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STOCKHOLDERS’ EQUITY (DEFICIT)
 3 Months Ended
Mar. 31, 2022
Equity [Abstract]  
STOCKHOLDERS’ EQUITY (DEFICIT)

NOTE 9 STOCKHOLDERS’ EQUITY (DEFICIT)

 

(A) Common Stock

 

The Company issued the following common stock during the three months ended March 31, 2022 and 2021:

 

Transaction Type  Shares Issued   Valuation $
(Issued)		   Range of Value Per Share 
2022 Equity Transactions               
Common stock issued per exercise of options   200,000    210,000   $0.60 - 1.20 
Common stock issued per exercise of warrants, cashless   311,750    —    — 
Common stock issued, pursuant to services provided   448,409    5,717,010    12.00 - $13.57 
Conversion of preferred stock   9,976,536    2,494,134    0.25 
Issuance of common stock pursuant to offering, net   1,650,000    20,552,000    14.00 
Issuance of common stock, pursuant to anti-dilutive provisions   335,073    4,691,022    14.00 

 

 

Transaction Type  Qty Shares Issued   Valuation $ (Issued)   Range of Value Per Share 
2021 Equity Transactions               
                
Common stock issued per PPM, Bridge Line Ventures   62,873    754,464    12.00 
Common stock issued, exercise of warrants   21,250    74,375    3.50 
Common stock issued, pursuant to services provided   35,000    101,250    2.25 
Conversion of preferred stock   200,000    50,000    0.25 

 

The Company issued 335,073 shares of its common stock to certain stockholders pursuant to certain anti-dilutive provisions during the three-month period ended March 31, 2022. The issuance of such shares was triggered based on the Company’s effective price of its initial public offering in February 2022. The shares were recorded as an increase in common stock and additional paid-in capital and accumulated deficit during the period, using the fair value of the shares at the date of issuance.

 

(B) Preferred Stock

 

The following is a summary of the Company’s Preferred Stock activity during the three months ended March 31, 2022:

 

Transaction Type  Quantity   Valuation   Value per Share 
Preferred Stock Balance at December 31, 2021   13,256,936   $3,314,233   $0.25 
Preferred Stock redemptions   (9,976,536)   (2,494,134)   0.25 
Preferred Stock Balance at March 31, 2022   3,280,400    820,099   $0.25 

 

The Preferred Stock is convertible at the holder’s option. Shares of the Preferred Stock may be repurchased by the Company upon 30 days’ prior written notice, for USD $3.50 per share. Holders also have a put option, allowing them to sell their shares of Preferred Stock back to the Company at $0.25 per share, the Note conversion price, and therefore the stock is classified as Mezzanine equity rather than permanent equity. For the three months ended March 31, 2022 and 2021, the Company paid dividends in the amount of $21,232 and $32,552, respectively, to the Preferred Stock shareholders.

 

 

(C) Stock Options

 

The following is a summary of the Company’s stock option activity during the three month periods ended March 31, 2022 and 2021:

 

Options  Shares   Weighted
Average
Exercise Price		   Weighted
Average
Remaining
Contractual
Life
(In Years)		   Aggregate
Intrinsic
Value		 
Outstanding, January 1, 2022   21,852,182   $3.87    4.17   $5,990,800 
Exercised   (200,000)   1.20    -    - 
Granted   11,724,500    13.09    -    - 
Forfeited   (665,000)   -    -    - 
Outstanding, March 31, 2022   32,711,682   $4.36    4.14   $345,090,982 
                     
Exercisable, March 31, 2022   8,982,557   $3.4    4.10   $203,781,741 

 

Options  Shares   Weighted
Average
Exercise Price		   Weighted
Average
Remaining
Contractual
Life
(In Years)		   Aggregate
Intrinsic
Value		 
Outstanding, January 1, 2021   12,654,500   $3.28    4.25   $8,754,750 
Forfeited   (100,000)   -    -    - 
Outstanding, March 31, 2021   12,554,500   $3.58    4.72   $350,397,290 
                     
Exercisable, March 31, 2021   8,097,658   $2.90    4.85    176,527,956 

 

The fair value of share options and similar instruments is estimated on the date of grant using a Black-Scholes. The range of inputs used by the Company are as follows:

 

During the three-month period ended March 31, 2022, the Black-Scholes model calculations included stock price on the date of measurement ranging from $12.00 - $14.00, exercise price with a range of $12.00 - $14.00, a term of 5 years, expected volatility of 54%, and a discount rate ranging from 1.82 % to 1.96%.

 

 

During the three-month period ended March 31, 2021, the Black-Scholes model calculations included stock price on the date of measurement ranging from $3.00 - $3.00, exercise price with a range of $3.00 - $12.00, a term ranging from 1.3 years to 1.3 years, expected volatility of 34% , and a discount rate ranging from .09% to 2.49%.

 

The Company cannot use its historical volatility as expected volatility because there is not enough liquidity in trades of common stock during a term comparable to the expected term of stock option issued. The Company relies on the expected volatility of comparable publicly-traded companies within its industry sector, which is deemed more relevant, to compute its expected volatility.

 

Unamortized future option expense was $4,196,100 (excluding certain market-based options which management cannot ascertain to have a probable outcome) at March 31, 2022 and it is expected to be recognized over a weighted-average period of 2.3 years.

 

(D) Warrants Issued

 

The following is a summary of the Company’s warrant activity during the three month periods ended March 31, 2022 and 2021:

 

   Number of
Warrants		   Weighted Average
Exercise Price		 
Balance, January 1, 2022   2,127,895   $5.4 
Issued   132,000    18.20 
Exercised   (430,000)   — 
Forfeited   (750,000)   — 
Balance, March 31, 2022   1,079,895   $8.84 

 

   Number of
Warrants		   Weighted Average
Exercise Price		 
Balance, January 1, 2021   1,602,415   $3.24 
Exercised   (21,250)   — 
           
Balance, March 31, 2021   1,581,165   $3.28