Stockholders’ Equity

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Stockholders’ Equity

Note 8. Stockholders’ Equity

Common Stock

On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year common stock purchase warrant to purchase one share of common stock at an exercise price of $0.0175 per share in consideration of $200,000.

On March 31, 2023, the Company issued 61,204 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending March 31, 2023. The fair value of these shares was $1,336.

On March 31, 2023, the Company issued an aggregate of 137,000 shares of common stock to the holders of convertible notes for payment of interest for the three months ending December 31, 2022. The fair value of these shares was $7,000.

On June 30, 2023, the Company issued 61,205 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending June 30, 2023. The fair value of these shares was $1,326.

On June 30, 2023, the Company issued an aggregate of 137,000 shares of common stock to the holders of convertible notes for payment of interest for the three months ending June 30, 2023. The fair value of these shares was $7,000.

On September 30, 2023, the Company issued 61,205 shares of common stock to Robert Carmichael for payment of interest on the convertible demand note for the three months ending September 30, 2023. The fair value of these shares was $1,326.

On September 30, 2023, the Company issued an aggregate of 137,000 shares of common stock to the holders of convertible notes for payment of interest for the three months ending September 30, 2023. The fair value of these shares was $7,000.

Preferred Stock

During the second quarter of 2010, the holders of the majority of the Company’s outstanding shares of common stock approved an amendment to the Company’s Articles of Incorporation authorizing the issuance of 10,000,000 shares of blank check preferred stock. The blank check preferred stock as authorized has such voting powers, designations, preferences, limitations, restrictions and relative rights as may be determined by the Board of Directors of the Company from time to time in accordance with the provisions of the Florida Business Corporation Act. In April 2011, the Board of Directors designated 425,000 shares as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible into a share of the Company’s common stock at any time at the option of the holder at a conversion price of $18.23 per share. Holders of shares of Series A Convertible Preferred Stock are entitled to 250 votes for each share held. The Company’s common stock and Series A Convertible Preferred Stock vote together on any matters submitted to our shareholders. As of September 30, 2023, and December 31, 2022, the 425,000 shares of Series A Convertible Preferred Stock are owned by Robert Carmichael.

Equity Incentive Plan

On May 26, 2021 the Company adopted an Equity Incentive Plan (the “Plan”). Under the Plan, stock options may be granted to employees, directors, and consultants in the form of incentive stock options or non-qualified stock options, stock purchase rights, time vested and/performance invested restricted stock, and stock appreciation rights and unrestricted shares may also be granted under the Plan. 25,000,000 shares are reserved for issuance under the Plan. The term of the Plan is ten years.

The Company also issued options outside of the Plan that were not approved by the security holders. These options may be granted to employees, directors, and consultants in the form of incentive stock options or non-qualified stock options.

Equity Compensation Plan Information as of September 30, 2023:

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted – average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a) (c)
Equity Compensation Plans Approved by Security Holders		3,319,118	$	0.0401		21,680,882
Equity Compensation Plans Not Approved by Security Holders		105,971,520		0.0258		—
Total		109,290,638	$	0.0262		21,680,882

Options

The Company has issued options to purchase approximately 105,971,520 shares of its common stock at an average exercise price of $0.0262 with a fair value of approximately $37,000. For the three and nine months ended September 30, 2023, the Company issued no options to purchase shares.

For the three months ended September 30, 2023 and 2022, the Company recognized an expense of approximately $7,200 and $315,000, respectively and for the nine months ended September 30, 2023 and 2022, the Company recognized an expense of approximately $25,000 and $847,000, respectively, of non-cash compensation expense (included in General and Administrative expense in the accompanying Consolidated Statement of Operations) determined by application of a Black-Scholes option pricing model with the following inputs: exercise price, dividend yields, risk-free interest rate, and expected annual volatility. As of September 30, 2023, the Company had approximately $1,504,700 of unrecognized pre-tax non-cash compensation expense related to performance based options to purchase shares, which the Company expects to recognize, based on a weighted-average period of 2.7 years. The Company uses straight-line amortization of compensation expense over the requisite service period for time-based options. For performance-based options the Company evaluates the likelihood of a vesting qualification being met, and will establish the expense based on that evaluation. The maximum contractual term of the Company’s stock options is 5 years. The Company recognizes forfeitures and expirations as they occur. Options to purchase approximately 57,877,500 shares have vested as of September 30, 2023.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock option awards and warrant issuances. The calculation of the fair value of the awards using the Black-Scholes option-pricing model is affected by the Company’s stock price on the date of grant as well as assumptions regarding the following:

	Nine Months ended September 30,
	2023			2022
Expected volatility		172.0% - 346.4	%		172.0 – 346.4	%
Expected term		1.50 – 5.0 Years			1.5 – 5.0 Years
Risk-free interest rate		0.16% - 4.64	%		0.16% - 2.10	%
Forfeiture rate		0.17	%		0.03	%

The expected volatility was determined with reference to the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate in effect at the time of grant.

A summary of the status of the Company’s outstanding stock options as of September 30, 2023 and December 31, 2022 and changes during the periods ending on such dates is as follows:

	Number of			Weighted Average Exercise		Weighted Average Remaining Contractual		Aggregate Intrinsic
	Options			Price		Life in Years		Value
Outstanding at December 31, 2021		233,128,266		$	0.0362		2.23
Granted		5,710,901			0.0281
Forfeited		(400,000	)		0.0354
Exercised		-			-
Cancelled					-
Outstanding – December 31, 2022		238,439,167		$	0.0360		1.43
Exercisable – December 31, 2022		111,558,754		$	0.0321		1.33	$	68,994
Granted		-			-
Forfeited		(129,148,529	)		0.0443
Exercised		-			-
Cancelled		-			-
Outstanding – September 30, 2023		109,290,638		$	0.0262		1.99
Exercisable – September 30, 2023		57,877,504		$	0.0217		1.54	$	36,983

The following table summarizes information about employee stock options outstanding at September 30, 2023.

Range of Exercise Price		Number outstanding at September 30, 2023		Weighted average remaining life		Weighted average exercise price		Number exercisable at September 30, 2023		Weighted average exercise price		Weighted average remaining life
$	0.0180 - $0.0225		70,730,020		1.47	$	0.0182		45,730,020	$	0.0181		1.12
$	0.0229 - $0.0325		5,018,254		3.79	$	0.0267		4,993,254	$	0.0267		3.79
$	0.0360 - $0.0425		25,457,364		2.82	$	0.0398		6,179,230	$	0.0395		2.76
$	0.0440 - $0.0531		8,085,000		2.81	$	0.0529		975,000	$	0.0520		1.96
	Outstanding options		109,290,638		1.99		0.0262		57,877,504		0.0217		1.54

At September 30, 2023, there was approximately $1,504,755 of unrecognized stock option expense which may be recognized only if the full vesting requirements for these options are met.

At September 30, 2023, there was approximately $44,992 of total unrecognized stock option expense which is expected to be recognized on a straight-line basis over a weighted-average period of 0.95 years.

Warrants

On January 18, 2023 and February 18, 2023, the Company issued to Charles Hyatt, an aggregate of 11,428,570 units, with each unit consisting of one share of common stock and a two-year common stock purchase warrant to purchase one share of common stock at an exercise price of $0.0175 per share in consideration of $200,000.

A summary of the Company’s warrants as of December 31, 2022 and changes during the nine months ended September 30, 2023 is presented below:

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Outstanding – December 31, 2022		18,255,951	$	0.0245		1.55	$	12,000
Granted		11,428,570	$	0.0175
Exercised
Forfeited or Expired		4,000,000-
Outstanding – September 30, 2023		25,684,521	$	0.0247		1.18
Exercisable – September 30, 2023		25,684,521	$	0.0247		1.18	$	24,000