| Equity | Note 3. Equity 2013 Long-Term Incentive Plan On June 20, 2013, the Company’s Board of
Directors (the “ Board 2013 Plan 20,000,000 16,618,266 The 2013 Plan is administered by the Board or
a committee designated by the Board. Subject to the provisions of the 2013 Plan, the Board has the authority to determine the officers,
employees and consultants to whom options will be granted, the number of shares covered by each option, vesting rights and the terms and
conditions of each option that is granted to them; however, no person may be granted options to purchase more than 2,000,000 shares in
any one fiscal year under the 2013 Plan, and the aggregate fair market value (determined at the time the option is granted) of the shares
with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year cannot exceed
$100,000. Options granted pursuant to the 2013 Plan are exercisable no later than ten years after the date of grant. The exercise price per share of common stock for
options granted under the 2013 Plan is the fair market value of the Company's common stock on the date of grant, using the closing price
of the Company's common stock on the last trading day prior to the date of grant, except for incentive stock options granted to a holder
of ten percent or more of the Company's common stock, for whom the exercise price per share will not be less than 110% of the fair market
value. Common Stock At September 30, 2021, the Company had 500,000,000 0.00001 87,352,364 During the three and nine months ended September
30, 2021 and 2020, the Company did not have any common stock transactions. Warrants The Company has issued warrants to purchase common
stock at various exercise prices in connection with loan agreements and private placements. The following table summarizes information
about warrants outstanding at September 30, 2021 and December 31, 2020:
Summary of warrants outstanding
Shares
of Common Stock Issuable from Warrants Outstanding as of Weighted
September
30, December
31, Average
Description 2021 2020 Exercise
Price Expiration
Series E - 584,416 $ 1.54 September 9, 2021
Series F 7,246 7,246 $ 3.45 February 23, 2022 March 9, 2022
Series G 460,250 460,250 $ 2.68 July 21, 2022
Series H 910,000 910,000 $ 2.75 October 16, 2022
Series I 10,335,000 10,335,000 $ 2.00 November 26, 2025
Total 11,712,496 12,296,912 During the three months ended September 30, 2021,
all the Series E Warrants expired unexercised. Stock Options The following table summarizes stock option activity
for the six months ended September 30, 2021:
Summary of stock option activity
Number of Options Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($)
Outstanding at December 31, 2020 5,895,570 2.45 5.14 1,650
Granted 50,000 1.72 9.82 -
Forfeited (2,805,571 ) 2.74
Outstanding at September 30, 2021 3,139,999 2.17 4.79 1,650
Vested and exercisable at September 30, 2021 2,564,999 1.95 4.73 1,650 The valuation methodology used to determine the
fair value of stock options is the Black-Scholes Model. The Black-Scholes Model requires the use of a number of assumptions including
volatility of the stock price, the risk-free interest rate, and the expected term of the stock options. The ranges of assumptions used
in the Black-Scholes Model during the nine months ended September 30, 2021 and 2020 is set forth in the table below:
Summary of assumption of stock option activity
Nine Months Ended September 30,
2021 2020
Risk-free interest rate 0.73 % 0.021 – 1.67
Expected term in years 5.38 3.25 – 6.00
Weighted Avg. Expected Volatility 102.07 103.56 – 110.71
Expected dividend yield 0 % 0 The risk-free interest rate assumption is based
upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the expected term. Estimated
volatility is a measure of the amount by which the stock price is expected to fluctuate each year during the term of an award. Our calculation
of estimated volatility is based on historical stock prices over a period equal to the term of the awards. The average expected life is
based on the contractual terms of the stock option using the simplified method. We utilize a dividend yield of zero based on the fact
that we have never paid cash dividends and have no current intention to pay cash dividends. Future stock-based compensation may significantly
differ based on changes in the fair value of our Common Stock and our estimates of expected volatility and the other relevant assumptions. The following table sets forth the share-based
compensation cost resulting from stock option grants, including those previously granted and vesting over time, that were recorded in
the Company’s Statements of Operations for the three and nine months ended September 30, 2021 and 2020:
Summary of consolidated statement of operations
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Research and development $ 224,000 $ 455,271 $ 731,438 $ 1,087,147
General and administrative 44,000 664,544 (1,138,601 ) 2,084,953
Total $ 268,000 $ 1,119,815 $ (407,163 ) $ 3,172,100 Nine Months Ended September 30, 2021 On July 26, 2021, in connection with an Executive
Services Consulting Agreement of the same date, the Company granted Justin Frere, the Company’s Chief Financial Officer, an option
to purchase up to 50,000 1.72 10 During the first half of 2021, certain individuals
resigned from the Company resulting in the forfeiture and cancellation of 2,805,571 1,314,705 268,000 907,541 |
