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Stockholders’ Equity
 9 Months Ended
Sep. 30, 2023
Stockholders’ Equity [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 6 – STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

The Company is authorized to issue 5,000,000 shares of its $0.0001 par value preferred stock. The Company’s board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. As of September 30, 2023 and December 31, 2022, no preferred shares have been designated and no preferred shares were issued and outstanding.

 

Common Stock

 

Subscriptions receivable of $37,500 were collected in January 2022.

 

2023 Stock Repurchase Plan

 

On March 20, 2023, the Board of Directors of the Company approved a stock repurchase program authorizing the purchase of up to $500,000 of the Company’s common stock until December 31, 2023 (the “2023 Stock Repurchase Program”). In connection with the 2023 Stock Repurchase Program, during the nine months ended September 30, 2023, the Company purchased and cancelled 105,931 shares of its common stock for $49,710, or at an average price of $0.469 per share.

 

Initial Public Offering

 

On February 17, 2023, the Company completed the IPO and sold 1,686,755 shares of its common stock at a price to the public of $4.15 per share for gross proceeds of $7,000,000. The Company received net proceeds of $5,958,470 which is net of offering expenses of $1,041,530. Additionally, the Company reclassified deferred offering costs of $202,599 which were paid and deferred as of December 31, 2022 to additional paid in capital as equity issuance costs. In connection with the IPO, the Company issued 1,686,747 warrants to the placement agent. The warrants are exercisable at $4.565 per share and expire on February 14, 2028. The fair value of these warrant of $3,657,258 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: dividend yield of 0%; expected volatility of 69.8%; risk-free interest rate of 4.03%; and an estimated holding period of 5 years. These warrants had no financial statement impact as they were considered to be equity issuance costs.

 

2022 Equity Incentive Plan

 

On March 30, 2022, the Company’s Board of Directors authorized and adopted the 2022 Equity Incentive Plan (the “2022 Plan”) and reserved 2,500,000 shares of common stock for issuance thereunder. The 2022 Plan was approved by shareholders on March 30, 2022. The 2022 Plan’s purpose is to encourage ownership in the Company by employees, officers, directors and consultants whose long-term service the Company considers essential to its continued progress and, thereby, encourage recipients to act in the stockholders’ interest and share in the Company’s success. The 2022 Plan provides for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards.

 

Stock Options

 

On February 14, 2023, the Company granted aggregate stock options to purchase 400,000 of the Company’s common stock at an exercise price of $4.15 per share to the Company’s chief executive officer, an executive officer, and employee and consultants pursuant to the 2022 Equity Incentive Plan. The grant date of the stock options was February 14, 2023 and the options expire on February 14, 2033. The options vest as to (i) 340,000 of such options on February 14, 2023; and (ii) the remaining 60,000 options vest quarterly (5,000 each quarter) beginning on May 14, 2023 and each quarter thereafter through February 14, 2026. The stock options were valued at $1,023,290 on the grant date using a Black-Scholes option pricing model which will be recognized as stock-based compensation expense over the vesting period.

 

On March 6, 2023, the Company granted stock options to purchase 60,000 of the Company’s common stock at an exercise price of $4.15 per share to the Company’s board of directors pursuant to the 2022 Equity Incentive Plan. The grant date of the stock options was March 6, 2023 and the options expire on March 6, 2028. The options vest on the one-year anniversary of the stock option grant on March 6, 2024. The stock options were valued at the grant date using a Black-Scholes option pricing model which will be recognized as stock-based compensation expense over the vesting period. The stock options were valued at $33,972 on the grant date using a Black-Scholes option pricing model which will be recognized as stock-based compensation expense over the vesting period.

 

The stock options were valued at the grant date using a Black-Scholes option pricing model with the following assumptions: risk-free interest rates ranging from 3.95% to 4.0%, expected dividend yield of 0%, expected option term of three to six years using the simplified method, and expected volatilities ranging from 68.8% to 71.6% based on the calculated volatility of comparable companies.

 

During the nine months ended September 30, 2023, the Company recognized total stock-based expenses related to stock options of $914,426 which has been reflected in general and administrative expenses on the unaudited statements of operations and comprehensive loss. A balance of $142,835 remains to be expensed over future vesting periods related to unvested stock options issued for services to be expensed over a weighted average period of 2.44 years.

 

   Number of
Options		   Weighted
Average
Exercise
Price		   Weighted
Average
Remaining
Contractual
Life
(Years)		 
Balance on December 31, 2022   
   -
   $
   -
    
   -
 
Granted   460,000    4.15    
-
 
Balance on September 30, 2023   460,000   $4.15    8.74 
Options exercisable on September 30, 2023   350,000   $4.15    9.38 
Weighted average fair value of options granted during the period   
-
   $2.30    
-
 

 

On September 30, 2023, the aggregate intrinsic value of options outstanding was $0.

 

Stock Warrants

 

In connection with the IPO, the Company issued 1,686,747 fully vested warrants to the placement agent. The warrants are exercisable at $4.565 per share and expire on February 14, 2028. The warrants were considered equity issuance costs; therefore, there was no financial statement impact for the grant during the nine months ended September 30, 2023.

 

Warrant activity for the nine months ended September 30, 2023 are summarized as follows: 

 

   Number of Warrants   Weighted
Average
Exercise
Price		   Weighted
Average
Remaining
Contractual
Term
(Years)		   Aggregate
Intrinsic
Value		 
Balance Outstanding, December 31, 2022   
-
   $
-
    
-
    
             -
 
Granted   1,686,747    4.565    
-
    
-
 
Balance Outstanding, September 30, 2023   1,686,747   $4.565    4.38    
-
 
Exercisable, September 30, 2023   1,686,747   $4.565    4.38    
-