Stockholder's Equity

12 Months Ended

Dec. 31, 2023

Stockholders Equity [Abstract]

STOCKHOLDER’S EQUITY

NOTE 3 - STOCKHOLDER’S EQUITY

On January 20, 2023, the Company closed its offering (the “Offering”) of 6,725,147 units (“Units”) of the Company at a price of C$1.71 per Unit, including the units issued pursuant to the full exercise of the over-allotment option by the underwriters in the Offering (the “Underwriters”), for aggregate gross proceeds of approximately C$11,500,000 before deducting Offering expenses.  Each Unit was comprised of one share of the Company’s common stock and one-half of one common stock purchase warrant.

In connection with the closing of the Offering, the Company entered into a Warrant Indenture dated January 20, 2023 (the “Warrant Indenture”) with Endeavor Trust Corporation, as the warrant agent, pursuant to which the Company issued Warrants to purchase up to a maximum of 3,362,573 Warrant Shares. Each Warrant is exercisable at any time after January 20, 2023, and prior to January 20, 2026.

As compensation in connection to the Offering, the Company paid the Underwriters cash compensation equal to 5.0% of the aggregate gross proceeds of the Offering and issued to the Underwriters 336,257 common stock purchase warrants (the “Compensation Warrants”). Each Compensation Warrant is exercisable for one share of common stock (each, a “Compensation Warrant Share”) for a period of 12 months following the closing of the Offering at a price of C$1.71 per Compensation Warrant Share. 

Recent Sales of Unregistered Securities

On June 13, 2022, 7,800,000 shares of common stock of the Company (“Common Shares”) were issued for the purchase of CR Reward. See Note 2 for additional information.

In addition to the above, the Company issued the following common shares for the years ending December 31, 2023, and 2022:

Warrants converted to common shares

Date	Shares		Price
June-22		208,334	C$	1.80

Preferred shares converted to common shares

Date	Shares
May-22		677,084

Convertible Preferred Stock

In August 2011, the Board of Directors designated 5,000,000 shares of Preferred Stock as Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into one share of common stock at the option of the preferred holder. The Series A Preferred Stock is not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series A Preferred Stock to the extent that, as a result of the conversion, the holder of such shares would beneficially own more than 4.99% (or, if this limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the issued and outstanding shares of our common stock. The holders of the Company’s Series A Preferred Stock are also entitled to certain liquidation preferences upon the liquidation, dissolution or winding up of the business of the Company.

In October 2012, the Board of Directors designated 5,000,000 shares of Preferred Stock as Series B Preferred Stock. In July 2016, the Board of Directors increased the total Series B Preferred Stock designated to 7,500,000. Each share of Series B Preferred Stock is convertible into one share of common stock at the option of the preferred holder. The Series B Preferred Stock is not entitled to receive dividends and does not possess redemption rights. The Company is prohibited from effecting the conversion of the Series B Preferred Stock to the extent that, as a result of the conversion, the holder of such shares would beneficially own more than 4.99% (which may be increased or waived upon no less than 61 days prior notice) in the aggregate of the issued and outstanding shares of our common stock. For a period of 24 months from the issue date, the holder of Series B Preferred Stock were entitled to price protection as determined in the subscription agreement. The Company has evaluated this embedded lower price issuance feature in accordance with ASC 815 and determined that it is clearly and closely related to the host contract and is therefore accounted for as an equity instrument.

On May 4, 2022, 677,084 shares of Series B Preferred Stock were converted into shares of common stock. As of December 31, 2023 and 2022, there were no Preferred Stock shares outstanding.

Common Stock Options

On February 22, 2021, the Company’s Board of Directors approved a new stock option plan (the “Plan”). The aggregate number of shares of common stock of the Company (a “Share”) that may be reserved for issuance pursuant to the Plan shall not exceed 10% of the number of Shares issued and outstanding from time to time. Options granted vest in accordance with terms at the discretion of the Board.

No options were granted during the year ended December 31, 2023. The details with respect to option grants during the year ended December 31, 2022 are as follows:

The Company granted 350,000 options to an officer and an employee of the Company, pursuant to the terms of the Company’s Stock Option Plan. The Black Scholes option pricing model was used to estimate the aggregate fair value of the June 2022 options of $324,816 with the following inputs:

Options	Exercise Price	Expected Life	Volatility	Risk Free Interest Rate
350,000	C$2.05	3.5 years	83.7%	2.94%

The Company granted 100,000 options to two employees of the Company, pursuant to the terms of the Company’s Stock Option Plan. The Black Scholes option pricing model was used to estimate the aggregate fair value of the August 2022 options of $99,021 with the following inputs:

Options	Exercise Price	Expected Life	Volatility	Risk Free Interest Rate
100,000	C$1.96	3.5 years	80.3%	3.14%

Stock Option Repricing

Effective September 29, 2022, the Company’s board of directors repriced certain previously granted and still outstanding vested and unvested stock option awards under the Company’s Plan held by current employees, officers and directors. As a result, the exercise price for these awards was lowered to C$2.00 per share. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 4,541,667 vested and unvested stock options outstanding as of September 29, 2022, with original exercise prices of C$3.00, were repriced.

The repricing on September 29, 2022, resulted in incremental stock-based compensation expense of $480,250, of which $188,233 related to vested stock option awards and was expensed on the repricing date, and $292,017 related to unvested stock option awards is being amortized on a straight-line basis over the remaining vesting period of those awards ranging from 5 months to 23 months.

The Company recognized share-based compensation expense related to the stock options of $1,265,971 and $2,164,055 for the years ended December 31, 2023 and 2022, respectively. The options are vested based on years of service, with certain options vested after two years and other options vested after three years.

Stock Option Activity

A summary of the stock options as of December 31, 2023 and 2022, and changes during the years ended are presented below:

						Weighted
						Average
				Weighted		Remaining
				Average		Contractual		Aggregate
	Number of			Exercise		Life		Intrinsic
	Options			Price		(Years)		Value
Balance at December 31, 2021		4,800,002		$	1.55		4.36	$	29,817
Exercised		0			0.00		0		0
Issued		450,000		C$	2.03		5.00		0
Canceled		(50,000	)	C$	2.00		0		0
Balance at December 31, 2022		5,200,002		$	1.56		3.45		57,468
Exercised		0			0.00		0		0
Issued		0			0.00		0		0
Canceled		(190,000	)	C$	2.02		0		0
Balance at December 31, 2023		5,010,002		$	1.48		2.43	$	0
Options exercisable at December 31, 2023		3,898,336		$	1.48		2.42	$	0

Warrant Activity

Total outstanding warrants of 34,701,615 as of December 31, 2023, were as follows:

	Warrants Issued												Total
Warrants issued (includes expired warrants)		1,434,522			27,433,335			3,777,784		3,362,573		336,257		36,344,471
Issued date		1/16/2020			10/26/2020			3/4/2021		1/20/2023		1/20/2023
Expiration date		1/15/2022			10/26/2024			3/4/2024		1/20/2026		1/20/2024
Exercise price (Canadian $)	$	1.20		$	1.80		$	2.80	$	2.30	$	1.71
Balance at December 31, 2021		216,076			27,433,335			3,777,784		0		0		31,427,195
Exercised		0			(208,334	)		0		0		0		(208,334	)
Issued		0			0			0		0		0		0
Expired		(216,076	)		0			0		0		0		(216,076	)
Balance at December 31, 2022		0			27,225,001			3,777,784		0		0		31,002,785
Exercised		0			0			0		0		0		0
Issued		0			0			0		3,362,573		336,257		3,698,830
Expired		0			0			0		0		0		0
Balance at December 31, 2023		0			27,225,001			3,777,784		3,362,573		336,257		34,701,615