000,000 (the “Shares”) through the Agent. Subject to the terms and conditions of the Sales Agreement, the Agent will use its commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions. The Agent is entitled to an aggregate fixed commission of 3.0% of the gross proceeds from the Shares sold and the Company provided the Agent with customary indemnification rights. Sales of the Shares under the Sales Agreement are made in transactions that are deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including on the Nasdaq Capital Market, at market prices or as otherwise agreed to with the Agent. A “shelf” registration statement on Form S-3 for the Shares was filed with the SEC, which became effective on September 16, 2019, and a prospectus supplement thereto was filed with the SEC on April 17, 2020.

Since April 17, 2020 and through September 30, 2020, the Company has sold an aggregate of 3,521,971 shares of common stock under the ATM program for aggregate gross proceeds of $18,953,323, less issuance costs of $737,109 which were recorded as a reduction to additional paid-in capital. As of September 30, 2020, $419,494 of net proceeds had not been received by the Company and was included as a subscription receivable on the accompanying balance sheet. Subsequent to September 30, 2020, the Company collected the subscription receivable in full.

Since April 17, 2020 and through November 11, 2020, the Company has sold 3,566,971 shares of common stock under the ATM program for aggregate gross proceeds of approximately $19.5 million.

PREFERRED STOCK

During the nine months ended September 30, 2020, a holder elected to convert 5,125 shares of Series D Convertible Preferred Stock into 1,642,628 shares of the Company’s common stock at a conversion price of $3.12 per share. The Company determined that the Series D Convertible Preferred Stock did not include a beneficial conversion feature. There are no longer any currently outstanding shares of Series D Convertible Preferred Stock.

COMMON STOCK

During April 2020, the Company issued 47,542 shares of common stock with an aggregate issuance date fair value of $87,000 as compensation to certain officers of the Company.

During June 2020, the Company issued 10,000 shares of common stock with an aggregate issuance date fair value of $23,500 as compensation to a consultant.

During July 2020, the Company issued 6,847 shares of common stock with an aggregate issuance date fair value of $46,560 as compensation to a consultant.

See Note 9 – Stockholder’s Equity - Preferred Stock for details associated with the issuance of common stock in connection with the conversion of Series D Convertible Preferred Stock.

STOCK OPTIONS

During April 2020, the Company granted five-year options to purchase an aggregate of 160,416 shares of common stock to executives with an exercise prices ranging from of $1.83-$2.01 per share. 54,325 options will vest one year from the date of grant, 53,433 options will vest the second year and 52,658 will vest the third year. The options had an aggregate grant date fair value of $180,000, which will be recognized over the vesting period.

During June 2020, the Company granted five-year options to purchase an aggregate of 150,000 shares of common stock to executives with an exercise price of $2.20 per share. One-third of the options will vest on February 7, 2021, the second third will vest on February 7, 2022 and the final third will vest on February 7, 2023. The options had an aggregate grant date fair value of $298,911, which will be recognized over the vesting period.

During September 2020, the Company granted five-year options to purchase an aggregate of 603 shares of common stock to employees with an exercise price of $9.14 per share. The options vest on September 27, 2021. The options had an aggregate grant date fair value of $5,000, which will be recognized over the vesting period.

STOCK WARRANTS

During the nine months ended September 30, 2020, the Company issued 161,126 shares of common stock upon the cashless exercise of warrants.

During the nine months ended September 30, 2020, the Company issued an aggregate of 34,403 shares of the Company’s common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross and net cash proceeds of $146,213 and $144,313, respectively.

STOCK-BASED COMPENSATION

The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three and nine months ended September 30, 2020 of $148,964 and $480,359, respectively, and for the three and nine months ended September 30, 2019 of $197,133 and $737,416, respectively, which is included within compensation expense on the condensed consolidated statements of operations. As of September 30, 2020, there was $483,840 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 1.04 years.