Quarterly report pursuant to Section 13 or 15(d)

Stockholder???s Equity

v3.23.1
Stockholder’s Equity
 3 Months Ended
Mar. 31, 2023
Equity [Abstract]  
Stockholder’s Equity

Note 14. Stockholder’s Equity

 

Authorized Capital Stock

 

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

 

The Company has authorized 110,000,000 shares of common stock with a par value of $0.0001, consisting of 100,000,000 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.

 

Class B Common Sock

 

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

 

Pre-funded Warrants

 

For the three months ended March 31, 2023, the Company issued a total of 14,610,000 pre-funded warrants for a period of five years at an exercise price per share of $0.30 in connection with the common stock sold. 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 for a period of five years at an exercise price per share of $0.375 in connection with the common stock sold. Upon the issuance of the warrants as compensation of its services as underwriters, the warrants were categorized as equity and the fair value of $566,229 was recorded as finance expense.

 

 

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

 

    Three Months Ended  
    March 31,  
    2023  
Expected term     5 years  
Expected average volatility     182 %
Expected dividend yield     -  
Risk-free interest rate     3.96 %

 

A summary of activity of the warrants during the three months ended March 31, 2023 as follows:

 

    Number of     Weighted Average     Average  
    warrants     Exercise Price     Life (years)  
Outstanding, December 31, 2022     -     $ -       -  
Granted     14,610,000       0.30       5.00  
Granted     690,000       0.375       5.00  
Expired     -       -       -  
Exercised     (14,610,000 )     0.30       5.00  
Outstanding, March 31, 2023     690,000     $ 0.375       4.84  

 

The intrinsic value of the warrants as of March 31, 2023 $121,509. All of the outstanding warrants are exercisable as of March 31, 2023.