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

NOTE 5 – COMMON STOCK

 

1.On December 22, 2023, the Company entered into a Standby Equity Purchase Agreement (the “SEPA II”) with YA II PN, Ltd. (the “Investor”), pursuant to which the Investor has agreed to purchase up to $20 million shares of common stock over 36 months after the date of the SEPA II. The price of shares to be issued under the SEPA II will be 94% of the lowest volume weighted average trading price (the “VWAP”) of the Company’s common stock for the three consecutive trading days commencing on the delivery of each advance notice by the Company. For additional information, see note 10(21) to the Company’s audited financial statements for the year ended December 31, 2023.

 

The SEPA II will terminate automatically on the earlier of January 1, 2027 or when the Investor has purchased an aggregate of $20 million of the Company’s shares of common stock. The Company has the right to terminate the SEPA II upon five trading days’ prior written notice to the Investor.

 

In connection with and subject to the satisfaction of certain conditions set forth in the SEPA II, upon the request of the Company, the Investor will pre-advance to the Company up to $3,000,000 of the $20,000,000 commitment amount.

 

The Company paid a subsidiary of the Investor a structuring fee in the amount of $10,000 and on December 28, 2023, the Company issued 110,554 shares of common stock as a commitment fee to a subsidiary of the Investor. The Company determined the value of the shares issued at $254,274 based on the share price on the agreement date, which was recorded as prepaid expenses in other current assets during the year ended December 31, 2023 and $34,783 was recorded in the statement of operations under financing expenses for the six months ended June 30, 2024.

 

During the six months ended June 30, 2024, the Company issued 1,170,813 shares of common stock, to the Investor pursuant to the terms of SEPA II valued at $977,044 for gross consideration of $1,082,457.

 

On April 4, 2024, the Company, sold a $1,500,000 promissory note (the “Note”) to the Investor pursuant to the terms of SEPA II in exchange for proceeds of $1,455,000, reflecting an original issue discount of 3% to face value of the Note.

 

The Note bears interest at a rate of 8% per annum and matures April 4, 2025. Commencing June 3, 2024, and every 30 days thereafter, the Company is required to pay $150,000, together with accrued and unpaid interest on the then outstanding principal. Payments under the Note can be made either (i) in cash or (ii) by submitting notice of an advance of shares to be issued and sold to the Investor pursuant to the SEPA II, or any combination of (i) or (ii) as determined by the Company. The entire remaining principal balance and unpaid interest amount of the Note becomes due and payable in full at maturity. The Company determined that the Note is accounted for as a liability in accordance with ASC 470 “Debt”.

 

The Note sets forth certain events of default, including a breach by the Company of another agreement with the Investor, the failure of the securities of the Company to remain listed on the Nasdaq and the failure of the Company to timely file periodic reports with the SEC. Upon the occurrence of an event of default, interest will accrue at a default rate of 18% per annum and the Note will become immediately due and payable, together with all costs, legal fees and expenses of collection through the date of full repayment.

 

2.On October 26, 2022, pursuant to an investor relations consulting agreement, the Company’s Board of Directors approved the quarterly issuances of 1,286 shares of common stock to a consultant beginning in the first quarter of 2023. On March 18, 2024, the Company issued 1,286 shares of common stock to a consultant for consulting services provided to the Company. The shares were estimated at $17,914 based on the share price of the common stock on October 26, 2022. On July 25, 2024, the Company issued to a consultant additional 1,286 shares of common stock - see also note 9 below.

 

3.On March 18, 2024, the Company issued 3,508 shares of common stock to a consultant for consulting services provided to the Company pursuant to a consulting agreement dated on November 23, 2023. The Company determined the value of the shares and the services provided at $5,824 and recorded share based compensation expenses.

 

4.On May 8, 2024 the Company issued 30,000 shares of common stock to a consultant, for services provided to the Company pursuant to an amendment of a consulting agreement, dated November 15, 2023. The shares were estimated at $30,900 based on the share price of the common stock on May 8, 2024.

 

5.During the six months ended June 30, 2024, the Company recorded share based compensation expenses in General and Administrative expenses in the amount of $187,935 related to shares issued by the Company to service providers during the year ended December 31, 2023.