Note 8 - Stockholders' Equity
|6 Months Ended|
Jun. 30, 2019
|Notes to Financial Statements|
|Stockholders' Equity Note Disclosure [Text Block]||
PUBLIC OFFERING AND PRIVATE PLACEMENT
February 2019,Milestone Scientific consummated a public offering and a private placement of Common Stock. The public offering generated gross proceeds of approximately
$2.0million for the issuance of
5,715,000shares of common stock and warrants to purchase
1,428,750shares of common stock. The warrants’ term is
5years and they are exercisable at
$0.50.Subsequent to the public offering the underwriter exercised its overallotment option and paid approximately
567,400additional shares of common stock and
February 2019,the Company generated gross proceeds from a private placement of approximately
714,286shares of common stock and warrants to purchase
178,571shares of common stock from
Bp4S.p.A., a principal stockholder of Milestone Scientific, that exercised its right to participate on a pro-rata basis on the recent public offering.
Bp4’sCEO is a director of Milestone Scientific and also Chief Executive Officer and Director of Wand Dental, a wholly owned subsidiary of Milestone Scientific. The warrants’ terms are
5years and they are exercisable at
The following table summarizes information about shares issuable under warrants outstanding at
June 30, 2019 :
May 2014,Milestone completed a private placement, which raised gross proceeds of
$10million, from the sale of
$3million of Milestone Scientific common stock (
two millionshares at
$1.50per share) and
$7million of our Series A Convertible Preferred Stock ("preferred stock") (
$1,000per share). These shares are convertible, at the option of the holder, into the number of shares of common stock equal to the stated value divided by
$2.545,subject to anti-dilution adjustments, at any time before
May 14, 2019.These shares are mandatory convertible on
May 14, 2019,into the number of shares of common stock equal to the stated value divided by
$2.545per share or
$1.50per share if the common stock does
$3.15for period of time, as defined by the agreements, both subject to anti-dilution adjustment.
The conversion ratio and anti-dilution adjustment becomes effective if a triggering event occurs such as; issuance of stock dividends or distributions, subdivisions, splits, issuance of stock purchase rights, debt and distributions, cash dividends or distributions, self-tender offers and exchange offers, rights plans and issuance below the conversion price, as defined in the Investment Agreement. Generally, each share of preferred stock entitles the holder to vote together with the holders of Milestone Scientific common stock, as a single class, on all matters submitted for the approval of the holders of Milestone Scientific common stock and has the number of votes equal to the number of shares of our common stock into which they are then convertible. In addition, preferred stock is also entitled to share, pari passu, in any cash dividends declared on Milestone Scientific common stock on as converted basis.
May 14, 2019,the mandatory conversion date, the Preferred Stock was converted at a rate of
$1.17per common share resulting in the issuances of
5,982,906shares of common stock.
SHARES TO BE ISSUED
June 30, 2019
2,185,910shares to be issued to employees were classified as liability until there are sufficient number of authorized shares of common stock to cover the issuance of the shares. As of
December 31, 2018,there were
1,908,813shares, whose issuance has been deferred under the terms of an employment agreements with the Chief Executive Officer, Chief Financial Officer and other employees of Milestone Scientific. Such shares will be issued to each party upon termination of their employment. As of
June 30, 2019,
717,456shares to be issued to non-employees were classified as liability until there are sufficient number of authorized shares of common stock to cover the issuance of the shares. As of
December 31, 2018,there were
561,752shares, respectively, that will be issued to non-employees for services rendered. The number of shares was fixed at the date of grant and were fully vested upon grant date.
SHARES AND WARRANTS IN EXCESS OF AUTHORIZED SHARES
As a result of the shares and warrants issued in the public and private offerings as well as other issuances of common stock during
2019,the Company does
nothave a sufficient number of authorized shares of common stock to cover the exercise and issue of approximately
4,850,000outstanding equity instruments. Therefore, the warrants issued in the public and private placements during
2016are classified as liabilities and will continue to be liability-classified until there are sufficient number of authorized shares of common stock to cover the shares issuable upon exercise of the warrants. As long as the warrants are liability-classified, they will continue to be re-measured each reporting period, with any increase or decrease in value recorded as a loss or gain in the condensed consolidated statement of operations.
The fair value of the warrants is determined using a Black-Scholes option pricing model. The following assumptions were used to value the warrants at the reclassification to liability date:
As these warrants are liability-classified, they were revalued at
June 30, 2019using the following assumptions:
June 30, 2019the gain(loss) on the liability classified warrants was approximately (
2,900,000of shares to be issued are classified as liabilities until there are sufficient number of authorized shares of common stock to cover the issuance of such shares. These shares were valued at the trading price of a share of the Company’s common stock (
June 30, 2019 )and they will continue to be re-measured each reporting period, with any increase or decrease in value recorded as a loss or gain in the condensed consolidated statement of operations. For the
June 30, 2019the gain(loss) on the liability classified shares to be issued was approximately
$47,000,respectively. The Company plans to seek shareholder approval to increase the number of authorized shares of Common Stock at the next Shareholder’s meeting.
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef