Quarterly report pursuant to Section 13 or 15(d)

Stockholders??? (Deficit)

v3.22.2.2
Stockholders’ (Deficit)
 9 Months Ended
Sep. 30, 2022
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.

 

On May 1, 2022, the Company issued 125,000 shares of its restricted common stock to employees in exchange for services at a fair value of $400,000.

 

During the nine months ended September 30, 2022, employees exercised 3,334 options into shares of common stock. The Company received $6,934 for these options.

 

Common Stock Options

 

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

 

                               
    Number of
Shares
Under Options		   Range of
Option Price
Per Share		   Weighted
Average
Exercise Price		   Weighted
Average
Contractual
Life
Options Outstanding at December 31, 2021     267,467     $ 2.00 – 16.00       $ 5.19       6.94  
Options Granted     89,428       5.87 – 2.04         3.30       10  
Exercised     (3,334 )     2.00 – 2.16         2.08       —  
Expired/Cancelled     (63,231 )     2.00 – 16.00         2.56       —  
Options Outstanding at September 30, 2022     290,330     $ 2.00 – 16.00       $ 2.66       7.71  
                                 
Options Exercisable at September 30, 2022     142,098     $ 2.00 – 16.00     $ 2.40       5.68  

 

Share-based compensation expense for options totaling $74,143 and $21,573 was recognized in our results for the three months ended September 30, 2022 and 2021, respectively. Share-based compensation expense for options totaling $215,968 and $120,252 was recognized in our results for the nine months ended September 30, 2022 and 2021, 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, 2022, there was $468,110 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 2.51 years.

 

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

 

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

 

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

 

On March 31, 2022, the Board resolved that, the Company shall pay each member of the Board, compensation as a group amount to $40,375. The shares vest one year after issuance.

 

On June 30, 2022, the Board resolved that, the Company shall pay each member of the Board, compensation as a group amount to $30,625. The shares vest one year after issuance.

 

On September 30, 2022, the Board resolved that, the Company shall pay each member of the Board, compensation as a group amount to $25,000. The shares vest one year after issuance.

 

A summary of the activity related to RSAs for the nine months ended September 30, 2022, is presented below:

  

               
Restricted stock award (RSA’s)    Total
shares   		  Grant date
fair value
RSA’s non-vested at January 1, 2022     —     $ —  
RSA’s granted     37,500     $ 2.04 – 3.23  
RSA’s vested     —     $ —  
RSA’s forfeited     —     $ —  
RSA’s non-vested September 30, 2022     37,500     $ 2.04 – 3.23   

 

Stock-based compensation for RSA’s has been recorded in the consolidated statements of operations and totaled $17,896 for the three months ended September 30, 2022. Stock-based compensation for RSA’s has been recorded in the consolidated statements of operations and totaled $27,962 for the nine months ended September 30, 2022.