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Equity
 6 Months Ended
Jun. 30, 2024
Equity [Abstract]  
EQUITY

NOTE 10 – EQUITY

 

Common Shares Issued as Convertible Note Payable Commitment Fee

 

During the six months ended June 30, 2024, the Company issued a total of 507,000 shares of its common stock as commitment fee for the purchase of March 2024 Convertible Note and June 2024 Convertible Note. These shares were valued at $320,546, the fair market value on the grant dates using the reported closing share prices on the dates of grant, and the Company recorded it as debt discount.

 

Options

 

The following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at June 30, 2024:

 

Options Outstanding   Options Exercisable 
Range of
Exercise Price		   Number
Outstanding at
June 30,
2024		   Weighted
Average
Remaining
Contractual Life
(Years)		   Weighted
Average
Exercise Price		   Number
Exercisable at
June 30,
2024		   Weighted
Average
Exercise Price		 
$0.27 – 2.08    205,000    3.64   $1.36    126,980   $1.49 
 3.25 – 8.20    307,803    2.54    5.26    307,803    5.26 
 10.30 – 19.30    198,500    3.54    14.20    198,500    14.20 
$0.27 – 19.30    711,303    3.14   $6.63    633,283   $7.31 

 

Stock option activity for the six months ended June 30, 2024 was as follows:

 

   Number of
Options		   Weighted
Average Exercise Price		 
Outstanding at January 1, 2024   853,303   $9.94 
Granted   56,000    0.41 
Expired   (198,000)   (19.11)
Outstanding at June 30, 2024   711,303   $6.63 
Options exercisable at June 30, 2024   633,283   $7.31 
Options expected to vest   78,020   $1.15 

 

The aggregate intrinsic value of stock options outstanding and stock options exercisable at June 30, 2024 was $3,626 an $7, respectively.

 

The fair values of options granted during the six months ended June 30, 2024 were estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: volatility of 83.10% - 91.17%, risk-free rate of 3.93% - 4.79%, annual dividend yield of 0%, and expected life of 3.00 - 5.00 years. The aggregate fair value of the options granted during the six months ended June 30, 2024 was $15,483.

 

The fair values of options granted during the six months ended June 30, 2023 were estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: volatility of 79.76% - 96.37%, risk-free rate of 3.58% - 3.96%, annual dividend yield of 0%, and expected life of 3.00 - 5.00 years. The aggregate fair value of the options granted during the six months ended June 30, 2023 was $313,144.

 

For the three months ended June 30, 2024 and 2023, stock-based compensation expense associated with stock options granted amounted to $12,256 and $112,015, of which $4,488 and $38,191 was recorded as compensation and related benefits, $7,768 and $73,824 was recorded as professional fees, and $0 and $0 was recorded as research and development expenses, respectively.

 

For the six months ended June 30, 2024 and 2023, stock-based compensation expense associated with stock options granted amounted to $25,789 and $180,277, of which, $9,591 and $89,527 was recorded as compensation and related benefits, $16,198 and $85,281 was recorded as professional fees, and $0 and $5,469 was recorded as research and development expenses, respectively.

 

A summary of the status of the Company’s nonvested stock options granted as of June 30, 2024 and changes during the six months ended June 30, 2024 is presented below:

 

   Number of
Options		   Weighted
Average
Exercise
Price		 
Nonvested at January 1, 2024   79,667   $1.57 
Granted   56,000    0.41 
Vested   (57,647)   (1.02)
Nonvested at June 30, 2024   78,020   $1.15 

 

Warrants

 

The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding at June 30, 2024:

 

 Warrants Outstanding    Warrants Exercisable 
 Range of
Exercise Price		    Number
Outstanding at
June 30,
2024		    Weighted
Average
Remaining
Contractual Life
(Years)		    Weighted
Average
Exercise Price		    Number
Exercisable at
June 30,
2024		    

Weighted
Average
Exercise Price

 
$0.50 – 2.50    2,535,150    4.89   $0.74    1,335,150   $0.95 
 4.50    179,998    3.93    4.50    179,998    4.50 
 12.50    123,964    2.81    12.50    123,964    12.50 
$0.50 – 12.50    2,839,112    4.74   $1.49    1,639,112   $2.21 

 

Stock warrant activity for the six months ended June 30, 2024 was as follows:

 

   Number of
Warrants		   Weighted
Average
Exercise Price		 
Outstanding at January 1, 2024   645,527   $5.04 
Issued   2,542,904    0.69 
Cancelled (*)   (349,319)   (2.19)
Outstanding at June 30, 2024   2,839,112   $1.49 
Warrants exercisable at June 30, 2024   1,639,112   $2.21 
Warrants expected to vest   1,200,000   $0.50 

 

*Second Warrant, which was issued on May 23, 2023, July 6, 2023, October 9, 2023, and March 7, 2024, was cancelled in June 2024. First Warrant, which was issued on May 23, 2023, July 6, 2023, October 9, 2023, and March 7, 2024, is still outstanding as of June 30, 2024. First Warrant and Second Warrant, which are issued on June 5, 2024, are still outstanding as of June 30, 2024.

 

The aggregate intrinsic value of both stock warrants outstanding and stock warrants exercisable at June 30, 2024 was $0.

 

Warrants Issued in March 2024

 

In connection with the issuance of March 2024 Convertible Note (See Note 6), the Company issued (i) a warrant to purchase 131,250 shares of common stock with an exercise price of $2.00 exercisable until the five-year anniversary of March 7, 2024, (ii) a warrant to purchase 121,154 shares of common stock with an exercise price of $1.30, which warrant was cancelled and extinguished against payment of the March 2024 Convertible Note, to Mast Hill; and issued a warrant to purchase 10,500 shares of common stock with an exercise price of $2.00 exercisable until the five-year anniversary of March 7, 2024 to a third party as a finder’s fee.

 

Based upon the Company’s analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party as a finder’s fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances. The 121,154 warrants with an exercise price of $1.30 were cancelled and extinguished against payment of the March 2024 Convertible Note. The fair value of the 141,750 warrants with an exercise price of $2.00 exercisable until the five-year anniversary of March 7, 2024 was classified as a derivative liability on March 7, 2024. The fair values of the 141,750 warrants with an exercise price of $2.00 exercisable until the five-year anniversary of March 7, 2024 issued on March 7, 2024 were computed using the Black-Scholes option-pricing model with the following assumptions: stock price of $0.40, volatility of 85.24%, risk-free rate of 4.07%, annual dividend yield of 0% and expected life of 5 years.

 

The warrants with an exercise price of $2.00 exercisable until the five-year anniversary of March 7, 2024 issued to Mast Hill to purchase 131,250 shares of the Company’s common stock were treated as a discount on the convertible note payable and were valued at $20,374 and were amortized over the term of the March 2024 Convertible Note.

 

The warrants with an exercise price of $2.00 exercisable until the five-year anniversary of March 7, 2024 issued to a third party as a finder’s fee to purchase 10,500 shares of the Company’s common stock were treated as convertible debt issuance costs and were valued at $1,679 and were amortized over the term of the March 2024 Convertible Note.

 

Warrants Issued in June 2024

 

In connection with the issuance of June 2024 Convertible Note (See Note 6), the Company issued (i) a warrant to purchase 1,000,000 shares of common stock with an exercise price of $0.65 exercisable until the five-year anniversary of June 5, 2024, (ii) a warrant to purchase 1,200,000 shares of common stock with an exercise price of $0.50 exercisable until the five-year anniversary of June 5, 2024, which warrant shall be cancelled and extinguished against payment of the June 2024 Convertible Note, to Mast Hill; and issued a warrant to purchase 80,000 shares of common stock with an exercise price of $0.65 exercisable until the five-year anniversary of June 5, 2024 to a third party as a finder’s fee.

 

Based upon the Company’s analysis of the criteria contained in ASC 815, the Company determined that all the warrants issued to Mast Hill and a third party as a finder’s fee meet the definition of a derivative liability, as the Company cannot avoid a net cash settlement under certain circumstances. Management determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the 1,200,000 warrants with an exercise price of $0.50 exercisable until the five-year anniversary of June 5, 2024, which warrant shall be cancelled and extinguished against payment of the June 2024 Convertible Note, has been estimated to be zero. Accordingly, the fair value of the 1,080,000 warrants with an exercise price of $0.65 exercisable until the five-year anniversary of June 5, 2024 was classified as a derivative liability on June 5, 2024. The fair values of the 1,080,000 warrants with an exercise price of $0.65 exercisable until the five-year anniversary of June 5, 2024 issued on June 5, 2024 were computed using the Black-Scholes option-pricing model with the following assumptions: stock price of $0.69, volatility of 85.72%, risk-free rate of 4.31%, annual dividend yield of 0% and expected life of 5 years.

 

The warrants with an exercise price of $0.65 exercisable until the five-year anniversary of June 5, 2024 issued to Mast Hill to purchase 1,000,000 shares of the Company’s common stock were treated as a discount on the convertible note payable and were valued at $418,194 and will be amortized over the term of the June 2024 Convertible Note.

 

The warrants with an exercise price of $0.65 exercisable until the five-year anniversary of June 5, 2024 issued to a third party as a finder’s fee to purchase 80,000 shares of the Company’s common stock were treated as convertible debt issuance costs and were valued at $39,221 and will be amortized over the term of the June 2024 Convertible Note.

 

Warrants Cancelled in June 2024

 

As of June 5, 2024, the Company paid in full of its outstanding May 2023 Convertible Note, July 2023 Convertible Note, October 2023 Convertible Note, and March 2024 Convertible Note and cancelled 349,319 warrants since these convertible notes were fully extinguished.

 

A summary of the status of the Company’s nonvested stock warrants issued as of June 30, 2024 and changes during the six months ended June 30, 2024 is presented below:

 

   Number of
Warrants		   Weighted
Average
Exercise Price		 
Nonvested at January 1, 2024   228,165   $2.66 
Issued   2,542,904    0.69 
Cancelled   (349,319)   (2.19)
Vested   (1,221,750)   (0.81)
Nonvested at June 30, 2024   1,200,000   $0.50