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STOCKHOLDERS’ EQUITY
 9 Months Ended
Sep. 30, 2024
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 6 — STOCKHOLDERS’ EQUITY

 

Issuance of Common Stock

 

During the nine months ended September 30, 2024, the Company issued an aggregate of 5,425,043 shares of its common stock, as follows:

 

●150,000 shares of common stock were issued to affiliates of Wider in satisfaction of obligations pursuant to their collaborative agreement. A charge to research and development of $750,000 was recorded in 2023 at the time the Company recognized its obligation to issue these shares.

 

●3,000,000 shares of common stock were issued to investors for net proceeds of $4,516,184.

 

●2,275,043 shares of common stock were issued for services in lieu of cash of which 1,232,357 were issued to outside consultants, 200,000 to a related party, 542,500 to certain employees of the Company, and 300,186 to current and former members of the Board of Directors for their services as Board Members.

 

During the nine months ended September 30, 2023, the Company issued 150,000 shares of its common stock to Wider pursuant to their collaborative agreement resulting in a charge to research and development of $750,000.

 

Options

 

Nexalin’s 2023 Equity Incentive Plan (the “2023 Plan”) was approved by our stockholders on November 10, 2023 and an amendment thereto, increasing the number of shares reserved for issuance under the 2023 Plan, was approved by our stockholders on August 26, 2024. The 2023 Plan provides that maximum number of shares of Common Stock available for the grant of awards thereunder shall be 6,000,000, subject to adjustment for stock dividends, stock splits or similar events. The 2023 Plan is administered by the Board of Directors, which may in turn delegate administrative authority to one or more of our executive officers. Under the terms of the 2023 Plan, the Compensation Committee may grant equity awards, including nonqualified stock options and restricted stock to employees, officers, directors, consultants, agents, advisors and independent contractors.

 

On July 1, 2023, the Company entered into amended employment agreements with the three executives. In addition to the cash compensation included in their employment contracts, the three executives were granted one-time bonus stock options (that were immediately vested) and performance-based stock options that would be triggered based on certain performance criteria being achieved. The amount expensed during the three months ended September 30, 2024 and 2023 in the unaudited condensed consolidated statements of operations and comprehensive loss was $0 and $0 respectively. The amount expensed during the nine months ended September 30, 2024 and 2023 in the unaudited condensed consolidated statements of operations and comprehensive loss was $88,120 and $0 respectively.

 

Certain employees and certain members of the Board of Directors were issued options to purchase an aggregate of 581,250 shares of common stock. The options vested immediately upon grant. The amount expensed during the three months ended September 30, 2024 and 2023 in the unaudited condensed consolidated statements of operations and comprehensive loss was $434,194 and $0 respectively. The amount expensed during the nine months ended September 30, 2024 and 2023 in the unaudited condensed consolidated statements of operations and comprehensive loss was $434,194 and $0 respectively.

 

The following table presents a summary of stock option award activity during the nine months ended September 30, 2024:

 

               
   Number of
options		   Weighted
Average
Exercise Price		   Weighted
Average
Remaining
Life In Years		 
Outstanding December 31, 2023   2,281,879   $0.89    8.75 
Issued   581,250    0.94    5.00 
Exercised   -    -    - 
Expired or cancelled   -    -    - 
Outstanding September 30, 2024   2,863,129   $0.90    8.27 

 

The following table provides additional information about stock options that are outstanding and exercisable at September 30, 2024:

 

                 
Exercise Price   Outstanding
Number of
Options		   Weighted Average
Remaining Life
In Years		   Exercisable
Number of
Options		 
$0.89    2,281,879   $8.75    1,152,125 
$0.94    581,250    5.00    581,250 
      2,863,129   $8.27    1,733,375 

 

The fair value of these stock option awards is estimated as of the grant date using a Black-Scholes option pricing model and the following assumptions: A risk-free interest rate based on the U.S. Treasury yield curve at the date of grant; an expected or contractual term; and expected volatility based on an evaluation of comparable public companies’ measures of volatility. The Company does not anticipate declaring dividends on common shares now or in the near future and has therefore assumed no dividend rate. The following tables disclose the assumptions, utilized for stock options as follows:

 

For the 581,250 stock options granted during the nine months ended September 30, 2024, we used the following weighted average assumptions to estimate the fair value of stock options:

 

     
   September 30,
2024		 
Volatility   103.8%
Expected dividends  $- 
Risk-free interest rate   3.66%
Expected term (years)   5.0 

 

For the stock options outstanding as of December 31,2023, we used the following weighted average assumptions to estimate the fair value of stock options:

 

   December 31,
2023		 
Volatility   99.0%
Expected dividends  $- 
Risk-free interest rate   4.61%
Expected term (years)   9.5 

 

Warrants

 

The issuance of warrants to purchase shares of the Company’s common stock are summarized as follows:

 

          
   Number of
warrants		   Weighted
Average
Exercise Price		 
Outstanding December 31, 2023   2,662,250   $4.15 
Issued   -    - 
Exercised   -    - 
Expired or cancelled   -    - 
Outstanding September 30, 2024   2,662,250   $4.15 

 

The following table summarizes information about warrants to purchase shares of the Company’s common stock outstanding and exercisable at September 30, 2024:

 

                      
Exercise Price   Outstanding
Number of
Warrants		   Weighted Average
Remaining Life
In Years		   Weighted Average
Exercise Price		   Exercisable
Number of
Warrants		 
$4.15    2,315,000    1.00   $4.15    2,135,000 
$4.15    347,250    1.00    4.15    347,250 
      2,662,250    1.00   $4.15    2,662,250 

 

The compensation expense attributed to the issuance of the warrants, if required to be recognized on the nature of the transaction, was recognized as they vested/earned. These warrants are exercisable up to three years from the date of grant. All are currently exercisable.