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Stockholders' Equity
 6 Months Ended
Jun. 30, 2022
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY

NOTE 7 – STOCKHOLDERS’ EQUITY

 

Shares Authorized

 

The authorized capital stock consists of 200,000,000 shares, of which 180,000,000 are shares of common stock and 20,000,000 are shares of preferred stock.

 

Reverse Stock Split

 

On July 28, 2021, the Company filed a certificate of change to the Company’s amended and restated certificate of incorporation, with the Secretary of State of the State of Nevada, to effectuate a one-for-two (1:2) reverse stock split of the Company’s common stock. Proportional adjustments for the Reverse Stock Split were made to the Company’s outstanding stock options, warrants and equity incentive plans. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the consolidated financial statements to reflect the Reverse Stock Split.

 

2021 Omnibus Equity Incentive Plan

 

On July 26, 2021, the Company adopted the 2021 Omnibus Equity Incentive Plan, and authorized the reservation of 2,000,000 shares of common stock for future issuances under the plan.

 

Preferred Stock

 

In August 2016, the Company designated 1 share of Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) and has a stated value equal to $1.00 as may be adjusted for any stock dividends, combinations or splits. Each one (1) share of the Series A Preferred Stock shall have voting rights equal to (x) the total issued and outstanding Common Stock eligible to vote at the time of the respective vote divided by (y) forty-nine one hundredths (0.49) minus (z) the total issued and outstanding Common Stock eligible to vote at the time of the respective vote. The Series A Preferred Stock does not convert into securities of the Company. The Series A Preferred Stock does not contain any redemption provision. In the event of liquidation of the Company, the holder of Series A Preferred shall not have any priority or preferences with respect to any distribution of any assets of the Company and shall be entitled to receive equally with the holders of the Company’s common stock.

 

As of June 30, 2022, and 2021, there were no shares of Series A Preferred Stock outstanding.

 

Common Stock

 

Sale of Common Stock

 

During the six months ended June 30, 2021, the Company sold an aggregate of 404,974 shares of its common stock at $4.00 per common share for gross proceeds of $1,619,896 and net proceeds of $1,588,237 after escrow fees related to private placement sale.

Common Stock for Services

 

In March 2021, the Company issued an aggregate of 105,000 shares of common stock for consulting and professional services rendered. The Company valued these common shares at the fair value of $420,000 or $4.00 per common share based on sales of common stock in the recent private placement. The Company recorded stock-based consulting of $420,000 which is included in professional and consulting expenses in the accompanying unaudited condensed statements of operations for the six months ended June 30, 2021.

 

In February 2021, the Company entered into a one-year Advisory Board Agreement with an individual who will function as an advisor to the Company’s Board. In accordance with this agreement the Company issued 100,000 shares of its common stock as consideration for the services provided. The Company valued these common shares at a fair value of $400,000 or $4.00 per common share based on sales of common stock in the recent private placement. For the six months ended June 30, 2022 and 2021, the Company recorded stock-based consulting of $50,000 and $150,000 which was included in professional and consulting expenses in the accompanying unaudited condensed statements of operations.

 

Common Stock Issued for Acquisition

 

Pursuant to the Merger Agreement, the Company acquired all the issued and outstanding shares of Avila in consideration of the issuance of an aggregate of 1,000,000 shares (the “Acquisition Shares”) of the Company’s common stock. These shares were value at $1,090,000, or $1.09 per share, based on the quoted closing price of the Company’s common stock on the measurement date (See Note 3).

 

Common Stock Warrants

 

A summary of the Company’s outstanding stock warrants is presented below: 

 

   Number of
Warrants		   Weighted Average
Exercise Price		   Weighted Average
Remaining
Contractual
Life (Years)		 
Balance on December 31, 2021   736,341   $4.59    4.30 
Balance on June 30, 2022   736,341   $4.59    3.80 
Warrants exercisable on June 30, 2022   736,341   $4.59    3.80 

 

Stock Options

 

On December 26, 2021 and effective January 10, 2022, the Company approved the grant of 150,000 options to purchase the Company’s common stock to a newly hired employee of the Company. The options have a term of 5 years from the date of grant and are exercisable at an exercise price of $4 per share. The options vest 25% every six months from date of grant for two years. The employee service date shall start on January 10, 2022 or the grant date which is when the Company started recognizing stock-based compensation expenses.

 

On January 19, 2022, the Company granted an aggregate of 85,000 options to purchase the Company’s common stock to four newly hired employees of the Company. The options have a term of 5 years from the date of grant and are exercisable at an exercise price of $4.00 per share. The options vest 25% every six months from date of grant for two years. The employee service date shall start on January 19, 2022 or the grant date which is when the Company started recognizing stock-based compensation expenses.

 

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 1.21% to 1.33%, expected dividend yield of 0%, expected option term of three years using the simplified method, and expected volatility of 165% based on the calculated volatility of comparable companies. During the six months ended June 30, 2022, the Company recognized total stock-based expenses related to stock options of $1,832,339 of which $1,594,780 was recorded in compensation and related expenses and $237,559 was recorded in professional and consulting expenses as reflected in the unaudited condensed statements of operations. A balance of $3,956,348 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 1.30 years.

 

The following is a summary of the Company’s stock option activity for the six months ended June 30, 2022: 

 

   Number of
Options		   Weighted
Average
Exercise
Price		   Weighted
Average
Remaining
Contractual
Life
(Years)		 
Balance on December 31, 2021   1,054,200   $14.66    4.64 
Granted   235,000    4.00    5.00 
Balance on June 30, 2022   1,289,200   $12.72    4.22 
Options exercisable on June 30, 2022   485,325   $9.90    4.07 
Options expected to vest   803,875   $14.43      
Weighted average fair value of options granted during the period       $2.07      

 

On June 30, 2022, the aggregate intrinsic value of options outstanding was $0.