Quarterly report pursuant to Section 13 or 15(d)

Stockholders??? (Deficit)

v3.23.3
Stockholders’ (Deficit)
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Stockholders’ (Deficit)

Note 8 – Stockholders’ (Deficit)

 

Capital Stock

 

The Company has 260,000,000 authorized shares of capital stock, consisting of 250,000,000 shares of Common Stock, par value $0.001, and 10,000,000 shares of Preferred Stock, par value $0.001 per share.

 

Common Stock Options

 

On June 2, 2023 the Company registered an additional 700,000 shares of common stock under the 2021 Stock Incentive Plan.

 

A summary of the Company’s options activity and related information follows:

 

                               
    Number of       Weighted   Weighted
    Shares   Range of   Average   Average
    Under   Option Price   Exercise   Contractual
    Options   Per Share   Price   Life
Options Outstanding at January 1, 2023     301,391     $ 15.76-1.48       $ 3.46       7.45  
Options Granted     307,343        1.96-1.52         1.83       10.00  
Exercised     —       —       —       —  
Expired/Cancelled     (29,213 )      5.80-2.16         3.76       —  
Options Outstanding at September 30, 2023     579,521     $ 14.00-1.48       $ 2.58       8.30  
                                 
Options Exercisable at September 30, 2023     236,584     $ 14.00-1.48       $ 3.24       6.76  

 

Share-based compensation expense for options totaling $81,520 and $74,143 was recognized in the Company’s results for the three months ended September 30, 2023, and 2022, respectively. Share-based compensation expense for options totaling $211,223 and $215,968 was recognized in the Company’s results for the nine months ended September 30, 2023, and 2022, respectively.

 

The valuation methodology used to determine the fair value of the options issued during the year was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including the volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options.

 

The risk-free interest rate assumption is based upon observed interest rates on zero-coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options.

 

Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s calculation of estimated volatility is based on historical stock prices of the Company over a period equal to the expected life of the awards.

 

As of September 30, 2023, there was $676,513 of total unrecognized compensation expense related to unvested employee options granted under the Company’s share-based compensation plans that is expected to be recognized over a weighted average period of approximately 2.7 years.

 

The weighted average fair value of options granted, and the assumptions used in the Black-Scholes model during the three months ended September 30, 2023, and 2022, are set forth in the table below.

 

               
    2023   2022
Weighted average fair value of options granted   $ 1.77     $ 3.00  
Risk-free interest rate     3.41%-4.59 %     1.63% – 3.83 %
Volatility     195%-199 %     204% – 214 %
Expected life (years)     10 years       10 years  
Dividend yield   $ — %   $ — %

 

Share-based awards, restricted stock award (“RSAs”)

 

On March 1, 2023, the Company granted certain employees an aggregate of 73,530 RSAs. Compensation expense as a group amounted to $130,883. The shares vest one third each year for three years after issuance.

 

On March 28, 2023, the Company granted certain employees an aggregate of 44,942 RSAs. Compensation expense as a group amounted to $72,357. The shares vest one third each year for three years after issuance.

 

On March 31, 2023, the Board resolved that the Company shall issue to Board members an aggregate of 12,500 RSAs. Compensation expense as a group amounted to $22,750. The shares vest one year after issuance.

 

On April 10, 2023, the Company granted certain employees an aggregate of 50,000 RSA’s. Compensation expense as a group amounted to $90,000. The shares vest one third each year for three years after issuance.

 

On June 30, 2023, the Board resolved that the Company shall issue to Board members an aggregate of 12,500 RSAs. Compensation expense as a group amounted to $29,125. The shares vest one year after issuance.

  

On September 30, 2023, the Board resolved that the Company shall issue to Board members an aggregate of 12,500 RSAs to each member of the Board. Compensation expense as a group amounted to $38,875. The shares vest one year after issuance.

 

A summary of the activity related to RSUs for the nine months ended September 30, 2023, is presented below:

 

               
    Total    Grant Date
Restricted Stock Units (RSUs)   Shares    Fair Value
RSU’s non-vested at January 1, 2023     50,000     $   1.48-3.23  
RSU’s granted     205,972     $   1.61-3.24  
RSU’s vested     (37,500 )   $   2.04-3.23  
RSU’s forfeited     —     $ —  
RSU’s non-vested September 30, 2023     218,472     $   1.48-3.24  

  

Stock-based compensation for RSUs has been recorded in the consolidated statements of operations and totaled $48,507 and $17,896 for the three months ended September 30, 2023 and 2022, respectively. Stock-based compensation for RSUs has been recorded in the consolidated statements of operations and totaled $127,986 and $27,962 for the nine months ended September 30, 2023 and 2022, respectively.

 

As of September 30, 2023, there was $320,344 of total unrecognized compensation expense related to unvested RSUs granted under the Company’s share-based compensation plans that is expected to be recognized over a weighted average period of approximately 2.1 years.