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STOCKHOLDERS’ DEFICIT
 12 Months Ended
Dec. 31, 2021
Equity [Abstract]  
STOCKHOLDERS’ DEFICIT

NOTE 6 - STOCKHOLDERS’ DEFICIT

 

Common Stock

 

On April, 29, 2021, the Company completed a public offering (“the Offering”) to sell an aggregate of 3,180,000 shares of the Company’s common stock together with warrants to purchase an aggregate of 3,180,000 shares of common stock. The Company also granted the underwriters warrants to purchase an aggregate of 477,000 shares of Common Stock at the same price. Net proceeds from the Offering were approximately $11.7 million (excluding any sale of the Option Shares), after deducting underwriting discounts and commissions and public offering expenses payable by the Company. In connection with the Offering, the Company issued 79,500 shares to the underwriter which were recognized as stock issuance costs.

 

During the year ended December 31, 2021, a total of 872,766 shares of the Company’s Series B preferred stock was converted to 872,766 shares of the Company’s common stock.

 

Stock-Based Compensation

 

In connection with the consummation of the Merger completed on February 12, 2016, we adopted Prior Protagenic’s 2006 Employee, Director and Consultant Stock Plan (the “2006 Plan”). On June 17, 2016, our stockholders adopted the 2016 Plan and, as a result, we terminated the 2006 Plan. We will not grant any further awards under the 2006 Plan. All outstanding grants under the 2006 Plan will continue in effect in accordance with the terms of the particular grant and the 2006 Plan.

 

 

Pursuant to the 2016 Plan, the Company’s Compensation Committee may grant awards to any employee, officer, director, consultant, advisor or other individual service provider of the Company or any subsidiary. On each of January 1, 2017, January 1, 2019 and January 1, 2020, pursuant to an annual “evergreen” provision contained in the 2016 Plan, the number of shares reserved for future grants was increased by 564,378 shares, or a total of 1,693,134 shares. On January 1, 2021, 569,826 shares of common stock were added to the 2016 Plan pursuant to this evergreen provision. As a result of these increases, as of December 31, 2021 and December 31, 2020, the aggregate number of shares of common stock available for awards under the 2016 Plan was 5,438,449 shares and 4,868,623 shares, respectively. Options issued under the 2016 Plan are exercisable for up to ten years from the date of issuance.

 

There were 5,520,861 options outstanding as of December 31, 2021. The fair value of each stock option granted was estimated using the Black-Scholes assumptions and or factors as follows:

 

Exercise price  $ 1.96-5.60 
Expected dividend yield    0%
Risk free interest rate    0.81%-1.58%
Expected life in years    5-10 
Expected volatility    147%-158%

 

There were 5,597,861 options outstanding as of December 31, 2020. The fair value of each stock option granted was estimated using the Black-Scholes assumptions and or factors as follows:

 

Exercise price  $1.75 
Expected dividend yield   0%
Risk free interest rate   0.64%-1.61%
Expected life in years   10 
Expected volatility   140%-146%

 

The following is an analysis of the stock option grant activity under the Plan:

 

      

Weighted

Average

  

Weighted

Average

 
   Number   Exercise Price   Remaining Life 
Stock Options               
                
Outstanding December 31, 2020   5,597,861   $1.47    6.48 
Granted   583,000   $4.77    9.12 
Expired   (290,000)  $1.00    - 
Exercised   (370,000)  $1.48    - 
Outstanding December 31, 2021   5,520,861   $1.84    6.32 

 

A summary of the status of the Company’s nonvested options as of December 31, 2021, and changes during the year ended December 31, 2021, is presented below:

 

Nonvested Options  Options  

Weighted-

Average
Exercise Price

 
Nonvested at December 31, 2020   862,833   $1.75 
Granted   583,000   $4.77 
Vested   (635,500)  $3.07 
Forfeited   -   $- 
Nonvested at December 31, 2021   810,333   $3.08 

 

As of December 31, 2021, the Company had 5,520,861 shares issuable under options outstanding at a weighted average exercise price of $1.84 and an intrinsic value of $430,174.

 

 

The total number of options granted during the year ended December 31, 2021 and 2020 was 583,000 and 1,762,495, respectively. The exercise price for these options ranges from $1.96 to $5.60 per share.

 

The Company recognized compensation expense related to options issued of $1,518,756 and $1,427,084 during the years ended December 31, 2021 and 2020, respectively, in which $1,513,835 and $1,354,750 is included in general and administrative expenses and $4,921 and $72,334 in research and development expenses, respectively. For the year ended December 31, 2021, $769,479 of the stock compensation was related to employees and $749,277 was related to non-employees.

 

As of December 31, 2021, the unamortized stock option expense was $2,187,130 with $255,277 being related to employees and $1,931,853 being related to non-employees. As of December 31, 2021, the weighted average period for the unamortized stock compensation to be recognized is 3.23 years.

 

On February 25, 2021, the Company issued a total of 366,000 options to purchase shares of the Company’s common stock to five individuals, with 350,000 of these options being issued to related parties. These options had a grant date fair value of $2,009,063. These options have an exercise price of $5.60 and a term of 10 years or 5 years. 16,000 of the options vest immediately and 350,000 of the options vest monthly over 48 months.

 

On May 26, 2021, the Company issued a total of 180,000 options to purchase shares of the Company’s common stock to a related party. These options had a grant date fair value of $474,231. These options have an exercise price of $3.65, a term of 10 years, and vest immediately.

 

On July 26, 2021, the Company issued a total of 32,000 options to purchase shares of the Company’s common stock. These options had a grant date fair value of $65,626. These options have an exercise price of $2.09, a term of 10 years, and vest over 48 months.

 

On August 10, 2021, the Company issued a total of 5,000 options to purchase shares of the Company’s common stock. These options had a grant date fair value of $9,615. These options have an exercise price of $1.96, a term of 10 years, and vest over 48 months.

 

During the three months ended March 31, 2021, 10,000 options were exercised for 10,000 shares of the Company’s common stock. These options had an exercise price of $1.00.

 

During the three months ended June 30, 2021, the Company issued 360,000 shares of the Company’s common stock to a related party for the exercise of 360,000 options. The Company received proceeds of $532,500 from the exercise.

 

Warrants:

 

A summary of warrant issuances are as follows:

 

       

Weighted

Average

  

Weighted

Average

 
    Number   Exercise Price   Remaining Life 
Warrants                
                 
Outstanding December 31, 2020    4,007,058   $1.06    1.86 
Granted    3,657,000    4.98    4.83 
Expired    (150,249)   1.25    - 
Exercised    (1,381,179)   1.13    - 
Outstanding December 31, 2021    6,132,630   $3.38    3.15 

 

As of December 31, 2021, the Company had 6,132,630 shares issuable under warrants outstanding at a weighted average exercise price of $3.38 and an intrinsic value of $928,802.

 

 

During the three months ended March 31, 2021, 373,042 warrants were exercised for 240,123 shares of the Company’s common stock. The Company received $27,125 from these exercises.

 

During the three months ended June 30, 2021, the Company issued 836,558 shares of the Company’s common stock for the net exercise of 1,008,137 warrants. 231,277 of these shares of common stock were issued to a related party. The Company received proceeds of $300,000 from the exercise.