Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Subsequent Events

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Note 8 - Subsequent Events
9 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
Subsequent Events [Text Block]
Note
8
- Subsequent Events
 
On
August 7, 2018,
the Company's Board authorized it to commence a new offering for up to
$485,000
10%
 non-convertible promissory notes, which were accompanied by a
five
-year warrant to purchase
one
share of Common stock with an exercise price of
$1.75
per share for each dollar in principal amount of notes purchased (collectively, the "Fifth Note") that can be exercised (i) at any time on or after the issuance of the notes and (ii) on or prior to the close of business on the
five
-year anniversary of the issuance of the notes. Mr. Klemp, Dr. Capelli, Ms. Bisson and other members of management collectively purchased
$125,000
of such notes and warrants. The principal and interest on the Fifth Note was due on the earlier of
one
-year from the date of issuance or upon successful completion of the IPO.
 
On
August 31, 2018,
the Company's Board approved a
$200,000
increase to the Fifth Note authorized on
August 7, 2018.
On
December 21, 2018,
the Company's Board approved an additional
$300,000
increase to the Fifth Note authorized on
August 7, 2018
up to a maximum of
$985,000.
From
October 2018
to
February 2019,
the Company issued
$125,000
and
$860,000
of the Fifth Note to related parties and non-related parties, respectively. On
February 15, 2019,
the Company paid
$1,005,039
in principal and interest to the note holders to repay the Fifth Note in full.
 
On
November 1, 2018,
the Company filed an amendment to its certificate of incorporation to increase the authorized shares of the Company's common stock to
19,000,000
shares of common stock,
$0.001
par value per share, and
2,534,766
shares of preferred stock,
$0.001
par value per share. On
February 19, 2019,
the Company amended its articles of incorporation to
no
longer have preferred shares authorized and increased the authorized shares of common stock to
100,000,000.
 
In
January 2019,
Mr. Klemp, Dr. Capelli, Mr. Tanner, Ms. Bisson and
one
other individual agreed to the extinguishment of about
$484,000
in deferred compensation which had been earned through
September 30, 2018,
and which was to be repaid out of the proceeds from this offering. In recognition of this extinguishment, on
February 5, 2019,
the Company granted the same parties an aggregate of
401,750
options to purchase common stock with an exercise price of
$1.75
per share and a term of
10
years. These options vest in
four
installments over the next year.
 
On
February 19, 2019,
the Company consummated its IPO. In the IPO, the Company sold a total of
2,172,591
shares of common stock at a purchase price of
$5.00
per share for gross proceeds of
$10,862,955
and net proceeds of approximately
$9,700,000.
In connection with the closing of the IPO, the Company's convertible notes (and related accrued interest) of
$11,784,987
were converted into
6,825,391
shares of the Company's common stock, accrued dividends of
$4,773,480
were converted into
954,696
shares of the Company's common stock and preferred stock, both Series A and Series B, were converted into
2,534,766
shares of the Company's common stock. In addition,
100,000
shares of restricted grants vested in
November 2018
and
127,500
shares of unvested restricted grants were immediately vested upon the completion of the IPO. Total shares of common stock outstanding at the closing of the IPO amounted to
14,613,000.
Upon the closing of the IPO, certain notes were to be automatically converted according to their terms into the Company’s common stock to the extent and provided that certain holders of these notes are
not
permitted to convert such notes to the extent that the holders or any of its affiliates would beneficially own in excess of
4.99%
of the Company’s common stock after such conversion. Due to this
4.99%
limitation, principal representing
$47,781
of these notes remained outstanding and will be converted into
273,034
shares of our common stock at such time as the
4.99%
limitation continues to be met. The maturity date of these notes is automatically extended until such date the notes are fully converted and these notes cease to accrue interest and are
not
repayable in cash.
 
On
February 25, 2019,
the Company finalized employment agreements with Walter Kemp, Christopher Capelli, Joe Tanner and Lori Bisson and included these employment agreements as Exhibits herein in this report on Form
10
-Q.