Quarterly report pursuant to Section 13 or 15(d)

STOCK WARRANTS

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STOCK WARRANTS
 6 Months Ended
Jun. 30, 2024
Stock Warrants  
STOCK WARRANTS

NOTE 9 – STOCK WARRANTS

 

On each of September 12, 2022, November 1, 2022, November 3, 2022, and June 1, 2023, the Company entered into agreements with members of the Board and consultants for services to be performed. As consideration therefore, the Company granted those individuals stock warrants to purchase an aggregate of 38,400,000 shares of common stock. The warrants vest over various terms for periods from one to five years. The warrants were valued using the Black-Scholes option pricing model under the assumptions as found in the table below.

 

On December 29, 2022 and March 3, 2023, the Company entered into agreements with Sklar, for warrants to purchase shares of common stock to be issued as a funding fee for an aggregate principal amount of $2,800,000 in secured promissory notes (see Note 7). The warrants were valued using the Black-Scholes option pricing model under the following assumptions as found in the table below.

 

The table below summarizes the grants of stock warrants and includes the assumptions used for valuation under the Black-Scholes option pricing model.

 

Date   Number of Stock Warrants     Stock Price     Strike Price     Expected Volatility     Interest Rate     Warrants and Rights Outstanding, Measurement Input     Expected Term     Fair Value  
    Number of                                   Expected        
    Stock     Stock     Strike     Expected     Interest     Dividend     Term     Fair  
Date   Warrants     Price     Price     Volatility     Rate     Rate     (years)     Value  
9/12/2022     33,150,000     $ 0.19     $ 0.19       103.09 %     3.47 %     0.00 %     3.0     $ 4,088,769  
11/1/2022     100,000     $ 0.20     $ 0.20       102.86 %     4.27 %     0.00 %     1.0     $ 8,116  
11/3/2022     5,000,000     $ 0.19     $ 0.19       102.84 %     4.36 %     0.00 %     3.0     $ 618,176  
12/29/2022     285,714     $ 0.20     $ 0.01       103.49 %     3.94 %     0.00 %     1.0     $ 54,401  
3/3/2023     114,286     $ 0.17     $ 0.01       137.62 %     4.26 %     0.00 %     1.0     $ 18,710  
6/1/2023     150,000     $ 0.12     $ 0.19       150.24 %     3.70 %     0.00 %     3.0     $ 14,013  

 

A summary of the status of the Company’s outstanding stock warrants and changes during the periods is presented below:

 

    Shares available to purchase     Weighted Average     Weighted Average Remaining Contractual     Aggregate  
    with warrants     Exercise Price     Term (in years)     Intrinsic Value  
Outstanding, December 31, 2023     39,350,000     $ 0.20       3.87     $ 61,600  
Issued     -       -       -       -  
Exercised     -       -       -       -  
Cancelled     -       -       -       -  
Expired     -       -       -       -  
Outstanding, June 30, 2024     39,350,000     $ 0.20       3.37     $ 36,000  
                                 
Exercisable, June 30, 2024     23,599,983     $ 0.20       3.37     $ 36,000  
                                 
Outstanding, December 31, 2022     41,085,714     $ 0.24       4.64     $ 45,714  
Issued     264,286       0.11       5.38       12,571  
Exercised     -       -       -       -  
Cancelled     -       -       -       -  
Expired     (2,000,000 )     1.05       -       -  
Outstanding, June 30, 2023     39,350,000     $ 0.20       4.27     $ 44,000  
                                 
Exercisable, June 30, 2023     3,015,970     $ 0.19       4.41     $ 44,000  

 

 

The Company granted stock warrants to purchase zero and an aggregate of 150,000 shares of Class A common stock during the three months ended June 30, 2024 and 2023, respectively, with grant date fair values of zero and $14,013, respectively; the Company granted stock warrants to purchase zero and an aggregate of 264,286 shares of Class A common stock during the six months ended June 30, 2024 and 2023, respectively, with grant date fair values of $32,723, respectively.

 

The following table summarizes information about stock warrants to purchase shares of the Company’s Class A common stock outstanding and exercisable as of June 30, 2024:

 

            Weighted-     Weighted-        
            Average     Average        
Range of     Outstanding     Remaining Life     Exercise     Number  
exercise prices     Warrants     In Years     Price     Exercisable  
$ 1.00       250,000       0.25     $ 1.00       250,000  
$ 0.90       300,000       1.25     $ 0.90       275,000  
$ 0.19       38,300,000       3.40     $ 0.19       22,574,983  
$ 0.20       100,000       3.34     $ 0.20       100,000  
$ 0.01       400,000       3.55     $ 0.01       400,000  
                                     
          39,350,000       3.37     $ 0.20       23,599,983  

 

The compensation expense attributed to the issuance of the stock warrants is recognized as they are vested.

 

Total compensation expense related to the stock warrants was $394,418 and $398,723 for the three months ended June 30, 2024 and 2023, respectively; total compensation expense related to the stock warrants was $785,165 and $800,728 for the six months ended June 30, 2024 and 2023, respectively, and was included in compensation expense on the statement of operations. As of June 30, 2024, there was $1,969,779 in future compensation cost related to non-vested stock warrants.

 

The aggregate intrinsic value as of June 30, 2024 is $36,000 for total outstanding and exercisable warrants, which was based on our estimated fair value of the common stock of $0.10, had all warrant holders exercised their warrants as of that date, net of the aggregate exercise price.