Stockholder Equity

9 Months Ended

Sep. 30, 2023

Stockholder Equity

Stockholder' Equity

Note 7 – Stockholders’ Equity

The Company is authorized to issue 50,000,000 preferred stock shares and 200,000,000 common stock shares both with a par value of $0.0001.

Preferred Stock

The Company is authorized, subject to limitations prescribed by Delaware law, to issue up to 50,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations or restrictions. The board of directors can increase or decrease the number of shares of any series, but not below the number of shares of that series then outstanding, without any further vote or action by the Company’s stockholders. The Company board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a change in control of the Company and may adversely affect the market price of the Company’s common stock and the voting and other rights of the holders of the Company’s common stock. As of September 30, 2023, there were no shares of preferred stock issued or outstanding.

Common Stock

The holders of common stock are entitled to one vote per share on all matters submitted to a vote of shareholders, including the directors’ election. There is no right to cumulative voting in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the board of directors out of funds legally available for payment of dividends subject to the prior rights of holders of preferred stock and any contractual restrictions the Company has against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive rights and have no right to convert their common stock into any other securities. As of September 30, 2023, there were 132,667,107 shares of common stock issued and outstanding.

In December 2022, the Company entered into an equity distribution agreement with an underwriter pursuant to which the Company may offer and sell shares of its common stock from time to time through the underwriter as its sales agent. Sales of common stock, if any, will be made at market prices by any method permitted by law deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company has no obligation to sell any shares of common stock under the open market sale agreement and may at any time suspend offers under the open market sale agreement, in whole or in part, or terminate the equity distribution agreement. 

During the nine months ended September 30, 2023, a total of 3,766,422 shares of common stock have been sold pursuant to the open market sale agreement resulting in a total of $13.41 million in proceeds, net of $0.23 million of commission fees and $0.14 million of accounting and legal fees. As of September 30, 2023, $86.56 million remained available under the Company’s at-the-market public facility, subject to various limitations.

Stock-based compensation

During the nine months ended September 30, 2023 and September 30, 2022, the Company recorded stock-based compensation of $667,950 and $419,995, respectively, related to common stock issued, restricted stock issued, or vested options to employees and various consultants of the Company. 

For the nine months ended September 30, 2023, $583,549 was charged as general and administrative expenses and $84,401 as research and development expenses in the accompanying condensed consolidated statements of operations. For the nine months ended September 30, 2022, $380,383 was charged as general and administrative expenses and $39,612 as research and development expenses in the accompanying condensed consolidated statements of operations.

Stock Options

Stock option activity for the nine months ended September 30, 2023 is summarized as follows:

	Shares			Weighted Average Exercise Price			Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (Years)
Options outstanding at December 31, 2022		12,752,000		$	0.62		$	28,543,370		5.09
Granted		273,000			3.09			—		—
Exercised		—			—			—		—
Expired/forfeit		—			—			—		—
Options outstanding at March 31, 2023		13,025,000		$	0.67		$	52,705,860		4.93
Granted		640,000			3.25			—		—
Exercised		(175,045	)		(1.05	)		—		—
Expired/forfeit		(634,488	)		(1.36	)		—		—
Options outstanding at June 30, 2023		12,855,467		$	0.76		$	20,968,586		4.73
Granted		144,000			1.72			—		—
Exercised		(1,988,095	)		(0.16	)		—		—
Expired/forfeit		(383,372	)		(1.42	)		—		—
Options outstanding at September 30, 2023		10,628,000		$	0.86		$	4,049,090		4.77

Stock option activity for the nine months ended September 30, 2022 is summarized as follows:

	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (Years)
Options outstanding at December 31, 2021		12,300,000		$	0.37	$	30,504,000		5.62
Granted		360,000			3.33		—		—
Exercised		—			—		—		—
Expired/forfeit		—			—		—		—
Options outstanding at March 31, 2022		12,660,000		$	0.45	$	45,576,000		5.39
Granted		560,000			—		—		—
Exercised		—			—		—		—
Expired/forfeit		(40,000	)		4.10		—		—
Options outstanding at June 30, 2022		13,180,000		$	0.54	$	31,683,690		5.31
Granted		270,000			2.39		—		—
Exercised		—			—		—		—
Expired/forfeit		(58,000	)		3.35		—		—
Options outstanding at September 30, 2022		13,392,000		$	0.56	$	30,383,910		5.13

Total unrecognized compensation associated with these unvested options is approximately $2,369,014 which will be recognized based on the options associated vesting schedules.

The fair value of these options granted were estimated on the date of grant, using the Black-Scholes option-pricing model with the following assumptions:

	September 30, 2023			September 30, 2022
Dividend yield		0.00	%		0.00	%
Expected life	5.45 – 6.53 Years			5.28 – 6.10 Years
Expected volatility	30.00–35.88		%	34.73–34.79		%
Risk-free interest rate	3.57–4.43		%	3.06-3.94		%

Stock Warrants

As of September 30, 2023, there were 1,235,000 warrants outstanding which relate to the Series 1 offering executed in December 2021, where investors were offered a warrant for every two common shares purchased during the offering at an exercise price of $2.50 per share. The intrinsic value of all outstanding warrants as of September 30, 2023 was $0 based on the market price of our common stock of $1.24 per share, which was the Company’s closing per share common stock price as reported on Nasdaq as of September 30, 2023.

During the three months ended September 30, 2023, there were no new warrants issued or exercised under existing warrants. As of September 30, 2023, there are 1,235,000 outstanding warrants.

 A summary of warrant activity during the nine months ended September 30, 2023, is as follows:

	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Life (Years)
Balance at December 31, 2022		1,250,000		$	2.50	$	450,000		1.96
Issued		—			—		—		—
Exercised		—			—		—		—
Balance at March 31, 2023		1,250,000		$	2.50	$	2,775,000		1.72
Issued		—			—		—		—
Exercised		(15,000	)		2.50		—		—
Balance at June 30, 2023		1,235,000		$	2.50	$	—		1.47
Issued		—			—		—		—
Exercised		—			—		—		—
Balance at September 30, 2023		1,235,000		$	2.50	$	—		1.21