Quarterly report pursuant to Section 13 or 15(d)

STOCKHOLDERS??? EQUITY

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STOCKHOLDERS’ EQUITY
 3 Months Ended
Mar. 31, 2023
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

 
NOTE 8 – STOCKHOLDERS’ EQUITY

 

The Company is authorized to issue up to 100,000,000 shares of common stock with a par value of $0.00001. The Company is seeking shareholder approval for an increase in the authorized shares of common stock from 100,000,000 to 250,000,000. The shareholders will vote on this proposal at the annual shareholders meeting scheduled for May 24, 2023. In addition, the Company is authorized to issue 5,000,000 shares of preferred stock with a par value of $0.00001. The specific rights of the preferred stock, when so designated, shall be determined by the board of directors.

 

Common Stock

 

On February 1, 2022, the Company sold 6,666,667 shares of its common stock in a public offering at $3.00 per share. The Company received net proceeds of $18,089,117 after underwriter commissions and expenses of $1,910,816. The underwriter was also issued a warrant to purchase 333,334 shares of the Company’s common stock at an exercise price of $3.75 per share that expires five years from the date of issuance. The underwriter agreement provided the underwriter with a right of first refusal for any additional securities offerings within twelve months of this offering.

 

As discussed in Note 6 above, the Company issued the Convertible Notes and Note Warrants, along with the warrants to the placement agent in August 2022. The Company received consent from the underwriter to issue such securities. In addition, the Company was required to reserve 21,135,267 shares of common stock for future issuance of shares for the conversion of the Convertible Notes and exercise of the Note Warrants and 603,864 shares for the exercise of the placement agent warrants. The placement agent agreement provided the placement agent with the right of first refusal for any additional securities offerings within twelve months of this offering.

 

Warrants

  

As discussed in Note 6, the Company issued the Note Warrants, which are fully vested, to purchase 9,057,971 shares of the Company’s common stock at an exercise price of $2.85. The Note Warrants expire five years from the issuance date. Also, the Company issued to the placement agent of the Convertible Notes, fully vested warrants to purchase 603,864 shares of the Company’s common stock at an exercise price of $3.5625. The warrants were not exercisable until February 24, 2023 and expire on February 24, 2028. The Company valued all of these warrants using the closing price of the Company’s common stock on August 24, 2022 of $2.44, volatility of 79.81% based on peer companies, risk free interest rate of 3.03%, no dividends and an estimated life of 2.5 years.

 

During three months ended March 31, 2023 and 2022, the Company recognized expense of $0 and $7,302, respectively, related to common stock warrants. No additional expense will be recognized in the future for any warrants outstanding as of March 31, 2023.

 

The following is the activity related to common stock warrants during the three months ended March 31, 2023:

                         
    Common Stock Warrants  
    Shares       Weighted
Average
Exercise
Price		       Weighted
Average
Remaining
Life in years		       Intrinsic Value  
                               
Outstanding at January 1, 2023   15,085,618     $ 2.33                  
Granted   –     $ –                  
Canceled   –     $ –                  
Expired   –     $ –                  
Exercised   –     $ –                  
Outstanding at March 31, 2023   15,085,618     $ 2.33       5.55     $ 2,593,084  
Exercisable at March 31, 2023   15,085,618     $ 2.33       5.55     $ 2,593,084