STOCK OPTIONS AND WARRANTS

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE 11 – STOCK OPTIONS AND WARRANTS

In connection with a consulting agreement dated March 7, 2022, the Company issued 200,000 options at an exercise price of $0.58 per share. These options vest one-fourth each six months over a period of two years and had a term of three years. The grant date fair value was $55,966. The Company recorded compensation expense in the amount of $18,318 for December 31, 2022 and, as of that date, there was $37,648 of total unrecognized compensation cost related to non-vested portion of options granted. In addition, there were 200,000 options outstanding, of which 100,000 and 50,000 were exercisable as December 31, 2022 with a weighted average remaining term of 1.31 years.

On June 3, 2023, the Company canceled Ken Water's 200,000 Options, of which 150,000 vested as of the cancellation date. On the same date, the Company agreed to issue 1,000,000 replacement options with a vesting date of June 3, 2023. The Company interprets this as concurrent replacement award and, as such, will account for it as a modification.

The following table summarizes the accounting effects of the modification: 

	June 3, 2023
	Replacement Award
Fair value of new award	$	60,472
Fair value of original award on modification date	$	1,377
Incremental cost	$	59,095
Unrecognized grant-date fair value of original award on modification date	$	37,647
Cost to be recognized after modification	$	96,742
Recognition Period		24 months

Significant inputs and results arising from the Black-Scholes process are as follows for the options:

Quoted market price on valuation date	$	0.3480
Exercise price	$	0.3600
Expected life (in years)		1.50 Years
Equivalent volatility		32.88	%
Interest rates		4.50	%

Stock option activity for the three months ended March 31, 2024 is summarized as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Options outstanding December 31, 2023		1,000,000		0.3600		1.01
Issued		—		—		—
Exercised		—		—		—
Cancelled		—		—		—
Options outstanding March 31, 2024		1,000,000		0.3600		0.76
Options exercisable March  31, 2024		1,000,000	$	0.3600		0.76

In connection with a different consulting agreement dated March 1, 2023, the Company initially agreed to pay 2,000,000 shares of common stock, along with a monthly consulting fee. This common stock was valued at $0.42 on the date of the agreement and was amortized equally over the six-month agreement. On July 1, 2023, the Company and consultant decided to amend the agreement so that the consultant would receive 3,250,000 warrants valued at $0.001 in replacement for the stock and extend the agreement until June 30, 2024. The agreement was amended again on September 15, 2023 resulting in an additional 500,000 warrants being issued and the agreement extended until September 15, 2025. This resulted in an additional $602,179 in consulting expenses which will be equally amortized over the following twelve month.

Significant inputs and results arising from the Black-Scholes process are as follows for the warrants:

Schedule of assumptions
Quoted market price on valuation date	$	0.3100
Effective contractual strike price	$	0.0013
Market volatility		373	%
Contractual term to maturity		2 years
Risk-adjusted interest rate		4.87	%

Stock warrant activity for the three months ended March 31, 2024 is summarized as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Warrants exercisable December 31, 2023		3,750,000	$	0.001		1.50
Issued		—		—		—
Exercised		—		—		—
Expired		—		—		—
Warrants outstanding March 31, 2024		3,750,000		0.001		1.25
Warrants exercisable March 31, 2024		3,750,000	$	0.001		1.25