Note 9. Stockholders’ Equity

Authorized Shares

The Company has 45,000,000 Common shares and 900,000 Series A convertible preferred shares authorized with a par value of $0.001 per share.

On October 6, 2023, following stockholder approval at the Company’s annual meeting, the Company amended its certificate of incorporation to implement a 1 for 15 reverse split of its common stock. The effect of the reverse stock split was to combine every 15 shares of outstanding common stock into one share of common stock. The reverse stock split was effective at the opening of the trading day on October 11, 2023. The effects of the reverse stock split have been reflected in this Annual report on form 10/K for all periods presented.

Common Stock

Issuance of Shares for Vested Restricted Stock Units

Between January 10, 2023 and January 26, 2023, the Company issued a total of 756 shares of common stock to holders of fully vested restricted stock units.

Between June 5, 2023 and June 16, 2023, the Company issued a total of 14,445 shares of common stock to holders of fully vested restricted stock units.

Between July 5, 2023 and July 19, 2023, the Company issued a total of 956 shares of common stock to holders of fully vested restricted stock units.

On November 23, 2023, the Company issued a total of 778 shares of common stock to holders of fully vested restricted stock units.

Issuance of Shares as Settlement of Accounts Payable

On May 24, 2023, the Company issued 6,807 shares of common stock in full settlement of $26,545 of accounts payable. The shares had a fair value of $3.90 per share.

On June 22, 2023, the Company issued 3,264 shares of common stock in full settlement of $17,621 of accounts payable. The shares had a fair value of $5.40 per share.

On July 26, 2023, the Company issued 4,837 shares of common stock in full settlement of $16,686 of accounts payable. The shares had a fair value of $3.45 per share.

On August 18, 2023, the Company issued 8,734 shares of common stock in full settlement of $32,750 of accounts payable. The shares had a fair value of $3.75 per share.

On September 27, 2023, the Company issued 7,910 shares of common stock in full settlement of $22,542 of accounts payable. The shares had a fair value of $2.85 per share.

On October 23, 2023, the Company issued 17,000 shares of common stock in full settlement of $37,571 of accounts payable. The shares had a fair value of $2.21 per share.

On December 22, 2023, the Company issued 20,520 shares of common stock in full settlement of $35,088 of accounts payable. The shares had a fair value of $1.71 per share

Issuance of Shares under Common Stock Purchase Agreement

On June 1, 2023, the Company issued 200,000 shares of common stock for net proceeds of $127,053 under its common stock purchase agreement dated June 28, 2022.

On June 22, 2023, the Company issued 200,000 shares of common stock for net proceeds of $134,634 under its common stock purchase agreement dated June 28, 2022.

On Between July 7, 2023 and September 28, 2023, the Company issued a total of 94,056 shares of common stock for aggregate net proceeds of $311,220 under its common stock purchase agreement dated June 28, 2022.

Issuance of Shares for the Exercise of Warrants

On June 15, 2023, the Company issued 15,238 shares of common stock in a cashless exchange for 54,872 warrants to purchase shares of common stock at $9.75 per share. 

Issuance of Shares for Class Action Settlement

On June 5, 2023, the Company issued an aggregate 129,458 shares of common stock in full settlement of the previously accrued subscription payable valued at $600,000. 

Stock Incentive Plan

The number of shares of the Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based vesting as of and for the year ended December 31, 2023 are:

The number of shares of the Company’s common stock that are issuable pursuant to warrant and stock option grants with time-based vesting as of and for the year ended December 31, 2022 are:

The Company has classified the warrant as having Level 2 inputs, and has used the Black-Scholes option-pricing model to value the warrant.

The Company’s outstanding warrants and options at December 31, 2023 are as follows:

As of December 31, 2023 and 2022, the total unrecognized expense for unvested stock options and restricted stock awards was none and approximately $220,000, respectively, to be recognized over a one to three-year period for restricted stock awards and one year for option grants from the date of grant.

Stock-based compensation expense for the years ended December 31, 2023 and 2022 was as follows:

Stock-based compensation expense categorized by the equity components for the years ended December 31, 2023 and 2022 is as follows:

Stock compensation is included in general and administrative expenses on the consolidated statements of operations.