Stockholders' Deficit

12 Months Ended

Dec. 31, 2020

Stockholders' Equity Note [Abstract]

STOCKHOLDERS’ DEFICIT

NOTE 12 – STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company has authorized 10,000,000 shares of undesignated preferred stock with a $0.001 par value. As of December 31, 2020, no preferred shares have been issued and these shares are considered blank check preferred shares with no terms, limitations, or rights associated with them.

Common Stock

The Company has authorized 200,000,000 shares of common stock with a $0.001 par value per share. The holders of common stock are entitled to one vote for each share of common stock held at the time of vote. As of December 31, 2020, the Company has deemed 19,628,258 shares outstanding or deemed outstanding.

Shares Issued for Services

On December 4, 2019, the Company entered into an agreement with an advisor to memorialize certain services rendered to the Company. Pursuant to the terms of the agreement, in consideration for those services, the Company issued the advisor 75,000 shares of common stock. The shares were valued at $0.12 per share or $9,150.

On October 1, 2019, the Company entered into a three-month agreement with an advisor for consulting services. Pursuant to the agreement, the Company shall pay the advisor 4,000 shares of common stock a month. As of December 31, 2019, the Company has issued 4,000 shares at a value of $0.12 per share or $488. The agreement was terminated on October 31, 2019.

On October 7, 2019, the Company entered into a three-month agreement with an advisor for consulting services. Pursuant to the agreement, the Company shall pay the advisor 7,500 shares of common stock a month. As of December 31, 2019, the Company has issued 22,500 shares at a value of $0.12 per share or $2,745.

On August 8, 2018, the Company entered into a one-year agreement with an advisor for consulting services, as extended for an additional one-year period. Pursuant to the agreement, as amended, the Company has the right to pay $5,000 or issue the advisor a maximum of 6,667 shares of common stock on a quarterly basis, beginning the quarter ended December 31, 2018. The Company elected to issue 26,668 shares for the services provided during the year ended December 31, 2019 at an average value of $0.08 per share or $1,653. The Company elected to issue 9,899 shares for the services provided during the year ended December 31, 2020 at an average value of $1.52 per share or $15,000.

On August 28, 2018, the Company entered into a one-year agreement with an advisor for consulting services, as extended for an additional one-year period. Pursuant to the agreement, as amended, the Company has the right to pay $5,000 or issue the advisor a maximum of 6,667 shares of common stock on a quarterly basis, beginning the quarter ended December 31, 2018. The Company elected to issue 26,668 shares for the services provided during the year ended December 31, 2019 at an average value of $0.08 per share or $1,653. The Company elected to issue 9,899 shares for the services provided during the year ended December 31, 2020 at an average value of $1.52 per share or $15,000.

On September 1, 2019, the Company entered into a four-month agreement with an advisor for consulting services. Pursuant to the agreement, the Company shall pay the advisor 5,000 shares of common stock a month. As of December 31, 2019, the Company has issued 20,000 shares for services provided by the advisor at an average value of $0.10 per share or $2,000. On June 1, 2020 the Company entered into an additional four-month agreement with an advisor for consulting services. Pursuant to the agreement, the Company shall pay the advisor 7,000 shares of common stock a month. As of December 31, 2020, the Company has issued 28,000 shares for services provided by the advisor at an average value of $1.14 per share or $32,025.

On November 13, 2020, the Company entered into a six-month agreement with a consultant to provide services to the Company. As compensation for such services, the Company has agreed to pay the consultant $6,000 in cash and allowed the consultant to purchase 100,000 shares of the Company’s restricted common stock for a total purchase price of $500. The fair value per share on the November 13, 2020 issuance date was $1.00 or $100,000. During 2020 the Company recorded $26,019 of consulting expenses. 

On October 15, 2020, the Company granted to a newly-hired non-executive officer of the Company 292,174 restricted shares under the Company’s 2018 Equity Incentive Plan, which vest quarterly in equal amounts commencing January 15, 2021 and ending January 15, 2022. The shares were valued as of the date of the grant at a fair value of $1.67 per share or $487,931, which will be amortized over the vesting period. As of December 31, 2020, the Company has recorded $45,706 in stock-based compensation.

December 31, 2019 Securities Purchase Agreement

During the year ended December 31, 2019, in connection with the Securities Purchase Agreement (see Note 5), the company issued 100,000 warrants to a third party. The warrants were initially accounted for as a discount to the December 31, 2019 convertible note and therefore fair-valued using the Monte Carlo model. On March 18, 2020 upon the Initial Public Offering and the existence of a market for the common stock, the warrants were considered a derivative liability and as such are presented at every reporting period at fair value. Upon inception, the warrants were evaluated with the following assumptions:

- The stock price of $0.1208 would fluctuate with an annual volatility

- The projected volatility curve was based on historical volatility of comparable companies for the valuation period and the remaining term of the warrants. The volatility used was 85.2%.

- The stock price projection was modeled such that it follows a geometric Brownian motion with constant drift and a constant volatility, starting with market prices.

- The warrants are exercised at maturity, December 31, 2024, by the holder if they are in the money based on the adjusted exercise price (adjusted for full ratchet reset events).

- The warrants have a fixed $1.25 exercise price subject to full ratchet reset provisions. Capital raising events triggering a reset to 100% of the projected stock price (no discount to the market) are projected for the warrants on 6/30/20, 6/30/21 and 6/30/22.

- The cash flows are discounted to net present values using risk free rates. Discount rates were based on risk free rates in effect based on the remaining term.

As a result of certain terms granted as part of the issuance of the December 28 notes (see Note 6) the abovementioned warrants were reset from 100,000 to 125,000, and the exercise price was adjusted from $1.25 to $1.00.

Convertible Grid Notes

On April 21, 2020, in connection with the issuance of the Grid Notes (see Note 5), the company issued 1,500,000 warrants (the Grid Warrants) to a third party. The Grid Warrants were accounted for as a derivative liability and are presented at every reporting period at fair value. At issuance the Grid Warrants were fair-valued using the Monte Carlo model with the following assumptions:

- Stock price of $1.00

- The projected volatility curve was based on historical volatility of comparable companies for the valuation period and the remaining term of the warrants. The volatility used was 72.5%.

- The stock price projection was modeled such that it follows a geometric Brownian motion with constant drift and a constant volatility, starting with market prices.

- The warrants are exercisable at any time commencing 18 months from the issuance date and expire on April 21, 2025.

- The warrants have a fixed $0.80 exercise.

- The cash flows are discounted to net present values using risk free rates. Discount rates were based on risk free rates in effect based on the remaining term.

September 22, 2020 Securities Purchase Agreement

On September 22, 2020, in connection with the September Purchase Agreement (see Note 5), the company issued 1,411,764 warrants (the September Warrants) to a third party. The September Warrants were accounted for as a derivative liability and are presented at every reporting period at fair value. At issuance the September Warrants were fair-valued using the Monte Carlo model with the following assumptions:

- Stock price of $1.25

- The projected volatility curve was based on historical volatility of comparable companies for the valuation period and the remaining term of the warrants. The volatility used was 84.0%.

- The stock price projection was modeled such that it follows a geometric Brownian motion with constant drift and a constant volatility, starting with market prices.

- The warrants are may be exercised at any time until the three year anniversary of the Warrants; provided, however, in the event the Company repays the September 22 Note in its entirety on or prior to the Maturity Date, 705,882 September Warrants shall automatically expire and may only be exercised in the event it does not so automatically expire.

- The warrants have a fixed $1.28 exercise price subject to full ratchet reset provisions. Capital raising events triggering a reset to 100% of the projected stock price (no discount to the market) are projected for the warrants on 6/30/20, 6/30/21 and 6/30/22.

- The cash flows are discounted to net present values using risk free rates. Discount rates were based on risk free rates in effect based on the remaining term.

As a result of certain terms granted as part of the issuance of the December 28 notes (see Note 6) the abovementioned warrants were reset from 1,411,764 to 1,505,882, and the exercise price was adjusted from $1.28 to $1.20.

The following table summarized the warrant activity for the years ended December 31, 2020 and 2019:

Warrants	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance Outstanding, December 31, 2018		402,250	$	0.40		4.72	$	-
Granted		100,00	$	1.25		5.00		-
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, December 31, 2019		502,250	$	0.57		3.98	$	201,125
Granted		3,530,882		1.02		3.90		150,000
Forfeited		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance Outstanding, December 31, 2020		4,033,132	$	0.97		3.39	$	351,125
Exercisable, December 31, 2020		2,533,132	$	1.06		2.84	$	201,125

Equity Incentive Plan

As of September 21, 2018, the Company’s board of directors adopted, and stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan has a 10-year term, which terminates on the day prior to the 10^th anniversary of its adoption by the Board. Under the 2018 Plan, the Company may grant equity-based incentive awards, including options, restricted stock, and other stock-based awards, to any directors, employees, advisers, and consultants that provide services to the Company. The vesting period, term and exercise price will be determined at the time of the grant. An aggregate of up to 3,500,000 of the Company’s common stock are reserved for issuance under the 2018 Plan. As of December 31, 2020, the Company has granted and has 1,800,000 options outstanding, as well as 333,972 shares of restricted common stock issued under the 2018 Plan.

On January 14, 2019, the Board of Directors approved the issuance of options to purchase an aggregate of 800,000 and 200,000 shares of common stock to Boris Goldstein and Vadim Sakharov (a former director and executive officer of the Company), respectively. The options have an exercise price of $0.75 per share which will vest over a 24-month period as follows: 25% (or 200,000 and 50,000, respectively) shall vest six months after the grant date with the remaining options will vest on a monthly basis at a rate of 1/24^th per month. The options will expire on January 14, 2029. The aggregate fair value of $17,111 was calculated using the Black-Scholes pricing model with the following assumptions: (i) expected life 10 years, (ii) volatility of 77%, (iii) risk free rate of 2.71% (iv) dividend rate of zero, (v) stock price of $0.042, and (vi) exercise price of $0.75. The expense will be amortized over the vesting period and a total of $6,417 and $10,432 was recorded during the years ended December 31, 2020 and 2019, respectively.

On January 30, 2020, the Board of Directors approved the issuance of options to purchase an aggregate of 800,000 shares of common stock to Boris Goldstein. The options have an exercise price of $0.75 per share which will vest ratably on a quarterly basis over a two year period. The options will expire on January 30, 2029. The aggregate fair value of $51,757 was calculated using the Black-Scholes pricing model with the following assumptions: (i) expected life 10 years, (ii) volatility of 76%, (iii) risk free rate of 1.57% (iv) dividend rate of zero, (v) stock price of $0.12, and (vi) exercise price of $0.75. The expense will be amortized over the vesting period and a total of $23,790 was recorded during the year ended December 31, 2020.

The following table summarized the option activity for the years ended December 31, 2020 and 2019:

Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance Outstanding, December 31, 2018				$				$	-
Granted		1,800,00		$	0.75		10.00		-
Forfeited		(800,000	)		-		-		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance Outstanding, December 31, 2019		1,000,000		$	0.75		9.05	$	150,000
Granted		800,000			0.75		10.00		120,000
Forfeited		-			-		-		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance Outstanding, December 31, 2020		1,800,000		$	0.75		8.51	$	270,000
Exercisable, December 31, 2020		1,400,000		$	0.75		8.34	$	210,000

For future periods, the remaining value of the stock options totaling approximately $28,230 will be amortized into the statement of operations consistent with the period for which the services will be rendered.