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

NOTE 5 - STOCKHOLDERS’ EQUITY

 

Series A Preferred Stock

 

On November 8, 2021, in connection with the Company’s public offering, the Company’s Board of Directors adopted a resolution allowing for the designation and issuance of 1,543,158 shares of the Company’s Preferred Stock, $.01 par value per share, designated as Series A Preferred Stock (“Series A”). The Series A had a liquidation preference of $0.001 per share. On September 8, 2022, the Company issued 1,543,158 shares of Series B Preferred Stock (“Series B”) to Auctus Fund, LLC (“Auctus”) in exchange for an equal number of shares of the Company’s outstanding Series A. Simultaneously, the stock certificate representing the Series A shares was being returned to the Company for cancellation. On such date and upon such exchange, the Company’s Board of Directors cancelled the Series A.  

 

Series B Preferred Stock

 

Effective September 8, 2022, the Company issued 1,543,158 shares of Series B to Auctus in exchange for an equal number of shares of the Company’s outstanding Series A. The terms of the Series B are substantially identical to those of the Series A, except that, among other things, the limitation on beneficial ownership of Common Stock of the Company upon a conversion of the Series B into Common Stock, and the limitation on the number of votes attributable to the Series B, is 9.99% of the then outstanding Common Stock of the Company instead of 4.99% as provided for the Series A. The Company shall, at all times, reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of the Series B. The Series B is not subject to redemption by the Company or any Series B holder.

 

Dividends

 

Series B holders shall be entitled to receive, when and as declared by the Board of Directors, dividends on a pari passu basis with the holders of the shares of Common Stock based upon the number of shares of Common Stock into which the Series B is then convertible.

 

Voting Rights

 

Series B holders shall be entitled to vote on all matters presented to the stockholders of the Company for a vote at a meeting of stockholders of the Company or a written consent in lieu of a meeting of stockholders of the Company, and shall be entitled to such number of votes for each share of Series B entitled to vote at such meetings or pursuant to such consent, voting together with the holders of shares of Common Stock and other shares of preferred stock who are entitled to vote, and not as a separate class, except as required by law. The number of votes to which the Series B holders shall be entitled to vote for each share of Series B shall equal the number of shares of Common Stock into which such Series B is then convertible; provided, however, that in no event shall a Series B holder be entitled to vote more than 9.99% of the then outstanding shares of Common Stock.

 

Conversion

 

Optional Conversion - Each share of Series B shall be convertible, at any time and from time to time, at the option of the Series B holder, into one share of Common Stock; provided, however, that in no event shall a Series B holder be entitled to convert any shares of Series B to the extent that such conversion would result in beneficial ownership by such Series B holder of more than 9.99% of the outstanding shares of Common Stock.

 

Automatic Conversion – From time to time, if an event occurs, including adjustment due to merger, consolidation, etc., subdivision or combination of Common Stock, adjustment due to distribution, purchase rights, and notice of adjustments, which has the effect of reducing a Series B holder’s beneficial ownership of shares of Common Stock to less than 9.5% of the then publicly disclosed outstanding shares of Common Stock, then, within five (5) business days, the Series B holder shall provide notice to the Company to such effect, which notice shall state the number of shares of Common Stock beneficially owned by the Series B holder and shall provide reasonable detail with regard thereto, including the number of derivative securities compromising a portion of such beneficial share amount. Such notice shall have the effect of a notice of conversion with respect to the conversion of such number of shares of Series B as would increase the Series B holder’s beneficial ownership of Common Stock to 9.99% of the then publicly disclosed outstanding shares of Common Stock.

 

 

On April 4, 2023, Auctus converted 120,000 shares of Series B into 120,000 shares of Common Stock. As of September 30, 2023, the number of shares of Series B remaining outstanding after giving effect to such conversion was 1,398,158.

 

Common Stock

 

On July 13, 2023, the Company sold an aggregate of 685,033 shares of Common Stock to several institutional buyers and accredited investors in a registered direct offering at an offering price of $3.03 per share. The offering closed on July 13, 2023, with net proceeds of approximately $1.9 million. The Company intends to use the net proceeds from the offering in connection with its clinical trials with respect to its lead cell therapy candidate, BRTX-100, pre-clinical research and development with respect to its metabolic ThermoStem Program and for general corporate purposes and working capital. As of September 30, 2023, there were 4,667,641 shares of Common Stock outstanding.

 

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”). The 2021 Plan was approved by the Company’s stockholders on August 17, 2021. Pursuant to the 2021 Plan, a total of 1,175,000 shares of common stock were initially authorized to be issued pursuant to the grant of stock options, restricted stock units, restricted stock, stock appreciation rights and other incentive awards. On December 10, 2021, the Company’s Board of Directors approved an amendment to increase the number of shares of Common Stock authorized to be issued from 1,175,000 to 2,500,000. Such amendment was approved by the Company’s stockholders on November 3, 2022. On July 13, 2023, the Company’s Board of Directors approved an amendment to the 2021 Plan to increase the number of shares of common stock authorized to be issued from 2,500,000 to 3,850,000. Such amendment was approved by the Company’s stockholders on September 13, 2023.

 

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.

 

Stock Options

 

There were no stock options granted during the three months ended September 30, 2023. The Company granted options for the purchase of 629,017 shares of Common Stock during the nine months ended September 30, 2023. The grant date fair value of options issued during the nine months ended September 30, 2023 was $1,745,000.

 

There were no stock options granted during the three months ended September 30, 2022. The Company granted options for the purchase of 25,000 shares of Common Stock during the nine months ended September 30, 2022. The grant date fair value of options issued during the nine months ended September 30, 2022 was $122,117.

 

In applying the Black-Scholes option pricing model to stock options granted during the nine months ended September 30, 2023 and 2022, the Company used the following assumptions:

 

SCHEDULE OF STOCK OPTION GRANTED ASSUMPTIONS 

   For the
Nine Months Ended		   For the
Nine Months Ended		 
   September 30,   September 30, 
   2023   2022 
Risk free interest rate   4.22%   2.42%
Expected term (years)   3.50    3.50 
Expected volatility   175%   286%
Expected dividends   0.00%   0.00%

 

A summary of the stock option activity during the nine months ended September 30, 2023 is presented below:

 

SCHEDULE OF STOCK OPTION ACTIVITY

  

Number of

Options

  

Weighted Average

Exercise Price

 
Outstanding, January 1, 2023   864,639   $5.08 
Granted   629,017    2.91 
Expired   -    - 
Forfeited   (26,766)   5.08 
Outstanding, September 30, 2023   1,466,890   $4.17 
           
Exercisable, September 30, 2023   1,122,671   $4.69 

 

 

Restricted Stock Units

 

Pursuant to the Company’s 2021 Stock Incentive Plan, the Company may grant restricted stock units (“RSUs”) to employees, consultants or 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 2021 Plan administrator. On the distribution date, the Company shall issue to the Eligible Individual one unrestricted, fully transferable share of the Company’s Common Stock (or the fair market value of one such share in cash) for each vested and nonforfeitable RSU.

 

A summary of the Company’s unvested RSUs as of September 30, 2023 is as follows:

 

SCHEDULE OF UNVESTED RESTRICTED STOCK UNITS

   Number of Shares 
Outstanding, December 31, 2022   201,870 
Granted   - 
Forfeited   - 
Vested   (104,043)
Outstanding, September 30, 2023   97,827 

 

The following table presents stock compensation by award type:

 

SCHEDULE OF STOCK COMPENSATION BY AWARD TYPE

   For the Three Months Ended
September 30,		 
   2023   2022 
Options  $329,571   $1,865,297 
RSUs   1,164,135    1,190,349 
Shares issued for services   -    18,923 
   $1,493,706   $3,074,528 

 

   For the Nine Months Ended
September 30,		 
   2023   2022 
Options  $2,841,533   $5,869,543 
RSUs   3,477,020    3,544,782 
Shares issued for services   -    140,245 
   $6,318,553   $9,554,570 

 

Stock based compensation is included in General and administrative expenses on the unaudited condensed consolidated statements of operations. As of September 30, 2023, unrecognized stock based compensation expense is $872,304 with a weighted average remaining amortization period of 0.87 years.