STOCK OPTIONS AND WARRANTS

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

STOCK OPTIONS AND WARRANTS

16 - STOCK OPTIONS AND WARRANTS

Options

During the six months ended June 30, 2023, the Company granted options to purchase an aggregate of 75,000 shares of common stock under the Company’s 2022 performance equity plan with a weighted average exercise price of $2.61.

The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model using the assumptions noted as follows: expected volatility was based on the historical volatility of a peer group of companies; the expected term of options granted was determined using the simplified method under SAB 107, which represents the mid-point between the vesting term and the contractual term; and the risk-free rate is calculated using the U.S. Treasury yield curve and is based on the expected term of the option.

The Black-Scholes option pricing model was used with the following weighted assumptions for options granted during the period:

Schedule of Black-Scholes option pricing model was used with the following weighted assumptions for options granted

	June 30, 2023
Risk-free interest rate	0.52 – 4.92%
Expected option life	6 months – 48 months
Expected volatility	39.77 – 66.59%
Expected dividend yield	-%
Exercise price	$1.40 – 4.00

The following table summarizes stock option activity for the three months ended June 30, 2023:

Schedule of stock option activity

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2022		1,910,484		$	2.55		9.8	$	-
Granted		75,000			2.61
Exercised		-			-
Expired		-			-
Forfeited		(259,158	)		2.03
Outstanding at June 30, 2023		1,726,326		$	2.63		9.2	$	1,472,448
Exercisable at June 30, 2023		50,000		$	3.05		4.9	$	5,000

The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expense of $204,814 for the three months ended June 30, 2023 and $372,387 for the six months ended June 30, 2023. No stock compensation expense was recorded during the three and six months ended June 30, 2022. Unamortized option expense as of June 30, 2023, for all options outstanding amounted to $1,393,537. These costs are expected to be recognized over a weighted average period of 2.1 years.

A summary of the status of the Company’s nonvested options as of June 30, 2023, is presented below:

Nonvested options

	Number of Nonvested Options			Weighted Average Grant Date Fair Value
Nonvested options at December 31, 2022		1,910,484		$	2.55
Granted		75,000			2.61
Forfeited		(259,158	)		2.03
Vested		50,000			3.05
Nonvested options at June 30, 2023		1,676,326			2.62

Warrants

In connection with certain private placements funded by certain of our officers and directors prior to our initial public offering, we issued notes and warrants. The warrants were contingent upon, and became effective only upon, consummation of our initial public offering on August 11, 2022. In total, 695,000 of such warrants were issued to certain of our officers and directors with a weighted average exercise price of $4.20. These warrants are exercisable for five years.

Also, in conjunction with the initial public offering, the Company issued 135,000 warrants to the underwriter of the initial public offering, Maxim, with an exercise price of $4.40. These warrants are exercisable for five years.

Also, in connection with certain private placements with a third-party investor, the Company issued 920,000 warrants with an exercise price of $4.00. These warrants are exercisable for five years. In connection with such private placements, we also issued 32,000 warrants to Maxim (which served as agent for such private placement) at an exercise price of $4.40. These warrants are exercisable for five years.

On September 16, September 30, and October 20, 2022 in conjunction with a financing with the same third-party investor, we issued 517,500, 352,188 and 366,562 warrants with an exercise price of $4.00 per share. These warrants were subsequently cancelled and reissued at $2.00 per share.

On February 15, 2023 in conjunction with an advisory agreement, we issued 250,000 warrants with an exercise price of $4.00 per share.

On April 16, 2023 in conjunction with an agreement with certain lenders, we issued 1,000,000 warrants with an exercise price of $3.00 per share and 250,000 warrants with an exercise price of $4.00 per share. Under this agreement, these lenders would be forced to convert under trigger prices ranging between $3.00 per share - $4.00 per share. On June 19, 2023, we modified this agreement to convert all of related outstanding debt within two trading days in exchange for a reduction in the exercise price of these warrants from $3.00 or $4.00 per share to $2.50 per share. In conjunction with these transactions we recorded non-cash financing expenses of $259,074.

The following table summarizes warrant activity for the six months ended June 30, 2023:

	Number of Shares Issuable Upon Exercise of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2022		3,018,250		$	2.64		4.8	$	-
Issued		1,500,000			2.75
Exercised		(2,556,250	)		2.08		-
Expired		-			-		-
Outstanding at June 30, 2023		1,962,000		$	3.46		4.5	$	552,500
Exercisable at June 30, 2023		1,712,000		$	3.38		4.4	$	552,500

During the six months ended June 30, 2023, 1,500,000 shares were issued from the exercise of warrants.