NOTE 5 – EQUITY

Common Stock Warrants

During the six months ended March 31, 2018, 270,000 shares of common stock were issued in connection with the exercise of warrants issued and sold to various purchasers as part of a registered offering that closed in April 2017. The warrants were exercised at a price of $1.00 per share, and $270,000 in cash was received during the six months ended March 31, 2018.

Below is a table summarizing the warrants issued and outstanding as of March 31, 2018 (“Price” reflects the weighted average exercise price per share):

As of March 31, 2018, the warrants have a weighted average remaining term of 3.95 years and have no intrinsic value.

Stock Based Compensation

The Company’s Consolidated 2016 Stock Plan (“the Plan”) provides for granting stock options and restricted stock awards to employees, directors and consultants of the Company. The Company uses the Black-Scholes pricing model for determining the fair value of stock options and warrants granted as share based compensation.

The following assumptions were used to calculate the fair value of the Company’s warrants and options issued during the six month period ended March 31, 2018:

Warrants. In October 2017, the Company issued a warrant to purchase 250,000 shares of common stock to a consultant for services to be rendered. The warrant vests in six equal consecutive monthly amounts at the end of each calendar month starting October 31, 2017, at an exercise price of $1.00 per share, for a term of two years from the date of issuance.

During the six month period ended March 31, 2018, the Company recognized $87,108 of expense related to warrants granted as stock based compensation. There is no unamortized expense as of March 31, 2018 for outstanding warrants issued as stock based compensation. Refer to the Common Stock Warrants table within this note for information regarding all outstanding warrants.

Options. In October 2017, the Company granted nonqualified stock options to purchase an aggregate of 1,640,000 shares of common stock to certain directors, employees, executive officers and key consultants. Other than the issuance of a stock option to purchase 80,000 shares of common stock issued to one key consultant, one third of the shares of common stock subject to the stock options became exercisable immediately, and one third of the shares of common stock subject to the stock options will become exercisable on each of October 16, 2018 and October 16, 2019. With respect to the stock option to purchase 80,000 shares of common stock issued to one key consultant, one quarter of the shares of common stock subject to the stock option vested immediately, and the remaining three quarters of the shares of common stock subject to the stock option are exercisable upon the achievements of certain milestones in connection with the Company’s MAKO clinical study. All but one milestone has been achieved. As such, the 20,000 shares of common stock associated with this unmet performance condition have been accounted for as a forfeiture and the remaining 60,000 shares have vested as of March 31, 2018. The stock options have an exercise price of $0.67 per share and expire on October 15, 2022. 

During the six month period ended March 31, 2018, the Company recognized $643,889 of expense related to options granted. Unamortized option expense as of March 31, 2018 for all options outstanding amounted to $432,763. The Company expects to recognize this compensation cost over a weighted-average period of 1.46 years.

Below is a table summarizing the Company’s activity for the six month period ended March 31, 2018 (“Price” reflects the weighted average exercise price per share):

As of March 31, 2018, the outstanding options have a weighted average remaining term of 4.22 years and no intrinsic value. 

Restricted Stock. During the six month period ended March 31, 2018, the Company recognized $145,301 of expense related to restricted stock awards. As of March 31, 2018, there was no remaining unamortized expense. 

Below is a table summarizing the Company’s activity for the six month period ended March 31, 2018: