Quarterly report pursuant to Section 13 or 15(d)

Equity

v3.22.2
Equity
6 Months Ended
Jun. 30, 2022
Stockholders' Equity Note [Abstract]  
EQUITY

NOTE 10 – EQUITY

 

Common Shares Sold for Cash

 

On December 13, 2019, the Company entered into an Open Market Sale AgreementSM (the “Sales Agreement”) with Jefferies LLC, as sales agent (“Jefferies”), pursuant to which the Company may offer and sell, from time to time, through Jefferies, shares of its common stock. During the six months ended June 30, 2022, Jefferies sold an aggregate of 170,640 shares of common stock at an average price of $0.79 per share to investors and the Company recorded net proceeds of $112,328, net of commission and other offering costs of $23,239.

 

Common Shares Issued for Services

 

During the six months ended June 30, 2022, the Company issued a total of 408,957 shares of its common stock for services rendered and to be rendered. These shares were valued at $340,950, the fair market values on the grant dates using the reported closing share prices on the dates of grant, and the Company recorded stock-based compensation expense of $254,923 for the six months ended June 30, 2022 and reduced accrued liabilities of $30,000 and recorded prepaid expense of $56,027 as of June 30, 2022 which will be amortized over the rest of corresponding service periods.

 

Options

 

The following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at June 30, 2022:

 

Options Outstanding     Options Exercisable  
Range of
Exercise
Price
    Number
Outstanding at
June 30, 2022
    Weighted Average
Remaining
Contractual Life
(Years)
    Weighted
Average
Exercise
Price
    Number
Exercisable at
June 30, 2022
    Weighted
Average
Exercise
Price
 
$ 0.50 – 0.82       2,660,000       4.48     $ 0.56       2,233,334     $ 0.53  
  1.00 – 1.93       2,895,000       4.40       1.38       2,888,333       1.39  
  2.00 – 2.80       2,560,000       1.37       2.15       2,560,000       2.15  
  4.76       30,000       1.76       4.76       30,000       4.76  
$ 0.50 – 4.76       8,145,000       3.46     $ 1.37       7,711,667     $ 1.40  

 

Stock option activities for the six months ended June 30, 2022 were as follows:

 

    Number of Options     Weighted Average Exercise Price  
Outstanding at January 1, 2022     7,725,000     $ 1.45  
Granted     660,000       0.73  
Expired/forfeited/exercised     (240,000 )     (2.26 )
Outstanding at June 30, 2022     8,145,000     $ 1.37  
Options exercisable at June 30, 2022     7,711,667     $ 1.40  
Options expected to vest     433,333     $ 0.69  

 

The aggregate intrinsic value of both stock options outstanding and stock options exercisable at June 30, 2022 was $0.

 

The fair values of options granted during the six months ended June 30, 2022 were estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: volatility of 74.8% - 117.46%, risk-free rate of 1.37% - 3.56%, annual dividend yield of 0%, and expected life of 3.00 - 5.00 years. The aggregate fair value of the options granted during the six months ended June 30, 2022 was $373,982.

 

The fair values of options granted during the six months ended June 30, 2021 were estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: volatility of 123.27% - 128.42%, risk-free rate of 0.33% - 0.80%, annual dividend yield of 0% and expected life of 3.00 - 5.00 years. The aggregate fair value of the options granted during the six months ended June 30, 2021 was $575,078.

 

For the three months ended June 30, 2022 and 2021, stock-based compensation expense associated with stock options granted amounted to $126,301 and $195,209, of which, $93,171 and $136,392 was recorded as compensation and related benefits, $21,460 and $39,545 was recorded as professional fees, and $11,670 and $19,272 was recorded as research and development expenses, respectively.

 

For the six months ended June 30, 2022 and 2021, stock-based compensation expense associated with stock options granted amounted to $278,624 and $397,714, of which, $198,084 and $275,899 was recorded as compensation and related benefits, $57,598 and $82,988 was recorded as professional fees, and $22,942 and $38,827 was recorded as research and development expenses, respectively.

 

A summary of the status of the Company’s nonvested stock options granted as of June 30, 2022 and changes during the six months ended June 30, 2022 is presented below:

 

    Number of Options     Weighted Average Exercise Price  
Nonvested at January 1, 2022     205,834     $ 1.04  
Granted     660,000       0.73  
Vested     (432,501 )     (0.92 )
Nonvested at June 30, 2022     433,333     $ 0.69  

 

Warrants

 

On March 28, 2022, the Company entered into Securities Purchase Agreement with an accredited investor, which was amended on June 8, 2022, providing for the sale by the Company to the investor of a Convertible Note in the amount of $3,718,943 (“2022 Convertible Note”). In addition to the 2022 Convertible Note, the investor also received a Stock Purchase Warrant (“2022 Warrant”) to acquire an aggregate of 1,239,647 shares of common stock. The 2022 Warrant is exercisable for five years at an exercise price of $1.25.

 

The fair values of the warrants issued to the investor with this private placement were computed using the Black-Scholes option-pricing model with the following assumptions: volatility of 111.94%, risk-free rate of 2.71% - 2.92%, annual dividend yield of 0% and expected life of 5 years. The warrants issued to the investor to purchase 1,239,647 shares of the Company’s common stock were treated as a discount on the convertible note payable and were valued at $498,509 and will be amortized over the term of the 2022 Convertible Note.

 

Stock warrant activities for the six months ended June 30, 2022 were as follows:

 

    Number of Warrants     Exercise Price  
Outstanding at January 1, 2022    
-
    $
-
 
Issued     1,239,647       1.25  
Expired/exercised    
-
     
-
 
Outstanding and exercisable at June 30, 2022     1,239,647     $ 1.25  

 

The following table summarizes the shares of the Company’s common stock issuable upon exercise of warrants outstanding at June 30, 2022:

 

Warrants Outstanding     Warrants Exercisable  
Exercise
Price
    Number
Outstanding at
June 30, 2022
    Weighted Average
Remaining
Contractual Life
(Years)
    Number
Exercisable at
June 30, 2022
    Exercise
Price
 
$ 1.25       1,239,647       4.81       1,239,647     $ 1.25  

 

The aggregate intrinsic value of both stock warrants outstanding and stock warrants exercisable at June 30, 2022 was $0.