Stockholders’ Equity, Options, and Warrants

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Stockholders’ Equity, Options, and Warrants

(6)       Stockholders’ Equity, Options, and Warrants

Employee Stock Purchase Plan

The Company has an employee stock purchase plan pursuant to which employees of the Company may participate to purchase shares of common stock at a discount. During the three months ended March 31, 2022 and 2021, the Company issued 67,945 and 105,361 shares of common stock, respectively, to employees under the employee stock purchase plan for proceeds of $5,197 and $4,478, respectively. As of March 31, 2022, 2,718,546 shares of common stock remain available for issuance under the employee stock purchase plan.

Stock-Based Compensation Plans

2015 Incentive Plan - In April 2015, the Company’s Board of Directors approved the International Isotopes Inc. 2015 Incentive Plan (as amended, the 2015 Plan), which was subsequently approved by the Company’s shareholders in July 2015. The 2015 Plan was amended and restated in July 2018 to increase the number of shares authorized for issuance under the 2015 Plan by an additional 20,000,000 shares. The 2015 Plan provides for the grant of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock or cash-based awards. At March 31, 2022, there were 27,864,971 shares available for issuance under the 2015 Plan.

Employee/Director Grants - The Company accounts for issuances of stock-based compensation to employees by recognizing, as compensation expense, the cost of employee services received in exchange for equity awards. The compensation expense is based on the grant date fair value of the award. Stock option compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period).

Non-Employee Grants - The Company accounts for its issuances of stock-based compensation to non-employees by recognizing compensation expense based on the grant date fair value of the award. Stock option compensation expense is recognized over the vesting period for the award.

Option awards outstanding as of March 31, 2022, and changes during the three months ended March 31, 2022, were as follows:

Fixed Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2021		20,777,500		$	0.06
Granted		8,000,000			0.09
Exercised		(1,000,000	)		0.04
Expired		—			—
Forfeited		(1,210,000	)		0.07
Outstanding at March 31, 2022		26,567,500			0.06		6.6	$	537,075
Exercisable at March 31, 2022		16,777,500		$	0.06		5.0	$	503,785

The intrinsic value of outstanding and exercisable shares is based on the closing price of the Company’s common stock on the OTCQB of $0.09 per share on March 31, 2022, the last trading day of the quarter.

As of March 31, 2022, there was $361,348 of unrecognized compensation expense related to stock options that will be recognized over a weighted-average period of 2.03 years.

Total stock-based compensation expense for the three months ended March 31, 2022 and 2021 was $181,957 and $37,419 respectively.

During the three months ended March 31, 2022, the Company granted 1,000,000 qualified stock options to one of its employees. These options vest over a five-year period with the first vesting at the one-year anniversary of the grant and expiration at ten-year anniversary for all grants. The exercise price for these options was $0.10 per share. On February 21, 2022, the Compensation Committee granted 3,000,000 qualified stock options to its executive officers and 4,000,000 non-qualified stock options to members of the Board. The exercise price for these options was $0.09. 2,000,000 of the options granted to an executive officer vest one half immediately and one half at the one-year anniversary of the grant. The remaining executive officer and board member options vest one fourth immediately and one fourth each subsequent year. All these granted options expire on February 21, 2032. The options issued during the three months ended March 31, 2022 have a fair value of $438,537 as estimated on the date of issue using the Black-Scholes options pricing model with the following weighted-average assumptions: risk free interest rate of 1.37% to 1.93%, expected dividend yield rate of 0%, expected volatility of 66.28% to 68.83% and an expected life between 5 and 7.5 years.

In March 2022, 1,000,000 qualified stock options were exercised under a cashless exercise. The company withheld 388,889 shares to satisfy the exercise price and issued 611,111 shares of common stock. The options exercised were granted under the 2015 Plan, and, accordingly, there was not any income tax effect in the accompanying unaudited condensed consolidated financial statements.

Pursuant to an employment agreement with its Chief Executive Officer, the Company awarded 307,692 fully vested shares of common stock to its Chief Executive Officer in February 2022 under the 2015 Plan. The number of shares awarded was based on a $28,000 stock award using a price of $0.091 per share. The employment agreement provides that the number of shares issued will be based on the average closing price of common stock for the 20 trading days prior to issue date but not less than $0.05 per share. Compensation expense recorded pursuant to this stock grant was $27,692, which was determined by multiplying the number of shares awarded by the closing price of the common stock on February 28, 2021, which was $0.09 per share. The Company withheld 120,461 shares of common stock to satisfy payroll tax obligations in connection with this issuance. The net shares issued on February 28, 2021 totaled 187,231.

Warrants

On February 14, 2022, 515,000 Class M Warrants were exercised for an exercise price of $0.12. The Company received $61,800 for the exercise. On February 17, 2022 the 3,625,000 remaining unexercised Class M Warrants expired.

Warrants outstanding at March 31, 2022, 2,925,000 Class N Warrants which are immediately exercisable at an exercise price of $0.10 per share and expire on May 12, 2022.

Warrants outstanding at March 31, 2021, included 4,140,000 Class M Warrants which are immediately exercisable at an exercise price of $0.12 per share and expire on February 17, 2022 and 2,925,000 Class N Warrants which are immediately exercisable at an exercise price of $0.10 per share and expire on May 12, 2022.

Preferred Stock

At March 31, 2022, there were 675 shares of the Series B Preferred Stock outstanding with a mandatory redemption date of May 2022 at $1,000 per share or $675,000. The Company, at its option, shall pay the redemption price either in cash or in shares of common stock valued at the average price on May 31, 2022. The shares of Series B Preferred Stock are also convertible into 337,500 shares of the Company’s common stock at a conversion price of $2.00 per share. These shares of Series B Preferred Stock do not carry any dividend preferences. Due to the mandatory redemption provision, the Series B Preferred Stock has been classified as a liability in the accompanying condensed consolidated balance sheets.

At March 31, 2022, there were 4,063 shares of the Series C Preferred Stock outstanding with a mandatory redemption date of February 2023 at $1,000 per share in either cash or shares of common stock, at the option of the holder. Holders of the Series C Preferred Stock do not have any voting rights except as required by law and in connection with certain events as set forth in the Statement of Designation of the Series C Preferred Stock. The Series C Preferred Stock accrues dividends at a rate of 6% per annum, payable annually on February 17th of each year. The Series C Preferred Stock are convertible at the option of the holders at any time into shares of the Company's common stock at an initial conversion price equal to $0.10 per share, subject to adjustment. If the volume-weighted average closing price of the Company’s common stock over a period of 90 consecutive trading days is greater than $0.25 per share, the Company may redeem all or any portion of the outstanding Series C Preferred Stock at the original purchase price per share plus any accrued and unpaid dividends, payable in shares of common stock.

During the three months ended March 31, 2022 and 2021 dividends paid to holders of the Series C Preferred Stock totaled $243,780 and $254,280, respectively. Some holders of the Series C Preferred Stock elected to settle their dividend payments with shares of the Company’s common stock in lieu of cash. For the three months ended March 31, 2022 and 2021 the Company issued 2,271,980 and 1,398,200 shares of common stock, respectively, in lieu of a dividend payment of $204,480 and $207,480, respectively. The remaining dividend payable was settled with cash of $39,300 and $46,800 respectively.