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STOCKHOLDERS’ DEFICIT
 9 Months Ended
Sep. 30, 2022
Equity [Abstract]  
STOCKHOLDERS’ DEFICIT

NOTE 6 - STOCKHOLDERS’ DEFICIT

 

Common Stock

 

During the nine months ended September 30, 2022, the Company issued 75,649 shares of common stock for the conversion of notes and interest. (See Note 5)

 

Stock-Based Compensation

 

The Company adopted an Employee, Director and Consultant Stock Plan on June 17, 2016 (the “2016 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. On January 1, 2022, 737,040 additional shares of common stock are available for issuance under the 2016 Plan as a result of operation of the evergreen provision: (a) 564,278 shares resulting from operation of the evergreen provision in 2019, which were never previously registered and (b) 172,762 shares resulting from operation of the evergreen provision in 2022. As a result of these increases, as of September 30, 2022 and December 31, 2021, the aggregate number of shares of common stock available for awards under the 2016 Plan was 6,175,489 shares and 5,438,449 shares, respectively. Options issued under the 2016 Plan are exercisable for up to ten years from the date of issuance.

 

 

There were 5,504,861 options outstanding as of September 30, 2022. The fair value of each stock option granted during the nine months ended September 30, 2022 was estimated using the Black-Scholes assumptions and or factors as follows:

 

Exercise price  $1.21 
Expected dividend yield   0%
Risk free interest rate   1.73%
Expected life in years   10 
Expected volatility   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, 2021   5,520,861   $1.84    6.32 
Granted   50,000   $1.21    9.27 
Expired   (66,000)  $2.12    - 
Exercised   -   $-    - 
Outstanding September 30, 2022   5,504,861   $1.84    5.66 

 

A summary of the status of the Company’s nonvested options as of September 30, 2022, and changes during the nine months ended September 30, 2022, is presented below:

 

Nonvested Options  Options  

Weighted-

Average

Exercise Price

 
Nonvested at December 31, 2021   810,333   $3.08 
Granted   50,000   $1.21 
Vested   (274,895)  $1.57 
Forfeited   -   $- 
Nonvested at September 30, 2022   585,438   $3.11 

 

As of September 30, 2022, the Company had 5,504,861 shares issuable under options outstanding at a weighted average exercise price of $1.84 and an intrinsic value of $0.

 

The total number of options granted during the nine months ended September 30, 2022 and 2021 was 50,000 and 583,000, respectively. The exercise price for these options ranges from $1.21 to $5.60 per share.

 

The Company recognized compensation expense related to options issued of $214,679 and $231,649 during the three months ended September 30, 2022 and 2021, respectively, in which $195,624 and $230,173 is included in general and administrative expenses and $19,055 and $1,476 in research and development expenses, respectively. For the three months ended September 30, 2022, $49,685 of the stock compensation was related to employees and $164,994 was related to non-employees.

 

The Company recognized compensation expense related to options issued of $645,560 and $1,300,590 during the nine months ended September 30, 2022 and 2021, respectively, in which $568,198 and $1,296,162 is included in general and administrative expenses and $77,362 and $4,428 in research and development expenses, respectively. For the nine months ended September 30, 2022, $149,055 of the stock compensation was related to employees and $496,505 was related to non-employees.

 

 

As of September 30, 2022, the unamortized stock option expense was $1,606,180 with $107,079 being related to employees and $1,499,101 being related to non-employees. As of September 30, 2022, the weighted average period for the unamortized stock compensation to be recognized is 2.25 years.

 

On January 6, 2022, the Company issued a total of 50,000 options to purchase shares of the Company’s common stock to a consultant. These options had a grant date fair value of $68,614. These options have an exercise price of $1.21, a term of 10 years, and vest over four years.

 

Warrants:

 

A summary of warrant issuances are as follows:

 

      

Weighted

Average

  

Weighted

Average

 
   Number   Exercise Price   Remaining Life 
Warrants               
                
Outstanding December 31, 2021   6,132,630   $3.38    3.15 
Granted   16,000    1.25    4.27 
Expired   -    -    - 
Exercised   -    -    - 
Outstanding September 30, 2022   6,148,630   $3.37    2.40 

 

As of September 30, 2022, the Company had 6,148,630 shares issuable under warrants outstanding at a weighted average exercise price of $3.37 and an intrinsic value of $0.

 

The Company recognized compensation expense related to warrants issued of $20,433 and $0 during the three months ended September 30, 2022 and 2021, respectively.

 

The Company recognized compensation expense related to warrants issued of $20,433 and $0 during the nine months ended September 30, 2022 and 2021, respectively.

 

On January 6, 2022, the Company cancelled 16,000 options and replaced them with 16,000 warrants with a 5-year term and an exercise price of $1.25.