STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2022

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE H – STOCKHOLDERS’ EQUITY

[1] Stock option plans:The Company currently has two non-statutory stock option plans, the Fiscal 2001 Non-statutory Stock Option Plan (the “2001 Plan”) and the 2013 Equity Compensation Plan (the “2013 Plan”). Both plans have been adopted by our Board of Directors and approved by our shareholders. Both the 2001 Plan and the 2013 Plan have options available for future issuance. Any common shares issued as a result of the exercise of stock options would be new common shares issued from our authorized issued shares.

[2] Stock options:During Fiscal 2021 and Fiscal 2020, the Company issued 0 options to purchase shares of common stock.

As of December 31, 2022, there were $1,736,000 options issued and outstanding under the 2001 Plan. There were no options issued under the 2013 Plan, making the total issued and outstanding options 1,736,000 as of December 31, 2022. Of the total options issued and outstanding, 1,736,000 were fully vested as of December 31, 2022. As of December 31, 2022, there were 1,981,000 options available for issuance under the 2001 Plan and 4,000,000 options available under the 2013 Plan. The Company did not issue any stock options in Fiscal 2022.

Stock option activity for Fiscal 2022 and Fiscal 2021 is summarized as follows: (the figures contained within the tables below have been rounded to the nearest thousand) 

	Year Ended December 31,2022							Year Ended December 31, 2021
	Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value		Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value
Options outstanding-beginning of year		1,937,000		$	0.13				1,987,000		$	0.13
Granted		0		NA					0		NA
Exercised		0		NA					0		NA
Cancelled/expired		(201,000	)	$	0.18				(50,000	)	$	0.13
Options outstanding-end of year		1,736,000		$	0.12	$	0		1,937,000		$	0.13	$	1,000
Options exercisable-end of year		1,736,000		$	0.12				1,937,000		$	0.13

The following table presents information relating to stock options outstanding as of December 31, 2022:

	Options Outstanding						Options Exercisable
			Weighted		Weighted				Weighted
			Average		Average				Average
Range of Exercise			Exercise		Remaining				Exercise
Price	Shares		Price		Life in Years		Shares		Price
$0.07 - $0.11		910,000	$	0.11		3.59		910,000	$	0.11
$0.12 - $0.16		730,000	$	0.13		1.90		730,000	$	0.13
$0.18 - $0.26		96,000	$	0.22		0.23		96,000	$	0.22
TOTAL		1,736,000	$	0.12		2.69		1,736,000	$	0.12

The Company recognized $0 in share based payment expense related to stock options in Fiscal 2022 and Fiscal 2021. As of December 31, 2022, there was $0 of total unrecognized share based payment expense related to stock options.

[3] Warrants:

There was no warrant activity in Fiscal 2022 or Fiscal 2021.

[4] Landmark Consulting Agreement:

On March 7, 2022, the Company entered into a Financial Advisory Agreement (the “Agreement”) with Landmark Pegasus, Inc. (‘Landmark”). The Agreement provided that Landmark would provide certain financial advisory services for a minimum period of 3 months (which period commenced on February 28, 2022), and as consideration for these services, the Company would pay Landmark (a) a retainer fee consisting of 500,000 restricted shares of common stock and a warrant to purchase 2.75 million shares of the Company’s common stock at a strike price equal to the average closing price of the Company’s common shares for the 30 days preceding the Agreement, or $0.035 per share, resulting in gross proceeds to the Company in the amount of $96,250. The warrant would vest upon the closing of a transaction involving Landmark or upon the invocation of a “Breakup Fee”.

In a subsequent amendment, the terms of the warrant were changed to reflect that the warrant would be issued immediately preceding the closing of a transaction involving Landmark or immediately upon the invocation of the Breakup Fee. In each case, the warrant would vest immediately (i.e. the warrant would be 100% immediately exercisable).

The Breakup Fee would be invoked upon the generation of a specific transaction which meets certain criteria agreed upon by both the Company and Landmark; which transaction is then rejected by the Company. The Company will also pay to Landmark a “Success Fee” for the consummation of a transaction closing during the term of the Agreement and for 12 months thereafter, between the Company and any party first introduced to the Company by Landmark, or with any party the Company has specifically requested that Landmark assistance with the transaction.

Upon invocation of the Breakup Fee or payment of the Success Fee, the Company will also issue an additional 250,000 restricted shares of the Company’s common stock.

In the event that the Company consummates a transaction involving the provision of services to any party introduced to the Company by Landmark or with any party the Company has specifically requested Landmark’s assistance with, the Company will pay Landmark 10% of any revenues received from the transaction, unless this percentage is modified by both the Company and Landmark in writing. There is no material relationship between the Company and Landmark, other than with respect to the Agreement.

The Agreement expired on May 28, 2022. As of December 31, 2022 and as of the date of this report, no additional shares or warrants have been issued as the Breakup Fee has not been invoked nor has a Success Fee been required.

[5] Securities Purchase Agreement:

On October 18, 2021, the Company entered into a Securities Purchase Agreement (the “SPA”) with a non-affiliated, accredited investor (the “Investor”), pursuant to which the Company sold to the Investor in a private placement (the “Private Placement”), 2,500,000 shares of its common stock, par value $0.01 per share (“Common Share”), at a price per Common Share of $0.04 (the “Purchase Price”) for gross (and net) proceeds of $100,000 as there were no costs associated with the Private Placement.

[6] Shares issued in lieu of cash for interest:

On August 18, 2021, the Company issued 625,000 restricted shares of common stock to Cherokee in lieu of paying the $25,000 August 2021 interest payment in cash. The closing price of the Company’s common shares on the date of the payment in lieu of cash was $0.04.

[7] Lincoln Park Equity Line of Credit:

On December 9, 2020, the Company entered into a Purchase Agreement and a Registration Rights Agreement with Lincoln Park (together the “Agreements”) under which Lincoln Park agreed to purchase from the Company, from time to time, up to $10,250,000 of its shares of common stock, par value $0.01 per share, subject to certain limitations set forth in the Agreements, during their term (two years). A Form S-1 Registration Statement was declared effective by the SEC on January 11, 2021. In Fiscal 2021, the Company sold 500,000 shares of common stock that represented the balance of an initial purchase and 6,000,000 shares of common stock to Lincoln Park as Regular Purchases. The Company received proceeds of $639,000 from these purchases. The Company’s last sale to Lincoln Park was in October 2021.

The Company did not sell any shares of common stock to Lincoln Park in Fiscal 2022 as the closing price of the Company’s shares of common stock did not exceed $0.05 (which was a requirement under the terms of the Agreements). The Agreements expired on December 9, 2022.