Stockholders’ Equity

6 Months Ended

Dec. 31, 2021

Equity [Abstract]

Stockholders’ Equity

Note 6– Stockholders’ Equity

Common stock

In May 2021, the Board of Directors authorized the issuance of a total of 2,500,000 shares of common stock of the Company to each of its Chief Executive Officer and Chief Financial Officer, with 250,000 of such shares to be issued to each of them every quarter beginning July 1, 2021 and continuing every three months through October 1, 2023, it being the intent of the Board that the issuance of these shares represents compensation for services rendered for the then completed calendar quarter. At December 31, 2021, the Company has included as a component of Stockholders’ Equity the $35,000 fair value of the aggregate 500,000 shares issued January 1, 2022 for the quarter ended December 31, 2021. During the six months ended December 31, 2021, the Company issued, pursuant to the agreement, an aggregate 1,000,000 shares, valued at $70,000, for the quarters ended September 30, 2021 and June 30, 2021.

During the six months ended December 31, 2020, the Company issued shares of its common stock as follows:

● 1,797,192 shares, at $0.014 per share, to its CEO for conversion of a note payable in the principal amount of $25,000 and accrued interest of $161. No gain or loss was recognized on conversion as the conversion was made under the terms of the note agreement.

● 150,000 shares valued at $13,500, $0.09 per share, as consideration for consulting services.

CRX Limited Liability Company Interest Purchase Agreement

On October 26, 2018, Company entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with the members of CRx Bio Holdings LLC, a Delaware limited liability company (“CRx”), to acquire all of the membership interest in CRx in exchange for 11,000,000 restricted shares of the Company’s common stock (the “Acquisition”), valued at $0.76 per share. The transaction has been accounted for as an asset acquisition, and not a business combination, and has been valued at the fair value of the common stock issued by the Company, as CRx’s cost basis was $0 in the assets. CRx was engaged in the research and development of advanced cannabinoid formulations and drug delivery systems with a focus on bioavailability and related pharmacokinetics and pharmacodynamics (PK/PD) enhancement. The Acquisition transaction was consummated on October 26, 2018. By acquiring CRx as a wholly-owned subsidiary, the Company acquired all of its assets, which consist primarily of three U.S. provisional patent applications relating to cannabinoid formulations to treat convulsive disorders, chronic traumatic encephalopathy, and neuropathic pain. At the closing, the Company issued to the six members of CRx (the “Sellers”) 1,100,000 shares not subject to any forfeiture restrictions and 9,900,000 shares which were to be released from forfeiture restrictions in three equal tranches upon each anniversary of the closing of the Acquisition.

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6- Stockholders’ Equity (continued)

Any Seller who was not then providing services to the Company or any of its subsidiaries on any vesting date, whether through voluntary termination or termination “for cause,” would forfeit his unvested shares, which would be cancelled.

The transaction was valued at $8,360,000, based on the fair value of the 11,000,000 shares issued of $0.76 per share, as per the closing market price of the Company’s common stock on the date of the agreement. The $836,000 fair value of the 1,100,000 shares issued not subject to any forfeiture restrictions was charged to operations during the six months ended December 31, 2018. The $7,524,000 fair value of the 9,900,000 shares subject to forfeiture was charged to stockholders’ equity as a contra equity account, and was being amortized over the vesting periods. The net amount charged to stockholder’s equity was $0 on the date of the acquisition.

Effective December 31, 2018, one of the Sellers resigned from the Company and forfeited 1,732,500 unvested shares previously issued. In May 2019, that Seller returned to the Company an additional 142,500 vested shares issued in accordance with the Purchase Agreement. The fair value of the returned shares was credited to the operations as of June 30, 2019.

In March 2021, four of the Sellers terminated their relationships with the Company and forfeited their remaining 2,409,000 unvested shares, valued at the original issuance price of $1,830,840 ($0.76 per share).

As at December 31, 2021, all shares issued were fully vested and an aggregate $5,104,159 was charged to operations for the value of vested shares issued and the amortization of the unvested CRX shares. For the six months ended December 31, 2021 and 2020, $223,255,000 and $1,308,049, respectively, has been charged to operations for the amortization of unvested CRX shares during each of the periods.

2017 Stock Incentive Plan

On August 10, 2017, the Company adopted the “2017 Stock Incentive Plan” and granted an aggregate of 6,400,000 shares of Common Stock to five officers and directors of the Company, valued at $800,000 ($0.125 per share). In March 2018, 1,166,667 unvested shares (valued at $145,833) previously issued to the Company’s former Chief Executive Officer were canceled. On July 25, 2018, the Company accelerated the vesting of 1,083,342 unvested shares of Common Stock previously granted to its former Chief Executive Officer and Chief Financial Officer. All 5,233,333 shares issued (valued at $654,167) have been vested.

2018 Equity Incentive Plan

(i) On March 30, 2018, the Company’s board of directors approved and recommended for adoption by the stockholders of the Company a 2018 Equity Incentive Plan and has reserved 8,000,000 shares of Common Stock for issuance under the terms of that Plan.

In July 2018, the Board of Directors granted options to purchase a total of 1,810,000 shares of Common Stock, exercisable for a period of seven years, to officers/directors/consultants of the Company at an exercise price of $0.54 per share.

In August 2018, the Board of Directors granted options to purchase a total of 150,000 shares of Common Stock, exercisable for a period of seven years, to two individuals, (i) a director and (ii) a consultant of the Company, at an exercise price of $0.38 per share. All options granted have been fully vested.

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6-Stockholders’ Equity (continued)

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

Average risk-free interest rates	2.3% - 2.8	%
Average expected life (in years)	4.0 to 7.0
Volatility	160% to 296	%

(ii) On October 17, 2018, the Board of Directors granted options to purchase an aggregate 800,000 shares of Common Stock, exercisable for a period of seven years, to officers/directors of the Company at an exercise price of $0.655 per share and confirmed a grant of options made as of October 1, 2018, to purchase 500,000 shares of Common Stock, exercisable for a period of seven years, to an officer and director of the Company at an exercise price $0.48. All of the options were fully vested as of the date of grant

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

Average risk-free interest rates	2.88% - 2.93	%
Average expected life (in years)	4.0
Volatility	171% to 172	%

(iii) On August 19, 2020, the Board of Directors authorized the issuance of an aggregate 5,000,000 options to three officers of the Company, exercisable at $0.08 per share for a seven-year period from the date of grant. As of the date of grant, 3,333,334 options were fully vested and the balance of 1,666,666 options vested quarterly over the next four calendar quarters beginning September 30, 2020.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

Average risk-free interest rates	.23	%
Average expected life (in years)	4.0
Volatility	152	%

The fair value of the vested options granted of $315,350 was charged to operations during the year ended June 30, 2021.

A summary of option activity during the six months ended December 31, 2021 is presented below:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding and exercisable – June 30, 2021		7,995,000	$	0.26		4.5
Granted		-
Exercised		-
Expired/Canceled		-
Outstanding and exercisable -December 31, 2021		7,995,000	$	0.26		4.2

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6 – Stockholders’ Equity (continued)

Warrants

On November 24, 2020, the Company issued warrants for the acquisition of common shares as partial consideration for the issuance of convertible notes.

The following table summarizes information about warrants outstanding at December 31, 2021:

	Number		Exercise Price		Expires
Class A		1,727,299	$	0.040265	November 24, 2025
Class B		1,727,299	$	0.043276	November 24, 2025
Class C		1,727,299	$	0.045157	November 24, 2025

The fair value of the warrants granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

Average risk-free interest rates	.39	%
Average expected life (in years)	2.5
Volatility	153	%

The relative fair value of the warrants granted of $252,104 was charged to operations at the date of grant.