Annual report pursuant to Section 13 and 15(d)

Shareholders' Equity

v3.21.1
Shareholders' Equity
12 Months Ended
Dec. 31, 2020
Equity [Abstract]  
SHAREHOLDERS' EQUITY

7 — SHAREHOLDERS' EQUITY

  

Common Stock Issuances

 

On January 22, 2019, the Company issued 250,000 unregistered shares of common stock upon the exercise of a warrant to purchase 300,000 shares of common stock at an exercise price of $3.75 per share for a cash payment of $468,750 and the cashless exercise of the remaining warrant.

 

On January 31, 2019, the Company issued 22,311 unregistered shares of common stock upon the full cashless exercise of a warrant to purchase 65,130 shares of common stock at an exercise price of $4.99 per share.

 

On February 22, 2019, the Company concluded a follow-on offering of 2,475,000 shares of common stock and warrants to purchase 1,856,250 shares of common stock at an exercise price of $4.0625 per share. The shares of common stock and accompanying warrants were sold to the public at a price of $3.25 per share and warrant. The underwriters were granted an over-allotment option to purchase up to 371,250 shares of common stock and warrants to purchase 278,437 shares of common stock at a price of $3.25 per share of common stock and warrant. The underwriters partially exercised their over-allotment option by purchasing 370,000 shares of common stock and warrants to purchase 277,500 shares common stock. Gross proceeds of the offering, totaled $9,246,249, which after offering expenses, resulted in net proceeds of $8,195,673. 

 

On June 11, 2020, the Company concluded a registered direct offering of 2,820,000 shares of common stock and in a concurrent private placement the sale of warrants to purchase 2,115,000 shares of common stock at an exercise price of $2.00 per share. The shares of common stock and accompanying warrants were sold directly to the buyers at a combined at-the-market price of $1.85 for a share and three quarters warrant. Gross proceeds of the offering, totaled $5,217,000, which after offering expenses, resulted in net proceeds of $4,657,215. 

 

On July 31, 2020, warrants to purchase 1,354 shares at an exercise price of $0.005 per share were exercised for a cash payment of $8.

 

On September 21, 2020, the Company concluded a private placement of 357,143 unregistered shares of common stock and above market price of $1.40 per share. Gross proceeds of the offering, totaled $500,000, with no material expenses.

 

On September 29, 2020, previously registered warrants to purchase 225,000 shares at an exercise fee of $2.00 per share were exercised for a total of $450,000.

 

On November 18, 2020, the Company issue 175,000 shares of common stock at a cost of $295,750 to Keystone Capital, LLC as commitment shares due on execution of an equity purchase agreement.

 

During the year ended December 31, 2020, the Company issued 446,251 shares of common stock and 91,705 warrants to purchase shares of common stock to consultants for services rendered and to employees at a total cost for the period of $710,792.

 

 

2017 Equity Incentive Plan

 

On October 9, 2017, the Company adopted the Adial Pharmaceuticals, Inc. 2017 Equity Incentive Plan (the "2017 Equity Incentive Plan"); which became effective on July 31, 2018. Initially, the aggregate number of shares of our common stock that may be issued pursuant to stock awards under the 2017 Equity Incentive Plan was 1,750,000 shares. On September 1, 2020, by a vote of the shareholders, the number of shares issuable under the 2017 Equity Incentive Plan was increased to 5,500,000. At December 31, 2020, the Company had issued 799,438 shares of common stock and had outstanding 2,529,180 options to purchase shares of our common stock. At December 31, 2020, a total of 2,171,382 shares remain issuance under the 2017 Equity Incentive Plan.

 

Stock Options

 

The following table provides the stock option activity for the year ended December 31, 2020:

 

    Total
Options
Outstanding
    Weighted
Average
Remaining
Term
(Years)
    Weighted
Average
Exercise
Price
    Weighted
Average
Fair Value
at Issue
 
Outstanding December 31, 2018     243,182       8.93     $ 4.88     $ 4.09  
Issued     1,452,880               3.19       2.21  
Cancelled     (34,596 )             5.70       4.23  
Outstanding December 31, 2019     1,661,466               3.38       2.38  
Issued     1,255,000               1.44       1.13  
Cancelled     (247,600 )             3.27       2.04  
Outstanding December 31, 2020     2,668,866       8.09       2.48       1.78  
Outstanding December 31, 2020, vested and exercisable     1,242,831       7.72     $ 2.94     $ 2.13  

 

At December 31, 2020, the intrinsic value totals of the outstanding options were $339,520.

 

The Company used the Black Scholes valuation model to determine the fair value of the options issued, using the following key assumptions for the years ended December 31, 2020 and 2019:

 

    2020     2019  
Fair Value per Share   $ 1.36-1.48     $ 1.45-3.39  
Expected Term     5.75 years         1.46-5.75 years  
Expected Dividend            
Expected Volatility     102.39-103.83 %       97.37-101.09 %
Risk free rate     0.49-0.72 %       2.32-2.51 %

 

  

During the year ended December 31, 2020, 1,225,000 options to purchase shares of common stock were granted at a fair value of $1,420,505, an approximate weighted average fair value of $1.13 per option, to be amortized over a service a weighted average period of three years. As of December 31, 2020, $2,344,035 in unrecognized compensation expense will be recognized over a weighted average remaining service period of 2.38 years.

 

The components of stock-based compensation expense included in the Company's Statements of Operations for the years ended December 31, 2020 and 2019 are as follows:

 

    Year ended December 31,  
    2020     2019  
Research and development options expense     252,173       355,229  
Total research and development expenses     252,173       355,229  
General and administrative options expense     1,168,281       723,344  
Stock and warrants issued to consultants and employees     710,792       523,745  
Total general and administrative expenses     1,879,073       1,247,089  
Total stock-based compensation expense   $ 2,131,246     $ 1,602,318  

  

Stock Warrants

 

The following table provides the activity in warrants for the respective periods.

 

   

Total

Warrants

    Weighted
Average
Remaining
Term
(Years)
   

Weighted

Average

Exercise

Price

    Average
Intrinsic
Value
 
Outstanding December 31, 2018     5,054,759       5.07     $ 5.72       0.61  
Issued     2,113,750               4.06          
Exercised     (519,235 )           $ 4.07          
Outstanding December 31, 2019     6,669,274       4.23     $ 5.38       0.03  
Issued     2,206,705               1.98          
Exercised     (226,354 )           $ 1.99          
Outstanding December 31, 2020     8,649,625       3.46     $ 4.60       0.02  

 

This table includes warrants to purchase 91,705 shares of common stock issued to consultants, with a total fair value of $110,303 at time of issue, calculated using the Black Scholes model assuming an underlying security values ranging from $1.30 to 2.03 and volatility rate of 103.83%, a risk-free rate of 0.49%, and an expected term of 1.5 years.

 

During the year ended December 31, 2020, 226,354 warrants to purchase shares of common stock were exercised for total proceeds of $450,008.