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STOCKHOLDERS’ EQUITY
 12 Months Ended
Dec. 31, 2024
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 7 — STOCKHOLDERS’ EQUITY

 

Issuance of Common Stock

 

During the year ended December 31, 2024, the Company issued an aggregate of 5,866,961 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.

 

● 181,818 shares of common stock were issued to Wider in consideration of Wider’s research and development efforts for which a charge to research and development of $400,000 was recorded in 2024.

 

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

 

● 2,535,143 shares of common stock were issued for services in lieu of cash of which 1,492,457 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 year ended December 31, 2023, the Company issued 150,000 shares to certain designated Wider stockholders pursuant to the terms of the collaborative agreement between the Company and Wider. The amount expensed during the year ended December 31, 2023 in the audited consolidated statement of operations and comprehensive loss was $1,500,000 which included the value of 150,000 of additional shares not yet issued.

 

On December 12, 2023, various consultants, Board members and employees were awarded shares of common stock and/or stock options with a value of $642,029. The December 12, 2023 awards are subject to shareholder approval to amend our 2023 Equity Incentive Plan so as to provide for additional shares to be available for the grant of awards. The amount expensed during the year ended December 31, 2023 in the audited consolidated statement of operations and comprehensive loss was related to the December 12, 2023 awards was $642,029.

 

Options

 

Nexalin’s 2023 Equity Incentive Plan (the “2023 Plan”) was approved by our stockholders on November 10, 2023, and an amendment to the 2023 Plan was approved by our stockholders on August 26, 2024, to provide for additional shares to be available for the grant of awards. The Plan provides that maximum number of shares of common stock available for the grant of awards under the Plan shall be 6,000,000, subject to adjustment for stock dividends, stock splits or similar events. The 2023 Plan is administered by the Compensation Committee of 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 year ended December 31, 2024 and December 31, 2023 in the audited consolidated statement of operations and comprehensive loss was $774,277 and $271,342, respectively.

 

The following table presents a summary of stock option award activity during the year ended December 31, 2024:

 

                               
    Number of
options		     Weighted Average
Exercise Price		     Weighted Average
Remaining Life		     Aggregate
Intrinsic
Value		  
Outstanding December 31, 2023     2,281,879     $ 0.89       9.50     $ -  
Issued     856,870       1.34       4.23       1,247,987  
Exercised     -       -       -       -  
Expired or cancelled     (67,114 )     0.89       3.50       -  
Outstanding December 31, 2024     3,071,635     $ 1.02       7.26     $ 5,380,738  

 

The following table provides additional information about stock options that are outstanding and exercisable at December 31, 2024:

 

                           
Exercise Price     Outstanding
Number of
Options		     Weighted Average
Remaining Life
In Years		     Exercisable
Number of
Options		  
$ 0.89       2,214,765     $ 8.50       1,152,125  
  0.94       581,250       4.00       581,250  
  0.66       90,620       4.17       -  
  2.95       185,000       5.00       125,000  
          3,071,635     $ 7.26       1,858,375  

 

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 table discloses the assumptions utilized for stock options awarded during each year as follows:

 

               
    December 31,
2024		     December 31,
2023		  
Volatility     103.8-129.2 %     99.0 %
Expected dividends   $ -     $ -  
Risk-free interest rate     3.66-4.45 %     4.61 %
Expected term (years)     5-10       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 December 31, 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 December 31, 2024:

 

                                   
Exercise Price     Outstanding
Number of
Warrants		     Weighted Average
Remaining Life
In Years		     Weighted Average
Exercise Price		     Exercisable
Number of
Warrants		  
$ 4.15       2,662,250       0.75     $ 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.