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

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

Series A Preferred

 

On November 8, 2021, in connection with the Company’s public offering, the Company’s Board of Directors adopted a resolution allowing for the authorization of and issuance of 1,543,458 shares of the Company’s Preferred Stock, $.01 par value per share, designated as Series A Preferred Stock (“Series A”). The Series A has a liquidation preference of $0.001 per share.

 

Dividends

 

Series A holders shall be entitled to receive, when and as declared by the Board of Directors, dividends on an equivalent basis without preference with the holders of the shares of the Company’s common stock based upon the number of shares of common stock into which the Series A is then convertible.

 

Voting Rights

 

Series A holders shall be entitled to vote on all matters presented to the stockholders of the Company and shall be entitled to such number of votes that equal the number of shares of common stock into which each share of Series A held may be converted; provided, however, that in no event shall a Series A holder be entitled to vote more than 4.99% of the then outstanding shares of common stock.

 

Conversion

 

Optional Conversion - Each share of Series A shall be convertible, at any time, at the option of the Series A holder, into one share of common stock; provided, however, that in no event shall a Series A holder be entitled to convert any shares of Series A to the extent that such conversion would result in beneficial ownership by the Series A holder of more than 4.99% of the outstanding shares of common stock.

 

Automatic Conversion – If an event occurs which has the effect of reducing a Series A holder’s beneficial ownership of shares of common stock to less than 4.5% of the then publicly disclosed outstanding shares of common stock, then, within five business days thereafter, the Series A holder shall provide notice to the Company to such effect. Such notice shall have the effect of a notice of conversion such that the Series A holder’s post-conversion ownership of common stock will be 4.99% of the then publicly disclosed outstanding shares of common stock.

 

 

2021 Stock Incentive Plan

 

On March 18, 2021, the Company’s Board of Directors adopted the BioRestorative Therapies, Inc. 2021 Stock Incentive Plan (the “2021 Plan”). Pursuant to the 2021 Plan, a total of 1,175,000 shares of common stock are authorized to be issued pursuant to the grant of stock options, restricted stock units, restricted stock, stock appreciation rights and other incentive awards. As of June 30, 2022, based on stock options and restricted stock units currently outstanding under the 2021 Plan, no shares remain available for future grants under the 2021 Plan.

 

Warrant and Option Valuation

 

The Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model. The expected term used for warrants and options issued to non-employees is the contractual life and the expected term used for options issued to employees and directors is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

 

Warrant Activity Summary

 

No warrants were granted or issued during the six months ended June 30, 2022 and 2021.

 

A summary of the warrant activity during the six months ended June 30, 2022, is presented below:

 

           Weighted     
       Weighted   Average     
       Average   Remaining   Aggregate 
   Number of   Exercise   Life   Intrinsic 
   Warrants   Price   In Years   Value 
Outstanding, January 1, 2022   4,739,871   $11.78    4.9   $     - 
Granted   -    -           
Exercised   -    -           
Expired   (138)   16,107.00           
Outstanding, June 30, 2022   4,739,733   $10.92    4.4   $- 
                     
Exercisable, June 30, 2022   4,739,733   $10.92    4.4   $- 

 

 

The following table presents information related to warrants at June 30, 2022:

 

 

Warrants Outstanding   Warrants Exercisable 
        Weighted     
    Outstanding   Average   Exercisable 
Exercise   Number of   Remaining Life   Number of 
Price   Warrants   In Years   Warrants 
$10.00    4,501,937    4.4    4,501,937 
$12.50    235,970    4.4    235,970 
$60.00    250    2.5    250 
$800.00    869    2.3    869 
$2,240.00    39    2.0    39 
$3,400.00    264    1.8    264 
$4,000.00    55    1.8    55 
$8,000.00    19    1.3    19 
$14,000.00    18    1.0    18 
$16,000.00    298    1.6    298 
$16,600.00    14    0.3    14 
      4,739,733    4.4    4,739,733 

 

Stock Options

 

The Company grants stock options to certain employees which is recognized as compensation expense on a straight-line basis over the vesting term of the grants. Vesting terms are generally two years, and grants expire between five and ten years.

 

For the three months ended June 30, 2022 and 2021, the Company recognized compensation expense related to stock option grants of $1.9 million and $1.7 million, respectively. For the six months ended June 30, 2022 and 2021, the Company recognized compensation expense related to stock option grants of $4.0 million and $15.6 million, respectively. The Company values these option grants using the Black-Scholes option pricing model. In applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:

 

   For the Six Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2022   2021 
Risk free interest rate   2.42%   1.71%
Expected term (years)   3.50    5.50 
Expected volatility   286%   228%
Expected dividends   0.00%   0.00%

 

The Company granted options for the purchase of 25,000 shares of common stock during the six months ended June 30, 2022, with a grant date fair value of $4.88 per share. At June 30, 2022, the unamortized compensation expense related to these grants was $0.1 million.

 

The Company granted options for the purchase of 586,959 shares of common stock during the six months ended June 30, 2021, with a grant date fair value of $47.25 per share, after taking into effect the reverse stock split. At June 30, 2022, the unamortized compensation expense related to these grants was $5.7 million.

 

A summary of the stock option activity during the six months ended June 30, 2022 is presented below:

 

            Weighted     
        Weighted   Average     
        Average   Remaining   Aggregate 
    Number of   Exercise   Life   Intrinsic 
    Options   Price   In Years   Value 
Outstanding, January 1, 2022    839,639   $18.73    9.5              - 
Granted    25,000    4.92           
Forfeited    (30)   3,273.00           
Outstanding, June 30, 2022    864,609   $18.73    8.8   $- 
                      
Exercisable, June 30, 2022    532,045   $17.50    9.0   $- 

 

 

The following table presents information related to stock options at June 30, 2022:

 

Options Outstanding   Options Exercisable 
        Weighted     
    Outstanding   Average   Exercisable 
Exercise   Number of   Remaining Life   Number of 
Price   Options   In Years   Options 
$4.92    25,000    4.8    - 
$13.50(1)   838,550    9.0    530,994 
$1,040.00    44    7.3    44 
$3,000.00    1,004    4.6    996 
$22,800.00    1    2.0    1 
$48,200.00 - $52,000.00    9    1.5    9 
$120,000.00    1    0.4    1 
      864,609    8.8    532,045 

 

(1)Subject to reduction to $5.08 per share in the event of stockholder approval of certain amendments to the 2021 Plan.

 

Restricted Stock Units

 

Pursuant to the 2021 Plan, the Company grants RSUs to employees, consultants and non-employee directors (“Eligible Individuals”). The number, terms and conditions of the RSUs that are granted to Eligible Individuals are determined on an individual basis by the plan administrator. On the distribution date, the Company shall issue to the Eligible Individual one share of the Company’s common stock for each vested and nonforfeitable RSU.

 

On March 18, 2022, the Company, granted an aggregate of 24,876 RSUs to its Chief Executive Officer, President and Chairman of the Board and its Vice President, Research and Development with a fair value of $4.21 per share. The RSUs vest in twelve equal monthly installments.

 

A summary of our unvested RSUs as of June 30, 2022 is as follows:

 

   Number of 
   Shares 
Outstanding, January 1, 2022   293,479 
Granted   24,876 
Forfeited   - 
Vested   (104,052)
Outstanding, June 30, 2022   214,303 

 

The following table presents information related to stock compensation expense:

 

   For the Three Months Ended   For the Six Months Ended   Unrecognized at   Weighted Average Remaining Amortization   
   June 30,   June 30,   June 30,   Period 
   2022   2021   2022   2021   2022   (Years) 
Consulting  $23,210   $-   $96,029   $-   $                          -              - 
Research and development   -    24,304    -    49,245    -    - 
General and administrative   3,080,941    2,902,160    6,384,025    16,953,806    13,843,633    1.4 
   $3,104,151   $2,926,464   $6,480,054   $17,003,231   $13,843,633    1.4