Shareholders' Equity (Deficit)

6 Months Ended

Jun. 30, 2024

Shareholders' Equity (Deficit) [Abstract]

Shareholders' Equity (Deficit)

NOTE 13 – SHAREHOLDERS’ EQUITY (DEFICIT)

SEPA Advances

On July 5, 2022, the Company entered into the SEPA with Yorkville, pursuant to which the Company shall have the right, but not the obligation, to sell to Yorkville up to 30,000,000 of its shares of common stock, par value $0.0001 per share, at the Company’s request any time during the commitment period commencing on July 5, 2022 and terminating on the earliest of (i) the first day of the month following the 36-month anniversary of the SEPA and (ii) the date on which Yorkville shall have made payment of any advances requested pursuant to the SEPA for shares of the Company’s common stock equal to the commitment amount of 30,000,000 shares of common stock. Each SEPA advance (an “Advance”) may be for a number of shares of common stock with an aggregate value of up to greater of: (i) an amount equal to thirty percent (30%) of the aggregate daily volume traded of the Company’s common stock for the three (3) trading days immediately preceding notice from the Company of an Advance, or (ii) 2,000,000 shares of common stock. The shares would be purchased at 96.0% of the average of the daily volume weighted average price of the Company’s common stock as reported by Bloomberg L.P. during regular trading hours during each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance notice to Yorkville and would be subject to certain limitations, including that Yorkville could not purchase any shares that would result in it owning more than 4.99% of the Company’s outstanding common stock at the time of an Advance. On July 11, 2022, the Company filed a Form S-1 registration statement registering up to 30,000,000 shares of common stock underlying the SEPA. The registration statement was declared effective on July 19, 2022.

During the six months ended June 30, 2023, the Company made one Advance under the SEPA, receiving $18,765 in proceeds for the issuance of 225,000 shares of common stock, all of which was applied to the balance of the Yorkville Promissory Note that was repaid in first quarter 2023. No Advances were made during the six months ended June 30, 2024.

Private Placements

During the three and six months ended June 30, 2024, the Company sold 877,193 and 5,977,193 shares of common stock, respectively, to one and four investors, respectively, in separate private placement transactions. The Company received $50,000 and $405,000 in proceeds from the sales in the three and six months ended June 30, 2024, respectively. In connection with the sales, the Company also issued 2,500,000 five-year warrants to purchase shares of common stock at an exercise price of $0.17 per share in the three months ended March 31, 2024 and 438,596 five-year warrants to purchase shares of common stock at an exercise price of $0.16 per share in the three months ended June 30, 2024.

During the three and six months ended June 30, 2023, the Company sold 5,416,667 and 7,416,667 shares of common stock, respectively, to two and three investors, respectively, in separate private placement transactions. The Company received $275,000 and $475,000 in proceeds from the sales in the three and six months ended June 30, 2024, respectively. In connection with the sales, the Company also issued 1,500,000 five-year warrants to purchase shares of common stock at an exercise price of $0.20 per share in the three months ended March 31, 2024 and 1,562,500 five-year warrants to purchase shares of common stock at exercise prices between $0.15 and $0.16 per share and a 3-month warrant to purchase 5,000,000 shares of common stock at an exercise price of $0.05 in the three months ended June 30, 2024.

Shares issued to Consultants

During the six months ended June 30, 2024, the Company issued to a consultant a ten-year stock option to purchase 2,504,974 shares of common stock at an exercise price equal of $0.0569 in satisfaction of common stock issuable accrued to the consultant for services provided between 2021 and 2024.

Common Stock Issuable

As of June 30, 2024 and December 31, 2023, the Company was obligated to issue the following shares:

	June 30, 2024				December 31, 2023
	Amount		Shares		Amount		Shares
Shares issuable to employees and consultants	$	50,874		752,651	$	261,682		2,356,188
Shares issuable to independent directors		60,000		1,224,492		20,000		408,164
	$	110,874		1,977,143	$	281,682		2,764,352

Stock Warrants

Transactions involving our stock warrants during the six months ended June 30, 2024 and 2023 are summarized as follows:

	2024						2023
				Weighted						Weighted
				Average						Average
				Exercise						Exercise
	Number			Price			Number			Price
Outstanding at beginning of the period		77,414,648		$	0.20			68,109,094		$	0.22
Granted during the period		19,992,346		$	0.07			10,619,698		$	0.10
Exercised during the period		—		$	—			—		$	—
Expired during the period		(1,342,402	)	$	(0.28	)		(3,662,333	)	$	(0.25	)
Outstanding at end of the period		96,064,592		$	0.18			75,066,459		$	0.21
Exercisable at end of the period		96,064,592		$	0.18			75,066,459		$	0.21
Weighted average remaining life		3.3			years			2.2			years

The following table summarizes information about the Company’s stock warrants outstanding as of June 30, 2024:

Warrants Outstanding								Warrants Exercisable
				Weighted-
				Average		Weighted-				Weighted-
				Remaining		Average				Average
Exercise		Number		Contractual		Exercise		Number		Exercise
Prices		Outstanding		Life (years)		Price		Exercisable		Price
$	0.0001 to 0.09		40,362,039		5.0	$	0.06		40,362,039	$	0.06
$	0.10 to 0.24		25,875,536		2.8	$	0.16		25,875,536	$	0.16
$	0.25 to 0.49		26,867,093		1.3	$	0.31		26,867,093	$	0.31
$	0.50 to 1.05		2,959,924		2.0	$	0.68		2,959,924	$	0.68
$	0.05 to 1.00		96,064,592		3.3	$	0.18		96,064,592	$	0.18

During the six months ended June 30, 2024 and 2023, the Company issued 19,992,346 and 10,619,698 warrants, respectively, the aggregate grant date fair value of which was $754,657 and $510,235, respectively. The fair value of the warrants was calculated using the following range of assumptions:

	2024	2023
Pricing model utilized	Binomial Lattice	Binomial Lattice
Risk free rate range	3.97% to 4.20%	3.60% to 4.27%
Expected life range (in years)	5.00 years to 10.00 years	0.28 years to 5.00 years
Volatility range	139.73% to 173.25%	126.30% to 141.2%
Dividend yield	0.00%	0.00%
Expected forfeiture	33.00%	20.00%

There were no warrants exercised during the six months ended June 30, 2024 or 2023.

Equity Incentive Plans

On January 1, 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 EIP”) for the purpose of having equity awards available to allow for equity participation by its employees, consultants and non-employee directors. The 2016 EIP allowed for the issuance of up to 15,503,680 shares of the Company’s common stock, which may be issued in the form of stock options, stock appreciation rights, or common shares. The 2016 EIP is governed by the Board, or a committee that may be appointed by the Board in the future. The 2016 EIP expired during 2021 but allows for the prospective issuance of common shares upon vesting of stock awards or exercise of stock options granted prior to expiration of the 2016 EIP.

On September 9, 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 EIP” and, together with the 2016 EIP, the “EIPs”) for the purpose of having equity awards available to allow for equity participation by its employees, consultants and non-employee directors. The 2021 EIP allows for the issuance of up to 20,000,000 shares of the Company’s common stock, which may be issued in the form of stock options, stock appreciation rights, or common shares. The 2021 EIP is governed by the Board, or a committee that may be appointed by the Board in the future.

Amounts recognized in the financial statements with respect to the EIPs in the three and six months ended June 30, 2024 and 2023 were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Total cost of share-based payment plans during the period	$	87,035	$	76,402	$	123,021	$	159,353
Amounts capitalized in deferred equity compensation during period	$	—	$	—	$	—	$	—
Amounts written off from deferred equity compensation during period	$	—	$	—	$	57,147	$	—
Amounts charged against income for amounts previously capitalized	$	—	$	5,204	$	—	$	10,354
Amounts charged against income, before income tax benefit	$	87,035	$	81,606	$	180,168	$	169,707
Amount of related income tax benefit recognized in income	$	—	$	—	$	—	$	—

Stock Options  

Stock options granted under the EIPs typically vest over a period of three to four years or based on achievement of Company and individual performance goals. The following table summarizes stock option activity as of and for the six months ended June 30, 2024 and 2023:

	2024						2023
				Weighted						Weighted
				Average						Average
				Exercise						Exercise
Stock options	Number			Price			Number			Price
Outstanding at beginning of period		5,093,738		$	0.16			5,222,982		$	0.20
Granted during the period		4,804,974		$	0.06			93,750		$	0.08
Exercised during the period		—		$	—			—		$	—
Forfeited during the period		(449,982	)	$	(0.21	)		(450,000	)	$	(0.16	)
Outstanding at end of period		9,448,730		$	0.10			4,866,732		$	0.17
Options exercisable at period-end		7,202,896		$	0.11			3,110,815		$	0.20

As of June 30, 2024, there was $79,525 of total unrecognized compensation cost related to options granted under the EIPs. That cost is expected to be recognized over a weighted-average period of 1.4 years.

The weighted-average grant-date fair value of options granted during the six months ended June 30, 2024 and 2023 was $0.04 and $0.05, respectively. The total fair value of options vested during the six months ended June 30, 2024 and 2023 was $147,568 and $35,954, respectively. No options were exercised during the six months ended June 30, 2024 or 2023. Stock based compensation expense related to stock options was $15,616 and $15,238 in the three months ended June 30, 2024 and 2023, respectively, and $63,515 and $37,748 in the six months ended June 30, 2024 and 2023, respectively.

The fair value of each stock option award is estimated on the date of grant using a binomial lattice option-pricing model based on the assumptions noted in the following table. The Company’s accounting policy is to estimate forfeitures in determining the amount of total compensation cost to record each period. The fair value of options granted for the six months ended June 30, 2024 and 2023 was calculated using the following range of assumptions:

	2024	2023
Pricing model utilized	Binomial Lattice	Binomial Lattice
Risk free rate range	4.20%	3.48%
Expected life range (in years)	10.00 years	10.00 years
Volatility range	173.09% to 173.25%	145.03%
Dividend yield	0.00%	0.00%
Expected forfeiture	30.00%	30.00%

The following table summarizes the status and activity of nonvested options issued pursuant to the EIPs as of and for the six months ended June 30, 2024 and 2023:

	2024						2023
				Weighted						Weighted
				Average						Average
				Grant Date						Grant Date
Stock options	Shares			Fair Value			Shares			Fair Value
Nonvested options at beginning of period		1,073,084		$	0.06			2,260,417		$	0.08
Granted		4,804,974		$	0.04			93,750		$	0.05
Vested		(3,582,224	)	$	(0.04	)		(298,250	)	$	(0.12	)
Forfeited		(50,000	)	$	(0.08	)		(300,000	)	$	(0.09	)
Nonvested options at end of period		2,245,834		$	0.05			1,755,917		$	0.07

Stock Grants  

Stock grant awards made under the EIPs typically vest either immediately or over a period of up to four years. The following table summarizes stock grant activity as of and for the six months ended June 30, 2024 and 2023:

	2024						2023
				Weighted						Weighted
				Average						Average
				Grant Date						Grant Date
Stock Grants	Shares			Fair Value			Shares			Fair Value
Nonvested grants at beginning of period		1,484,488		$	0.05			1,651,435		$	0.05
Granted		—		$	—			160,944		$	0.09
Vested		(821,328	)	$	(0.05	)		(981,584	)	$	(0.05	)
Forfeited		(50,000	)	$	(0.12	)		(15,000	)	$	(0.26	)
Nonvested grants at end of period		613,160		$	0.05			815,795		$	0.05

As of June 30, 2024, there was $8,653 of total unrecognized compensation cost related to stock grants made under the EIPs. That cost is expected to be recognized over a weighted-average period of 1.2 years. The weighted-average grant-date fair value of share grants made during the six months ended June 30, 2023 was $0.09 per share. No grants were made in the six months ended June 30, 2024. The aggregate fair value of share grants that vested during the six months ended June 30, 2024 and 2023 was $40,588 and $52,756, respectively. Stock based compensation expense related to stock grants was $1,796 and $24,172 in the three months ended June 30, 2024 and 2023, respectively, and $3,592 and $49,640 in the six months ended June 30, 2024 and 2023, respectively.

The fair value of each stock grant is calculated using the closing sale price of the Company’s common stock on the date of grant. The Company’s accounting policy is to estimate forfeitures in determining the amount of total compensation cost to record each period.

Liability-Classified Equity Instruments

During 2021, the Company made certain stock grants from the 2021 EIP that vest over a four-year period and that are settleable for a fixed dollar amount rather than a fixed number of shares. During 2022, the Company made an additional grant of stock options from the 2021 EIP with a fixed fair value that may be earned based on achievement of performance targets on a quarterly basis through June 2025. The Company recognized an asset captioned “Deferred equity compensation” and an offsetting liability captioned as a “Liability-classified equity instrument” related to such instruments. Amortization of deferred stock compensation assets was $-0- and $5,203 in the three months ended June 30, 2024 and 2023, respectively, and $-0- and $10,353 in the six months ended June 30, 2024 and 2023, respectively. The Company subsequently de-recognized Deferred equity compensation and Liability-classified equity instruments upon termination of the instruments in 2022 and 2023 and no further equity-related assets or liabilities remained as of June 30, 2024.