Stockholders’ Deficiency

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Stockholders’ Deficiency

Note 10 – Stockholders’ Deficiency

Authorized Capital

Effective July 26, 2023, the Company amended the certificates of designation which established the Series A Convertible Preferred Stock and Series C Convertible Preferred Stock to increase the number of shares designated from 1,335,000 to 1,350,000 shares for the Series A Convertible Preferred Stock and from 500,000 to 1,000,000 shares for the Series C Convertible Preferred Stock.

On September 21, 2023, the Company’s Board of Directors approved the designation of 2,000,000 shares of the 10,000,000 authorized shares of preferred stock as Series B Convertible Preferred Stock, par value $0.001 per share.

As of December 31, 2023, the Company was authorized to issue 200,000,000 shares of common stock, par value of $0.001 per share, and 10,000,000 shares of preferred stock, par value of $0.001 per share. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock was designated as follows: 1,350,000 shares of Series A Convertible Preferred Stock, 2,000,000 shares of Series B Convertible Preferred Stock and 1,000,000 shares of Series C Convertible Preferred Stock.

Common Stock

During the year ended December 31, 2023, certain investors converted an aggregate of 75,295 shares of Series C Convertible Preferred Stock into an aggregate of 752,960 shares of the Company’s common stock.

During the year ended December 31, 2023, the Company issued an aggregate of 1,150,000 immediately-vested shares of the Company’s common stock to consultants with a grant date fair value of $381,000 which was immediately recognized in the consolidated statement of operations.

During the years ended December 31, 2023 and 2022, the Company issued 58,780 and 95,214 shares of common stock, respectively, in connection with the conversion of convertible notes payable and accrued interest. See Note 8, Notes Payable – Convertible Notes Payable for additional details.

See Note 8, Notes Payable for details associated with the issuance of 176,000 shares of common stock with an issuance date fair value of $58,080 in connection with the extinguishment of a note payable during the year ended December 31, 2023.

See elsewhere in Note 10, Stockholders’ Deficiency for details of issuances of common stock in connection with accrued dividends.

Series A Convertible Preferred Stock

The Series A Convertible Preferred Stock has a stated value of $7.50 per share. The Series A Convertible Preferred Stock contains the following terms:

Conversion. Each share of Series A Convertible Preferred Stock is convertible into shares of common stock (subject to adjustment as provided in the related certificate of designation of preferences, rights and limitations) at the option of the holder at any time. The number of shares of common stock which are issuable upon conversion of the Series A Convertible Preferred Stock shall be equal to the number of shares of Series A Convertible Preferred Stock to be converted, multiplied by the stated value of $7.50 per share, divided by the conversion price in effect at the time of conversion, initially at $0.75 per share.

Mandatory Conversion. Series A Preferred Stock will automatically convert into common stock at the earlier of (a) any of the Company’s treatment candidates receiving Food and Drug Administration or European Medicines Agency approval; or (b) five years from the final closing of the offering.

Liquidation Preference. Upon any liquidation, dissolution or winding-up of the Company, the holders of Series A Preferred Stock will be entitled to be paid for each share of Series A Preferred Stock held thereby, but only to the extent the assets of the Company are legally available for distribution to its stockholders, in an amount equal to the stated value per share plus any accrued but unpaid dividends, before any distribution or payment may be made to the holders of any junior securities.

Voting Rights. The holders of Series A Convertible Preferred Stock have the right to vote on any matter submitted to a vote of holders of common stock, voting together with the common stock as one class, on an as-converted basis.

Dividends. Holders of shares of Series C Convertible Preferred Stock will be entitled to receive cumulative dividends at an annual rate of 9% of the stated value. Dividends are payable semi-annually on June 30 and December 31,either by (i) issuance of shares of common stock at the rate of $0.75 per share of common stock or (ii) in cash, at the Company’s option.

During the year ended December 31, 2023, the Company accrued additional preferred dividends of $905,975 and issued 1,208,054 shares of common stock at $0.75 per share pursuant to the terms of the Series A Convertible Preferred Stock Certificate of Designation with fair values of $905,975 such that there was no accrued dividend payable as of December 31, 2023 related to the Series A Convertible Preferred Stock.

During the year ended December 31, 2022, the Company accrued additional preferred dividends of $905,975 and issued 1,208,054 shares of common stock at $0.75 per share pursuant to the terms of the Series A Convertible Preferred Stock Certificate of Designation with fair values of $905,975 such that there was no accrued dividend payable as of December 31, 2022 related to the Series A Convertible Preferred Stock.

Series B Convertible Preferred Stock

On October 30, 2023, the Company filed the Certificate of Designation with the Office of the Secretary of State for the State of Nevada, which established the Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock has a stated value of $7.50 per share. The Series B Convertible Preferred Stock contains the following terms:

Conversion. Each share of Series B Convertible Preferred Stock is convertible into shares of common stock (subject to adjustment as provided in the related certificate of designation of preferences, rights and limitations) at the option of the holder at any time. The number of shares of common stock which are issuable upon conversion of the Series B Convertible Preferred Stock shall be equal to the number of shares of Series B Convertible Preferred Stock to be converted, multiplied by the stated value of $7.50 per share, divided by the conversion price in effect at the time of conversion, initially at $0.75 per share.

Mandatory Conversion. On the earlier of (i) October 30, 2027 or (ii) any of the Company’s treatment candidates receiving approval from the U.S. or European agencies, all of the outstanding shares of Series B Convertible Preferred Stock will automatically convert to common stock.

Liquidation Preference. In the event of the liquidation, dissolution or winding-up of the Company, the holders of Series B Preferred Stock will be entitled to be paid for each share of Series B Preferred Stock held thereby, but only to the extent the assets of the Company are legally available for distribution to its stockholders, in an amount equal to the stated value per share plus any accrued but unpaid dividends. The Series B Convertible Preferred Stock will rank senior to common stock and any other class of capital stock which does not expressly rank senior to or pari passu with the Series B Preferred Stock and will rank pari passu with the Series A and Series C Convertible Preferred Stock.

Voting Rights. The holders of Series B Convertible Preferred Stock have the right to vote on any matter submitted to a vote of holders of common stock, voting together with the common stock as one class, on an as-converted basis.

Dividends. Holders of shares of Series B Convertible Preferred Stock will be entitled to receive cumulative dividends at an annual rate of 10% of the stated value. Dividends are payable semi-annually on June 30 and December 31, commencing on December 31, 2023, either by (i) issuance of shares of common stock at the rate of $0.75 per share of common stock or (ii) in cash, at the Company’s option.

The Company determined that the Series B Convertible Preferred Stock was perpetual preferred stock.

Beginning in October 2023, the Company entered into subscription agreements with certain accredited investors in a private placement offering. Each unit, which is sold at a price of $7.50 per unit, consists of one (1) share of Series B Convertible Preferred Stock and a five-year warrant to purchase a certain number of shares of common stock at an exercise price of $0.75 per share. For every $100,000 of units purchased, the investor will receive warrants to purchase an aggregate of 150,000 shares of common stock.

During the year ended December 31, 2023, the Company sold an aggregate of 106,668 units to certain investors for net proceeds of $799,918 and issued five-year warrants to purchase an aggregate of 1,200,000 shares of the Company’s common stock at an exercise price of $0.75 per share.

During the year ended December 31, 2023, the Company accrued preferred dividends of $6,795 and issued no shares of common stock at $0.75 per share pursuant to the terms of the Series B Convertible Preferred Stock Certificate of Designation, such that there was $6,795 accrued dividend payable as of December 31, 2023 related to the Series B Convertible Preferred Stock.

Series C Convertible Preferred Stock

The Series C Convertible Preferred Stock has a stated value of $7.50 per share. The Series C Convertible Preferred Stock contains the following terms:

Conversion. Each share of Series C Preferred Stock is convertible into shares of common stock (subject to adjustment as provided in the related certificate of designation of preferences, rights and limitations) at the option of the holder at any time. The number of shares of common stock which are issuable upon conversion of the Series C Preferred Stock shall be equal to the number of shares of Series C Preferred Stock to be converted, multiplied by the stated value of $7.50 per share, divided by the conversion price in effect at the time of conversion, initially at $0.75 per share.

Mandatory Conversion. On the earlier of (i) July 27, 2025 or (ii) any of the Company’s treatment candidates receiving approval from the U.S. or European agencies, all of the outstanding shares of Series C Preferred Stock will automatically convert to common stock.

Liquidation Preference. In the event of the liquidation, dissolution or winding-up of the Company, the holders of Series B Preferred Stock will be entitled to be paid for each share of Series C Preferred Stock held thereby, but only to the extent the assets of the Company are legally available for distribution to its stockholders, in an amount equal to the stated value per share plus any accrued but unpaid dividends. The Series C Preferred Stock will rank senior to common stock and any other class of capital stock which does not expressly rank senior to or pari passu with the Series C Preferred Stock and will rank pari passu with the Series A and Series B Preferred Stock.

Voting Rights. The holders of Series C Preferred Stock have the right to vote on any matter submitted to a vote of holders of common stock, voting together with the common stock as one class, on an as-converted basis.

Dividends. Holders of shares of Series C Preferred Stock will be entitled to receive cumulative dividends at an annual rate of 8% of the stated value. Dividends are payable semi-annually on June 30 and December 31, either by (i) issuance of shares of common stock at the rate of $0.75 per share of common stock or (ii) in cash, at the Company’s option.

During the year ended December 31, 2023, 75,295 shares of Series C Preferred Stock were converted into 752,960 shares of common stock at the shareholder’s election.

During the years ended December 31, 2023 and 2022, the Company accrued additional preferred dividends of $315,915 and $251,511, respectively, and issued 403,250 and 417,944 shares of common stock, respectively, at $0.75 per share pursuant to the terms of the Series C Convertible Preferred Stock Certificate of Designation with fair values of $302,386 and $313,523, respectively, such that there was $18,745 and $5,217 accrued dividend payable as of December 31, 2023 and 2022, respectively, related to the Series C Convertible Preferred Stock.

During the years ended December 31, 2023 and 2022, the Company issued 110,001 and 230,755 shares of Series C Convertible Preferred Stock, respectively, in connection with conversions of notes payable into Series C Convertible Preferred Stock. See Note 8, Notes Payable – Convertible Notes Payable for additional details.

Equity Incentive Plan

On August 13, 2019, the Company’s Board of Directors approved the adoption of the Company’s 2019 Equity Incentive Plan (the “Plan”). A total of 7,900,000 shares of common stock were initially reserved for issuance under the Plan and the number of reserved shares increases on the first day of each year in an amount equal to the lesser of 3% of the number of shares of common stock outstanding on the last day of the preceding year or the amount determined by our Board of Directors. The Plan permits the Board of Directors to issue stock options, stock appreciation rights, restricted stock, restricted stock units, performance and other awards to employees, consultants and directors of the Company. As of December 31, 2023, a total of 11,040,848 shares of common stock were reserved for issuance under the Plan. Of this amount, as of December 31, 2023, a total of 4,108,844 shares were available for future issuance under the Plan. As of the date of filing, the Company’s shareholders have not approved the Plan.

Stock-Based Compensation

During the year ended December 31, 2023, the Company recognized stock-based compensation expense of $463,034 (consisting of $70,764 expense related to warrants (of which, $71,464 has been included within stockholder’s deficiency and $(700) which has been included within accrued compensation), and $392,270 of expense related to common stock (of which, $381,000 has been included within stockholder’s deficiency and $11,270 has been included within accrued compensation). During the year ended December 31, 2022, the Company recognized stock-based compensation expense of $77,887 (consisting of expense related to common stock, options and warrants of $(1,545) which has been included within accrued compensation), $74,600 (of which, $74,600 has been included within stockholder’s deficiency and $4,832 (of which, $5,372 has been included within stockholder’s deficiency and $(540) has been included within accrued compensation), respectively). See Note 6, Accrued Compensation for additional details.

During the year ended December 31, 2023, $463,034 of stock-based compensation expense was included within general and administrative expenses and $0 was included within research and development on the consolidated statement of operations. During the year ended December 31, 2022, $77,887 of stock-based compensation expense was included within general and administrative expenses and $0 was included within research and development on the consolidated statement of operations. As of December 31, 2023, there was $31,346 of unrecognized stock-based compensation expense which will be recognized over a weighted average remaining amortization period of 0.26 years.

Stock Warrants

On May 25, 2023, the Company issued immediately vested 3.75-year warrants to an investor to purchase an aggregate amount of 300,000 shares of the Company’s common stock at an exercise price of $0.75 per share. The warrants had an issuance date fair value of $40,600, which was recognized immediately.

On August 9, 2023, the Company issued immediately vested four-year warrants to a former director of the Company to purchase an aggregate amount of 160,000 shares of the Company’s common stock at an exercise price of $0.75 per share. The warrants had an issuance date fair value of $23,758, which was recognized immediately.

On December 15, 2023, the Company entered into an advisory agreement for a term of December 15, 2023 to March 15, 2024. As compensation for services performed, the Company issued a 5.25-year warrant which vests one-third each month to the advisor to purchase an aggregate amount of 120,000 shares of the Company’s common stock at an exercise price of $1.25 per share. The warrant had an issuance date fair value of $17,544, which will be recognized over the vesting period.

The Company entered into an advisory agreement for a term of December 15, 2023 to May 15, 2024. As compensation for services performed, the Company issued a five-year warrant to purchase an aggregate amount of 150,000 shares of the Company’s common stock at an exercise price of $1.25 per share which vests in equal monthly installments over a five-month period, with the first vesting occurring on December 20, 2023. The warrant had an issuance date fair value of $20,908, which will be recognized over the vesting period.

On December 29, 2023, the Company issued an immediately vested five-year warrant to purchase 180,000 shares of the Company’s common stock at an exercise price of $0.75 per share in connection with a settlement agreement entered into with a certain investor. The warrants were deemed to be derivative liabilities pursuant to the Company’s sequencing policy in accordance with ASC 815-40-35-12. The warrant had an issuance date fair value of $31,400. See Note 11, Commitments and Contingencies for additional details.

During the years ended December 31, 2023 and 2022, the Company issued warrants to purchase an aggregate of 1,728,028 and 2,820,000 shares of common stock, respectively, in connection with notes payable. See Note 8, Notes Payable for additional details.

See Note 4, Fair Value and Note 11, Commitments and Contingencies for additional details.

A summary of the warrant activity during the year ended December 31, 2023 is presented below:

						Weighted
				Weighted		Average
				Average		Remaining
	Number of			Exercise		Life		Intrinsic
	Warrants			Price		In Years		Value
Outstanding, January 1, 2023		13,878,079		$	1.06
Issued		3,838,028			1.01
Expired/Canceled		(2,277,500	)		0.75
Outstanding, December 31, 2023		15,438,607		$	1.09		2.9	$	-
Exercisable, December 31, 2023		15,218,607		$	1.09		2.9	$	-

Information regarding outstanding and exercisable warrants at December 31, 2023 is as follows:

	Warrants Outstanding		Warrants Exercisable
			Weighted
		Outstanding	Average	Exercisable
	Exercise	Number of	Remaining Life	Number of
	Price	Warrants	In Years	Warrants
$	0.75	4,727,153	2.8	4,727,153
$	0.95	125,000	2.0	125,000
$	1.25	10,586,454	2.9	10,366,454
		15,438,607	2.9	15,218,607

Stock Options

On September 13, 2022, the Company granted an aggregate of 750,000 five-year immediately vested options under the Company’s Equity Incentive Plan to two directors of the Company with an exercise price of $1.00 per share. The options had a grant date fair value of $74,600 which was recognized immediately.

In applying the Black-Scholes option pricing model to stock options granted, the Company used the following approximate assumptions:

	For the Years Ended
	December 31,
	2023		2022
Risk-free interest rate		N/A		3.75	%
Expected term (years)		N/A		2.50
Expected volatility		N/A		90	%
Expected dividends		N/A		0.00	%

The expected term used is the contractual life of the instrument being valued. Since the Company’s stock has not been publicly traded for a sufficiently long period of time or with significant volume, the Company is utilizing an expected volatility based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

There were no stock options granted during the year ended December 31, 2023. The weighted average estimated grant date fair value of the stock options granted during the year ended December 31, 2022 was approximately $0.10 per share, respectively.

A summary of the option activity during the year ended December 31, 2023 is presented below:

					Weighted
			Weighted		Average
			Average		Remaining
	Number of		Exercise		Life		Intrinsic
	Options		Price		In Years		Value
Outstanding, January 1, 2023		6,932,004	$	0.83
Granted		-		-
Exercised		-		-
Forfeited/cancelled		-		-
Outstanding, December 31, 2023		6,932,004	$	0.83		4.1	$	-
Exercisable, December 31, 2023		6,932,004	$	0.83		4.1	$	-

Information regarding outstanding and exercisable options at December 31, 2023 is as follows:

	Options Outstanding		Options Exercisable
			Weighted
		Outstanding	Average	Exercisable
	Exercise	Number of	Remaining Life	Number of
	Price	Option	In Years	Options
$	0.75	4,832,004	4.7	4,832,004
$	1.00	2,100,000	2.7	2,100,000
		6,932,004	4.1	6,932,004