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STOCKHOLDERS’ EQUITY (DEFICIT)
 6 Months Ended
Jun. 30, 2022
Equity [Abstract]  
STOCKHOLDERS’ EQUITY (DEFICIT)

NOTE 10 STOCKHOLDERS’ EQUITY (DEFICIT)

 

(A) Common Stock

 

The Company issued the following common stock during the six months ended June 30, 2022 and 2021:

 

Transaction Type  Shares Issued  

Valuation $

(Issued)

  

Range of Value

Per Share

 
2022 Equity Transactions               
Common stock issued per exercise of options   436,890   $282,625   $0.10-3.00 
Common stock issued per exercise of warrants, cashless   416,750    —    — 
Common stock issued, pursuant to services provided   542,949    6,167,226    2.00 – 14.00 
Conversion of preferred stock   11,376,536    2,844,134    0.25 
Issuance of common stock pursuant to offering, net   1,650,000    23,100,000    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   214,957    2,579,464    12.00 
Common stock issued, exercise of warrants   21,250    172,386    3.50 
Common stock issued, pursuant to services provided   55,000    165,000    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 six-month period ended June 30, 2022. The issuance of such shares was triggered based on the Company’s effective price of its initial public offering in February 2022. The fair value of the shares at the date of issuance were recorded as an increase in common stock and additional paid-in capital and accumulated deficit during the period.

 

(B) Preferred Stock

 

The following is a summary of the Company’s Preferred Stock activity during the six months ended June 30, 2022 and 2021:

 

Transaction Type  Quantity   Carrying Value   Value per Share 
Preferred Stock Balance at December 31, 2021   13,256,936   $3,314,233   $0.25 
Preferred Stock redemptions   (11,376,536)   (2,844,134)   0.25 
Preferred Stock Balance at June 30, 2022   1,880,400    470,099   $0.25 

 

Transaction Type  Quantity   Carrying Value   Value per Share 
Preferred Stock Balance at December 31, 2020   13,456,936   $3,364,233   $0.25 
2021 Preferred Stock redemptions   (200,000)   (50,000)   0.25 
Preferred Stock Balance at June 30, 2021   13,256,936   $3,314,233   $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 $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 six months ended June 30, 2022 and 2021, the Company paid dividends in the amount of $27,876 and $65,103, respectively, to the Preferred Stock shareholders.

 

 

(C) Stock Options

 

The following is a summary of the Company’s stock option activity during the six-month periods ended June 30, 2022 and 2021:

 

Options  Shares  

Weighted

Average

Exercise Price

  

Weighted

Average

Remaining

Contractual

Life

(In Years)

  

Aggregate

Intrinsic

Value

 
Outstanding, January 1, 2022   21,927,182   $3.36    4.07   $5,990,800 
Exercised   (481,250)   1.34    —    — 
Granted   13,372,500    11.92    —    — 
Forfeited   (1,693,750)   —    —    — 
Outstanding, June 30, 2022   33,124,982   $7.70    3.86   $2,802,488 
                     
Exercisable, June 30, 2022   23,313,995   $5.96    3.34   $2,952,013 

 

Options  Shares  

Weighted

Average

Exercise Price

  

Weighted

Average

Remaining

Contractual

Life

(In Years)

  

Aggregate

Intrinsic

Value

 
Outstanding, January 1, 2021   13,492,682   $3.28    4.25   $8,754,750 
Granted   7,259,500    6.46    —    — 
Forfeited   —    —    —    — 
Outstanding, June 30, 2021   20,752,182   $4.57    4.48   $636,912,928 
                     
Exercisable, June 30, 2021   16,242,658   $4.06    4.51    481,595,644 

 

The range of inputs used by the Company to determine the fair value of options are as follows:

 

During the six-month period ended June 30, 2022, the Black-Scholes model calculations included stock price on the date of measurement ranging from $2.00 - $14.00, exercise price with a range of $0.10 - $14.00, a term of 5 years, expected volatility range of 40% -54%, and a discount rate ranging from 1.37 % to 1.96%.

 

During the six-month period ended June 30, 2021, the Black-Scholes model calculations included fair value of underlying shares at measurement date and exercise price ranging between $3.00 - $12.00, a term ranging from 1.3 years to 5.0 years, expected volatility range of 25%-30%, 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 $3,193,133 (excluding certain market-based options which management cannot ascertain to have a probable outcome) at June 30, 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 six-month periods ended June 30, 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   (535,000)   — 
Forfeited   (785,000)   — 
Balance, June 30, 2022   939,895   $9.66 

 

 

   Number of Warrants   Weighted Average Exercise Price 
Balance, January 1, 2021   1,602,415   $3.23 
Issued   214,957    12.00 
Exercised   (21,250)   — 
Forfeited/Cancelled   —    — 
Balance, June 30, 2021   1,796,122   $3.24