Note 15. Stockholder’s Equity

Authorized Capital Stock

Effective July 3, 2023, the Company filed Amended and Restated Certificate of Incorporation to amend for authorized capital stock to authorize the Company to issue 215,000,000 shares.

The Company has authorized 5,000,000 shares of preferred stock with a par value of $0.0001.

The Company has authorized 210,000,000 shares of common stock with a par value of $0.0001, consisting of 200,000,000 shares of Class A Common Stock and 10,000,000 shares of Class B Common Stock. The Class B Common Stock is entitled to 10 votes for every 1 vote of the Class A Common Stock.

Class A Common Stock

On January 30, 2023, the Company offered an aggregate of up to 2,640,000 shares of our Class A common stock and pre-funded warrants to purchase up to an aggregate 12,360,000 shares of Class A common stock. In addition, the company issued 2,250,000 prefunded warrants to cover over-allotments. All pre-funded warrants were exercised and total issued stock in this offering was 17,250,000 aggregate shares of Class A common stock. The purchase price for each share of Class A common stock was $0.30. Warrants equal to 4% of the number of securities issued by the Company in the offering were issued to the underwriter at an exercise price of 125% of the offering price per share. Gross proceeds from the offering were approximately $5.2 million, and net proceeds of approximately $4.6 million after underwriter expenses.

On April 20, 2023, the Company sold an aggregate of 8,572,018 shares of our Class A Common Stock and pre-funded warrants to purchase up to an aggregate 21,731,012 shares of Class A Common Stock and warrants to purchase up to 30,303,030 shares of Class A Common Stock. In addition, the Company sold 3,787,874 shares of Class A Common Stock and 3,787,874 of accompanying warrants to purchase shares of Class A Common Stock pursuant to the partial exercise of the underwriter’s over-allotment option. The purchase price for each share of Class A Common Stock and accompanying warrant was $0.33. Warrants equal to 3% of the number of securities issued by the Company in the offering at an exercise price of 125% of the offering price per share was issued to the underwriter. Gross proceeds from the offering were approximately $11.2 million, and net proceeds of approximately $10.2 million after underwriting discounts and commissions and estimated offering expenses payable by us.

During the nine months ended September 30, 2023, 11,601,919 Class A Common Stock were issued upon cashless exercise of warrants and 21,731,012 Class A Common Stock were issued upon exercise of pre-funded warrants of $2,173.

The Company had 70,965,559 and 8,022,736 shares of Class A common stock issued and outstanding as of September 30, 2023 and December 31,2022, respectively.

The Company had a total of 136,463 shares with a value of $25,000 to be issued out of the Omnibus Equity Incentive Plan related to the Board Stock Compensation as of September 30, 2023.

Class B Common Sock

The Company had 10,000,000 shares of Class B common stock issued and outstanding as of September 30, 2023 and December 31, 2022.

Warrants

January 2023 offering

For the nine months ended September 30, 2023, the Company issued a total of 14,610,000 pre-funded warrants exercisable for a period of five years at an exercise price per share of $0.30 in connection with the common stock sold in January 2023. These warrants were fully exercised into Class A Common stock as part of the offering previously described. In addition, the Company issued a total of 690,000 underwriter warrants exercisable 180 days after the January 30,2023 date of the offering agreement, for a period of five years at an exercise price per share of $0.375 in connection with the common stock sold.

April 2023 offering

For the nine months ended September 30, 2023, the Company issued a total of 21,731,012 pre-funded warrants and 34,090,904 warrants exercisable for a period of five years at an exercise price per share of $0.33 in connection with the common stock sold in April 2023. During the second and third quarters of 2023, a total of 21,731,012 pre-funded warrants and 23,203,838 warrants were exercised into Class A Common stock. In addition, the Company issued a total of 1,022,727 underwriter warrants exercisable 180 days after the April 20,2023 date of the offering agreement, for a period of five years at an exercise price per share of $0.413 in connection with the common stock sold.

For the nine months ended September 30, 2023, and 2022, the Company recognized finance expense of $806,754 and $0, respectively, for underwriter warrants issue for compensation of services.

The Company utilizes the Black-Scholes model to value its warrants. The Company utilized the following assumptions:

 Schedule of Warrant Valuation Assumption

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

 Schedule of Activity of Warrants

The intrinsic value of the warrants as of September 30, 2023 is $0.

Stock Options

On August 21, 2023, the Company granted 3,955,212 options with an exercise price of $0.16, with a term of five (5) years to exercise from the grant date, to employees of the Company. Options issued vest at 25% of shares subject to the option on each anniversary date, on August 21, 2024, 2025, 2026 and 2027.

The Company utilizes the Black-Scholes model to value its stock options. The Company utilized the following assumptions:

 Schedule of Utilizes Black-Scholes Model to Value of Stock Options

During the nine months ended September 30, 2023, the Company granted 3,955,212 options valued at $637,184. During the nine months ended September 30, 2023, the Company recognized stock option expense of $13,275 and as of September 30, 2023, $623,909 remains unamortized. The intrinsic value of the 3,955,212 options outstanding as of September 30, 2023, is $0.

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

 Schedule of Activity of Stock Options