Cover
Cover | 12 Months Ended |
Dec. 31, 2022 | |
Cover [Abstract] | |
Entity Registrant Name | ZIVO BIOSCIENCE, INC. |
Entity Central Index Key | 0001101026 |
Document Type | S-1 |
Amendment Flag | false |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Filer Category | Non-accelerated Filer |
Entity Incorporation State Country Code | NV |
Entity Tax Identification Number | 87-0699977 |
Entity Address Address Line 1 | 21 East Long Lake Road |
Entity Address Address Line 2 | Suite 100 |
Entity Address City Or Town | Bloomfield Hills |
Entity Address State Or Province | MI |
Entity Address Postal Zip Code | 48304 |
City Area Code | 248 |
Local Phone Number | 452-9866 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash | $ 1,799,263 | $ 8,901,875 |
Prepaid expenses | 102,416 | 58,078 |
Total current assets | 1,901,679 | 8,959,953 |
PROPERTY AND EQUIPMENT, NET | 0 | 0 |
OTHER ASSETS: | ||
Operating lease - right of use asset | 189,282 | 27,225 |
Security deposit | 32,058 | 3,000 |
Total other assets | 221,340 | 30,225 |
TOTAL ASSETS | 2,123,019 | 8,990,178 |
CURRENT LIABILITIES: | ||
Accounts payable | 490,670 | 654,333 |
Current portion of long-term operating lease | 99,259 | 15,178 |
Convertible debentures payable | 240,000 | 240,000 |
Deferred R&D obligations - participation agreements | 525,904 | 1,106,320 |
Deferred R&D obligations - participation agreements related parties | 175,427 | 369,037 |
Accrued interest | 98,286 | 95,886 |
Accrued liabilities - payroll and directors fees | 398,176 | 467,215 |
Total current liabilities | 2,027,722 | 2,947,969 |
LONG TERM LIABILITIES: | ||
Long-term operating lease, net of current portion | 105,919 | 0 |
Total long-term liabilities | 105,919 | 0 |
TOTAL LIABILITIES | 2,133,641 | 2,947,969 |
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Common stock, $0.001 par value, 150,000,000 and 150,000,000 shares authorized as of December 31, 2022 and December 31, 2021; 9,419,660 and 9,419,660 issued and outstanding at December 31, 2022, and December 31, 2021, respectively | 9,420 | 9,420 |
Additional paid-in capital | 115,784,488 | 113,092,026 |
Accumulated deficit | (115,804,530) | (107,059,237) |
Total stockholders' equity (deficit) | (10,622) | 6,042,209 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 2,123,019 | $ 8,990,178 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement Of Financial Position Abstract | ||
Common Stock, Par value | $ 0.001 | $ 0.001 |
Common Stock, Shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 9,419,660 | 9,419,660 |
Common Stock, Shares outstanding | 9,419,660 | 9,419,660 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
REVENUE: | ||
Service Revenue | $ 0 | $ 0 |
Total Revenues | 0 | 0 |
COSTS AND EXPENSES: | ||
General and administrative | 6,491,704 | 6,694,619 |
Research and development | 2,240,270 | 1,950,500 |
Total Costs and Expenses | 8,731,974 | 8,645,119 |
LOSS FROM OPERATIONS | (8,731,974) | (8,645,119) |
OTHER INCOME (EXPENSE): | ||
Gain of forgiveness of debt and accrued interest | 0 | 122,520 |
Interest expense - related parties | 0 | (188,605) |
Interest expense | (13,319) | (44,677) |
Total Other Expense | (13,319) | (110,762) |
NET LOSS | $ (8,745,293) | $ (8,755,881) |
BASIC AND DILUTED LOSS PER SHARE | $ (0.93) | $ (1.15) |
WEIGHTED AVERAGE | ||
BASIC AND DILUTED SHARES OUTSTANDING | 9,419,660 | 7,629,069 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2020 | 5,162,945 | |||
Balance, amount at Dec. 31, 2020 | $ (11,310,614) | $ 5,163 | $ 86,987,579 | $ (98,303,356) |
Employee and director equity-based compensation | 2,970,027 | 2,970,027 | ||
Issuance of common stock for cash - related party, shares | 4,464 | |||
Issuance of common stock for cash - related party, amount | 50,000 | $ 4 | 49,996 | |
Issuance of common stock for cash, shares | 139,664 | |||
Issuance of common stock for cash, amount | 1,514,969 | $ 140 | 1,514,829 | |
Issuance of warrants pursuant to the participation agreements | 55,697 | 55,697 | ||
Common stock issued on cashless warrant exercise, shares | 54,361 | |||
Common stock issued on cashless warrant exercise, amount | 0 | $ 54 | (54) | |
Public offering issuance of stock and warrants, shares | 2,910,000 | |||
Public offering issuance of stock and warrants, amount | 14,548,500 | $ 2,910 | 14,545,590 | |
Fractional Shares from Split, shares | (99) | |||
Fractional Shares from Split, amount | 0 | |||
Underwriting and other expenses for public offering | (1,697,828) | (1,697,828) | ||
Warrants sold as part of the public offering | 4,240 | 4,240 | ||
Common stock issued on registered warrant exercise, shares | 198,503 | |||
Common stock issued on registered warrant exercise, amount | 1,091,767 | $ 199 | 1,091,568 | |
Common stock issued on conversion of 11% Convertible Debt and accrued interest, shares | 942,322 | |||
Common stock issued on conversion of 11% Convertible Debt and accrued interest, amount | 7,538,557 | $ 942 | 7,537,615 | |
Stock issued for services, shares | 7,500 | |||
Stock issued for services, amount | 32,775 | $ 8 | 32,767 | |
Net loss for the twelve months ended December 31, 2021 | (8,755,881) | (8,755,881) | ||
Balance, shares at Dec. 31, 2021 | 9,419,660 | |||
Balance, amount at Dec. 31, 2021 | 6,042,209 | $ 9,420 | 113,092,026 | (107,059,237) |
Employee and director equity-based compensation | 2,692,462 | 2,692,462 | ||
Net loss for the twelve months ended December 31, 2021 | (8,745,293) | (8,745,293) | ||
Balance, shares at Dec. 31, 2022 | 9,419,660 | |||
Balance, amount at Dec. 31, 2022 | $ (10,622) | $ 9,420 | $ 115,784,488 | $ (115,804,530) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net Loss | $ (8,745,293) | $ (8,755,881) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock issued for services rendered | 0 | 32,775 |
Gain on forgiveness of debt and accrued interest | 0 | (122,520) |
Employee and director equity-based compensation expense | 2,692,462 | 2,970,027 |
Non-cash lease expense | 79,637 | 22,138 |
Amortization of deferred R&D obligations - participation agreements | (774,025) | (555,745) |
Changes in assets and liabilities: | ||
Prepaid expenses | (44,338) | (28,125) |
Security deposits | (29,058) | 0 |
Accounts payable | (163,663) | (905,295) |
Advanced payments for R&D obligations - participation agreements | 85,304 | |
Lease liabilities | (51,695) | (29,171) |
Accrued liabilities | (66,639) | 483,160 |
Net cash (used) in operating activities | (7,102,612) | (6,803,333) |
Cash flows from investing activities: | ||
Net cash (used) in investing activities | 0 | 0 |
Cash Flow from Financing Activities: | ||
Proceeds of loans payable, other | 628,600 | 190,500 |
Payment of loans payable, other | (628,600) | (190,500) |
Proceeds from sale of common stock warrants - participation agreements | 0 | 55,697 |
Proceeds from public sale of common stock | 0 | 15,644,507 |
Expenses related to public offering | 0 | (1,697,828) |
Proceeds from sale of common stock, related party | 0 | 50,000 |
Proceeds from sales of common stock | 0 | 1,514,970 |
Net cash provided by financing activities | 0 | 15,567,346 |
Increase (decrease) in cash | (7,102,612) | 8,764,013 |
Cash at beginning of period | 8,901,875 | 137,862 |
Cash at end of period | 1,799,263 | 8,901,875 |
Cash paid during the period for: | ||
Interest | 10,920 | 3,084 |
Income taxes | $ 0 | $ 0 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2022 | |
DESCRIPTION OF BUSINESS | |
DESCRIPTION OF BUSINESS | NOTE 1 - DESCRIPTION OF BUSINESS The business model of Zivo Bioscience, Inc. and its subsidiaries (Health Enhancement Corporation, HEPI Pharmaceuticals, Inc., Zivo Bioscience, LLC, Wellmetrix, LLC, WellMetris, LLC, Zivo Biologic, Inc., ZIVOLife, LLC, and Zivo Zoologic, Inc. (collectively the “Company”)) is to derive future income from licensing and selling natural bioactive ingredients derived from their proprietary algae cultures to animal, human and dietary supplement and medical food manufacturers. |
REVISION OF PREVIOUSLY ISSUED F
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | |
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | NOTE 2 - REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS Equity-Based Compensation Errors were identified in the historical financial statements related to the valuation and expense of equity-based compensation for management and the members of the Company’s board of directors. The Company accounts for stock-based compensation in accordance with ASC 718. Under the provisions of ASC 718, stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized as expense over the requisite service period. At the date of grant, the Company determines the fair value of the stock option award using the Black Scholes option pricing model. The Company made errors in the application of the Black Scholes option valuation model by applying an inappropriate methodology in determining the expected term of granted options. Based on the limited history relating to exercises of options, the Company determined that the best method for determining the expected life of an option grant is the simplified method. After recalculating the valuations and reviewing the periodic reported expense for all the options issued as equity-based compensation, the Company concluded that, in aggregate, it had overstated the equity-based compensation. In accordance with SEC Staff Accounting Bulletin No. 99, Materiality, and SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements; the Company evaluated the change and has determined that the related impact was not material to any previously presented financial statements. As such the Company corrected the error in the consolidated financial statements for the year ended December 31, 2021. The impact of the revision on the Company’s previously released financial statements that are referenced in this form 10-K are reflected in the following tables. CONSOLIDATED BALANCE SHEET as of December 31, 2021 As Previously Reported Adjustment As Revised Additional paid-in capital $ 114,259,830 $ (1,167,804 ) $ 113,092,026 Accumulated deficit (108,227,041 ) 1,167,804 (107,059,237 ) CONSOLIDATED STATEMENTS OF OPERATIONS for the Year Ended December 31, 2021 As Previously Reported Adjustment As Revised General and Administrative $ 6,932,921 $ (238,302) $ 6,694,619 Research and Development 2,119,684 (169,184) 1,950,500 Total costs and expenses 9,052,605 (407,486) 8,645,119 LOSS FROM OPERATIONS (9,052,605 ) 407,486 (8,645,119 ) NET LOSS (9,163,366 ) 407,485 (8,775,881 ) BASIC AND DILUTED LOSS PER SHARE $ (1.20 ) $ 0.05 $ (1.15 ) CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) For the Year Ended December 31, 2021 As Previously Reported Adjustment As Revised Balance, December 30, 2020 - Additional Paid in Capital $ 87,747,898 $ (760,319 ) $ 86,987,579 Balance, December 30, 2020 - Accumulated Deficit (99,063,675 ) 760,319 (98,303,356 ) Employee and director equity-based compensation - Additional Paid in Capital 3,377,512 (407,485 ) 2,970,027 Employee and director equity-based compensation - Total 3,377,512 (407,485 ) 2,970,027 Net loss for the year ended December 31, 2021 - Accumulated Deficit (9,163,366 ) 407,485 (8,775,881 ) Net loss for the year ended December 31, 2021 - Total (9,163,366 ) 407,485 (8,775,881 ) Balance, December 31, 2021 - Additional Paid in Capital 114,259,830 (1,167,804 ) 113,092,026 Balance, December 31, 2021 - Accumulated Deficit $ (108,227,041 ) $ 1,167,804 $ (107,059,237 ) CONSOLIDATED STATEMENT OF CASH FLOWS for the Year Ended December 31, 2021 As Previously Reported Adjustment As Revised Net Loss $ (9,163,366 ) $ 407,485 $ (8,775,881 ) Employee and director equity compensation 3,377,512 (407,485 ) 2,970,027 |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2022 | |
GOING CONCERN | |
GOING CONCERN | NOTE 3 - GOING CONCERN The Company has incurred net losses since inception, experienced negative cash flows from operations for the year ended December 31, 2022 and has an accumulated deficit of $115.8 million. The Company has historically financed its operations primarily through the issuance of common stock, warrants, and debt. The Company expects to continue to incur operating losses and net cash outflows until such time as it generates a level of revenue to support its cost structure. There can be no assurance that the Company will achieve profitable operations, and, if achieved, whether it will be sustained on a continued basis. The Company intends to fund ongoing activities by utilizing its current cash on hand and by raising additional capital through equity or debt financings. There can be no assurance that the Company will be successful in raising that additional capital or that such capital, if available, will be on terms that are acceptable to the Company. If the Company is unable to raise sufficient additional capital, the Company may be compelled to reduce the scope of its operations and planned capital expenditures. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. The Company’s consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business; no adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Zivo Bioscience, Inc. and its wholly-owned subsidiaries, Health Enhancement Corporation, HEPI Pharmaceuticals, Inc., Wellmetrix, LLC, Wellmetris, LLC, Zivo Bioscience, LLC, Zivo Biologic, Inc., ZIVOLife, LLC, and Zivo Zoologic, Inc. All significant intercompany transactions and accounts have been eliminated in consolidation. Accounting Estimates The Company’s consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements and reported amount of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results could differ from those estimates. Management uses its best judgment in valuing these estimates and may, as warranted, solicit external professional advice and other assumptions believed to be reasonable. Cash For the purpose of the statements of cash flows, cash equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company maintains cash and cash equivalents balances at financial institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At times, balances in certain bank accounts may exceed the FDIC insured limits. At December 31, 2022 and 2021, the Company did not have any cash equivalents. Property and Equipment Property and equipment consist of furniture and office equipment and are carried at cost less allowances for depreciation and amortization. Depreciation and amortization are determined by using the straight-line method over the estimated useful lives of the related assets. Repair and maintenance costs that do not improve service potential or extend the economic life of an existing fixed asset are expensed as incurred. Leases ASC 842, Leases ROU assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are recorded as current portion of long-term operating lease, and within long-term liabilities as long-term operating lease, net of current portion on the Company’s Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021. Lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Generally, we do not consider any additional renewal periods to be reasonably certain of being exercised, as comparable locations could generally be identified within the same trade areas for comparable lease rates. Because the Company's leases do not provide an implicit rate of return, the Company used its incremental borrowing rate in determining the present value of lease payments. We have elected the practical expedient not to separate lease and nonlease components for all of our building leases. Revenue Recognition Revenue is recognized in accordance with ASC 606, which utilizes five steps to determine whether revenue can be recognized and to what extent: (i) identify the contract with a customer; (ii) identify the performance obligation(s); (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) determine the recognition period. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, Revenue from Contracts with Customers Significant judgments exercised by management include the identification of performance obligations, and whether such promised goods or services are considered distinct. The Company evaluates promised goods or services on a contract-by-contract basis to determine whether each promise represents a good or service that is distinct or has the same pattern of transfer as other promises. A promised good or service is considered distinct if the customer can benefit from the good or service independently of other goods/services either in the contract or that can be obtained elsewhere, without regard to contract exclusivity, and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contact. If the good or service is not considered distinct, the Company combines such promises and accounts for them as a single combined performance obligation. Research and Development Research and development (“R&D”) costs are expensed as incurred. The Company’s R&D costs, including internal expenses, consist of clinical study expenses as it relates to the biotech business and the development and growing of algae as it relates to the agtech business. External clinical studies expenses were approximately $1.4 million and $1.6 million for the years ended December 31, 2022 and 2021, respectively. Internal expenses, composed of staff salaries compose approximately $1.5 million and $800,000 for the years ended December 31, 2022 and 2021, respectively. These costs were offset by the amortization of the R&D obligation of $774,025 and $555,745 for the years ending December 31, 2022 and 2021, respectively; $193,610 of the year ended December 31, 2022 and $150,805 for the year ended December 31, 2021 of the amortization amount was attributable to related parties (see “ Note 9 - Deferred R&D Obligations - Participation Agreements Income Taxes The Company follows the authoritative guidance for accounting for income taxes. Deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The tax effects of temporary differences that gave rise to the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021 were primarily attributable to net operating loss carry forwards. Since the Company has a history of losses, and it is more likely than not that some portion or all of the deferred tax assets will not be realized, a full valuation allowance has been established. In addition, utilization of net operating loss carry-forwards is subject to a substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code. The annual limitation may result in the expiration of net operating loss carry-forwards before utilization. Stock Based Compensation The Company accounts for stock-based compensation in accordance with FASB ASC 718, Compensation - Stock Compensation. During 2022 and 2021, options were granted to employees, directors and consultants of the Company. As a result of these grants, the Company recorded expenses of $2.7 million during the year ended December 31, 2022, approximately $500,000 of this expense was for R&D and $2.2 million was attributed to G&A. During the year ending December 31, 2021 the Company recorded expenses of $3.0 million, approximately $300,000 of this expense was for R&D and $2.7 million was attributed to G&A. The fair value of options and warrants were estimated on the date of grant using the Black-Scholes option-pricing model based on the following weighted average assumptions: Year Ended December 31, 2022 2021 Expected volatility 116.42% to130.18% 123.40% to 143.97% Expected dividends 0 % 0 % Expected term 5 to 5.75 years 3.25 to 5.87 years Risk free rate 1.88 to 3.70% 0.24% to 1.34% The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions, including the expected stock price volatility. In considering the expected term of the options, the Company employs the simplified method. The Company uses this method as it does not have a history of option exercises to establish a robust estimated term based on experience. The simplified term is used for the determination of expected volatility as well as the identification of the risk free rate. Income (Loss) Per Share Basic loss per share is computed by dividing the Company’s net loss by the weighted average number of shares of common stock outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of common stock such as shares issuable pursuant to the exercise of options and warrants and conversions of debentures. Potentially dilutive securities as of December 31, 2022, consisted of 53,546 shares of common stock from convertible debentures and related accrued interest and 6,267,602 shares of common stock underlying outstanding options and warrants. Potentially dilutive securities as of December 31, 2021, consisted of 53,076 shares of common stock from convertible debentures and related accrued interest and 7,250,206 shares of common stock underlying outstanding options and warrants. For 2022 and 2021, diluted and basic weighted average shares were the same, as potentially dilutive shares are anti-dilutive. Segment Reporting The Company’s Chief Executive Officer, who is considered to be the chief operating decision maker (CODM), reviews financial information presented on a consolidated basis, accompanied by information about operating segments for purposes of making operating decisions and assessing financial performance. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance. The Company operates solely in the United States. Fair Value of Financial Instruments We account for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring basis adhering to the Financial Accounting Standards Board (“FASB”) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: · Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement date. · Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. · Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. As of December 31, 2022 and 2021, fair values of cash, prepaid, other assets, accounts payable and accrued expenses approximated their carrying values because of the short-term nature of these assets or liabilities. As of December 31, 2022 and 2021 the fair value of the convertible notes approximated their carrying value. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company has historically maintained cash balances at financial institutions which exceed the current FDIC limit of $250,000 at times during the year. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such account. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted this ASU beginning January 1, 2023. The Company has determined there is no impact of this standard on its financial statements. In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This update provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. This update is effective for fiscal years beginning after December 15, 2021. The Company has determined there is no impact of this standard on its financial statements. Recent Accounting Pronouncements Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06"), Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2021 (or December 15, 2023 for companies who meet the SEC definition of Smaller Reporting Companies), and interim periods within those fiscal years. The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | NOTE 5 - LEASES On December 17, 2020, the Company entered into a 25 ½ month lease agreement for a facility that contains office, warehouse, lab and R&D space in Ft. Myer, Florida. The lease agreement commenced on December 17, 2020 and ends on January 31, 2023. The lease agreement provided for a total rent of $54,993 over the period. Occupancy of the property commenced on December 17, 2020, and there was a 6-week rent holiday and a commencement date of February 1, 2021. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Rent is $3,291 per month from January 15, 2021 to January 31, 2022 and $1,154 from February 1, 2022 to January 31, 2023. On June 5, 2022, the Company exercised an option to extend the lease through December 31, 2024. The lease extension rent is $2,261 per month for calendar year 2023, and $2,300 per month for calendar year 2024, and totals an additional rent obligation of $54,743 of rent over the extension period. On January 14, 2022, the Company entered into a 34-month sublease agreement for a 4,843 square-foot office in Bloomfield Hills, Michigan. The Company moved its headquarters to this location. The agreement commenced on January 29, 2022 and ends on November 30, 2024. The agreement provided for a total rent of $232,464. Occupancy of the property commenced on January 29, 2022, there was a three-month rent holiday with a rent commencement date of April 29, 2022. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Rent is $7,265 per month from commencement to November 30, 2022, $7,466 from November 30, 2022 to November 30, 2023, and $7,668 from November 30, 2023 to the lease end date. The balances for our operating lease where we are the lessee are presented as follows within our consolidated balance sheet: Operating leases: Assets: December 31, 2022 December 31, 2021 Operating lease right-of-use asset $ 189,282 $ 27,225 Liabilities: Current portion of long-term operating lease $ 99,259 $ 15,178 Long-term operating lease, net of current portion 105,918 - $ 205,177 $ 15,178 The components of lease expense are as follows within our consolidated statement of operations: For the Year ended December 31, 2022 December 31, 2021 Operating lease expense $ 102,249 $ 25,879 Other information related to leases where we are the lessee is as follows: For the Year ended December 31, 2022 December 31, 2021 Weighted-average remaining lease term: Operating leases 1.94 Years 1.08 Years Discount rate: Operating leases 11.00 % 11.00 % Supplemental cash flow information related to leases where we are the lessee is as follows: For the Year ended December 31, 2022 December 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: $ 74,307 $ 32,913 Non-cash investment in ROU asset 241,694 - As of December 31, 2022, the maturities of our operating lease liability are as follows: Year Ended: Operating Lease December 31, 2023 $ 116,933 December 31, 2024 111,956 Total minimum lease payments $ 228,889 Less: Interest (23,711) Present value of lease obligations $ 205,178 Less: Current portion 99,259 Long-term portion of lease obligations $ 105,919 |
LOAN PAYABLE, RELATED PARTIES
LOAN PAYABLE, RELATED PARTIES | 12 Months Ended |
Dec. 31, 2022 | |
LOAN PAYABLE, RELATED PARTIES | |
LOAN PAYABLE, RELATED PARTIES | NOTE 6 - LOAN PAYABLE, RELATED PARTIES HEP Investments, LLC During the year ended December 31, 2021, the Company and HEP Investments, LLC (“HEP”, or “HEP Investments”) agreed to exchange the $9,000 in related party debt into an equal investment of $9,000 in the Participation Agreements (see “ Note 9 - Deferred R&D Obligations - Participation Agreements |
CONVERTIBLE DEBT
CONVERTIBLE DEBT | 12 Months Ended |
Dec. 31, 2022 | |
CONVERTIBLE DEBT | |
CONVERTIBLE DEBT | NOTE 7 - CONVERTIBLE DEBT HEP Investments, LLC - Related Party On December 2, 2011, the Company and HEP Investments entered into the following documents, effective as of December 1, 2011, as amended through May 16, 2018: (i) a Loan Agreement under which the HEP Investments agreed to advance up to $20,000,000 to the Company, subject to certain conditions, (ii) an 11% Convertible Secured Promissory Note in the principal amount of $20,000,000 (“Convertible Note”) (of which a total of $18,470,640 was funded, with a total of $14,380,298 converted into 1,796,287 shares of common stock, leaving a balance advanced of $4,090,342 as of December 31, 2020), (iii) a Security Agreement, under which the Company granted HEP Investments a security interest in all of its assets, (iv) warrants issued to HEP Investments to purchase 20,833 shares of common stock at an exercise price of $9.60 per share (including a cashless exercise provision) which expired September 30, 2016, (v) a Registration Rights Agreement with respect to all the shares of common stock issuable to HEP Investments in connection with the Loan Agreement, in each case subject to completion of funding of the full $20,000,000 called for by the Loan Agreement, and (vi) an Intellectual Property security agreement under which the Company and its subsidiaries granted HEP Investments a security interest in all their respective intellectual properties, including patents, in order to secure their respective obligations to HEP Investments under the Convertible Note and related documents. The Convertible Note was originally convertible into the Company’s common stock at $8.00 per share. In addition, the Company’s subsidiaries guaranteed the Company’s obligations under the Convertible Note. On March 31, 2021, HEP Investments entered into a “Debt Extension and Conversion Agreement” with the Company providing that the Convertible Notes, including principal and accrued interest, would automatically convert into shares of common stock upon consummation of an underwritten public offering of the Company’s common stock. On June 2, 2021, in accordance with the Debt Extension and Conversion Agreement, all of the outstanding debt and accrued interest for the Convertible Notes was automatically converted into common stock of the Company. The principal amount of $4,090,342 and the accrued interest to June 2, 2021, of $2,161,845 totaled $6,252,187; this total amount was converted into 781,524 shares of common stock (calculated at $8.00 per share). As of December 31, 2022, the Company had no further remaining financial obligations to the HEP Investments under the terms of the Loan Agreement, the Convertible Note or the Registration Rights Agreement. Additionally, as of the conversion of the total outstanding principal and accrued interest balance, HEP Investments no longer retains a security interest in the Company’s intellectual property or other assets. In January 2019, and in connection with the Convertible Note, HEP Investments entered into a life insurance policy for Andrew Dahl, our former Chief Executive Officer. On February 23, 2021, the Company and HEP Investments entered into a Letter Agreement in which the Company agreed to pay certain premiums of $2,565 per month under the life insurance policy while payments under the Convertible Note remained outstanding. Upon conversion of the Convertible Notes on June 2, 2021, the Company immediately stopped paying the premiums under the life insurance policy. Paulson Investment Company, LLC - Related Debt The Company previously entered into a Placement Agent Agreement with Paulson Investment Company, LLC (“Paulson”). The Placement Agent Agreement provided that Paulson could provide up to $2 million in financings to “accredited investors”. The Company received gross proceeds of $1,250,000 in connection with loans received from the “New Lenders”. Each loan included (i) a Loan Agreement, (ii) a Convertible Secured Promissory Note (“New Lenders Notes”) in the principal amount of the loan, (iii) a Security Agreement under which the Company granted the New Lenders a security interest in all of its assets and (iv) an Intercreditor Agreement with HEP Investments whereby HEP Investments and the New Lenders agree to participate in all collateral on a pari passu basis. The New Lender Notes had a two-year term and matured September 2018 ($600,000) and October 2018 ($650,000). Paulson received a 10% cash finance fee for monies invested in the Company in the form of convertible debt, along with 5-year warrants, exercisable at $8.00 per share, all the warrants have expired as of December 31, 2021. The New Lenders Notes were convertible into the Company’s common stock at $8.00 per share. In May 2021, each of the remaining New Lenders entered into a Debt Extension and Conversion Agreement with the Company. These agreements provided that the New Lender Notes, including principal and accrued interest, would automatically convert into shares of common stock upon consummation of an underwritten public offering of the Company’s common stock. On June 2, 2021, in accordance with the Debt Extension and Conversion Agreement between the remaining New Lenders and the Company, all of the remaining outstanding debt and accrued interest for the New Lenders Notes were automatically converted to common stock. The remaining principal amount of $850,000 and the accrued interest to June 2, 2021, of $436,369 totaled $1,286,369; this total amount was converted into 160,798 shares of common stock at $8.00 per share. As of December 31, 2021, the Company had no further remaining financial obligations to the New Lenders under the terms of the New Lenders Notes. All security interests of the New Lenders in the Company’s assets have been terminated. Other Debt The Company’s 1% convertible debentures allow for rolling 30-day extensions until notice is given by the lender to the Company to the contrary. As of December 31, 2022, that agreement is still in place. |
NOTE PAYABLE
NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
NOTE PAYABLE | |
NOTE PAYABLE | NOTE 8 - NOTE PAYABLE Paycheck Protection Program Loan On May 7, 2020, the Company received $121,700 in loan funding from the Paycheck Protection Program (the “PPP”) established pursuant to the recently enacted Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The unsecured loan (the “PPP Loan”) is evidenced by a promissory note of the Company, dated April 29, 2020 (the “Note”) in the principal amount of $121,700 with Comerica Bank (the “Bank”), the lender. Under the terms of the Note and the PPP Loan, interest accrues on the outstanding principal at the rate of 1.0% per annum. The term of the Note was two years, though it could have been payable sooner in connection with an event of default under the Note. The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed. Under the PPP, the Company was eligible to apply for forgiveness for all or a part of the PPP Loan. The amount of loan proceeds eligible for forgiveness, as amended, was based on a formula that takes into account a number of factors, including: (i) the amount of loan proceeds that are used by the Company during the covered period after the loan origination date for certain specified purposes including payroll costs, interest on certain mortgage obligations, rent payments on certain leases, and certain qualified utility payments, provided that at least 60% of the loan amount is used for eligible payroll costs; (ii) the Company maintaining or rehiring employees, and maintaining salaries at certain levels; and (iii) other factors established by the SBA. Subject to the other requirements and limitations on loan forgiveness, only that portion of the loan proceeds spent on payroll and other eligible costs during the covered period will qualify for forgiveness. In August 2021, the Company applied to the SBA for forgiveness of the outstanding loan principal and accrued interest under the CARES Act. On September 9, 2021, the Company received a Notification of Paycheck Protection Program Forgiveness Payment letter from the SBA confirming that the full amount of the principal, $121,700, and accrued interest, $1,653, were forgiven by the SBA. The Company recognized the forgiveness of debt principal of $121,700 and the 2020 accrued interest of $820 as an Other Income of $122,520, the remaining interest due for the PPP Loan in 2021 through the forgiveness date of $833 was booked to offset the 2021 interest expense. The Company’s PPP loan and application for forgiveness of loan amounts remain subject to review and audit by SBA for compliance with program requirements. Short Term Loan On February 21, 2022, the Company entered into a short-term, unsecured loan agreement to finance a portion of the Company’s directors’ and officers’ insurance premiums. The note in the amount of $628,600 carried a 4.15% annual percentage rate and was paid down in nine equal payments of $71,058 beginning in March 2022. The loan was fully paid off, and there was no remaining principal balance as of December 31, 2022. |
DEFERRED RD OBLIGATIONS - PARTI
DEFERRED RD OBLIGATIONS - PARTICIPATION AGREEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
DEFERRED RD OBLIGATIONS - PARTICIPATION AGREEMENTS | |
DEFERRED RD OBLIGATIONS - PARTICIPATION AGREEMENTS | NOTE 9 - DEFERRED R&D OBLIGATIONS - PARTICIPATION AGREEMENTS The Company entered into twenty-one (21) License Co-Development Participation Agreements (the “Participation Agreements”) with certain investors (“Participants”) for aggregate proceeds of $2,985,000. The Participation Agreements provide for the issuance of warrants to such Participants and allows the Participants to participate in the fees (the “Fees”) from licensing or selling bioactive ingredients or molecules derived from ZIVO’s algae cultures. Specifically, ZIVO has agreed to provide to the Participants a 44.78% “Revenue Share” of all license fees generated by ZIVO from any licensee (See the Table below). According to the terms of the Agreements, and pursuant to ASC 730-20-25 the Company has bifurcated the proceeds of $2,985,000 as follows: 1) the 106,315 warrants sold were attributed a value of $953,897 based on the Black Scholes pricing model using the following assumptions: volatilities ranging from 129.13% to 154.26%; annual rate of dividends 0%; discount rates ranging from 0.26% to 0.87%, and recorded as Additional Paid In Capital; 2) the remaining $2,031,103 was recorded as Deferred R&D Obligation - Participation Agreements. Since the Company believes there is an obligation to perform pursuant to ASC 730-20-25, the Deferred R&D Obligation will be amortized ratably based on expenses incurred as the Company develops the technology for bioactive ingredients or molecules (including its TLR4 Inhibitor molecule) derived from the Company’s algae cultures. In the year ending December 31, 2022, the Company recognized $774,025 as a contra R&D expense related to personnel and third-party expenses to develop the subject technology. $193,610 of this total contra R&D expense was attributed to deferred R&D obligations funded by a related party. As of December 31, 2022, the remaining R&D obligation was $701,331, of which $175,427 was attributed to a related party. In the prior year ending December 31, 2021, the Company recognized $555,745 as a contra R&D expense related to personnel and third-party expenses to develop the subject technology. $150,805 of this total contra R&D expense was attributed to deferred R&D obligations funded by a related party. As of December 31, 2021, the remaining R&D obligation was $1,475,357, of which $369,037 was attributed to a related party. The Participation Agreements allow the Company the option to buy back the right, title and interest in the Revenue Share for an amount equal to the amount funded plus a forty percent (40%) premium, if the option is exercised less than 18 months following execution, and for either forty (40%) or fifty percent (50%) if the option is exercised more than 18 months following execution. Pursuant to the terms of twelve of the Participation Agreements, the Company may not exercise its option until it has paid the Participants a revenue share equal to a minimum of thirty percent (30%) of the amount such Participant’s total payment amount. Pursuant to the terms of one of the Participation Agreements, the Company may not exercise its option until it has paid the Participant a revenue share equal to a minimum of one hundred forty percent (140%) of such Participant’s total payment amount. Five of the Participation Agreements have no minimum threshold payment. Once this minimum threshold is met, the Company may exercise its option by delivering written notice to a Participant of its intent to exercise the option, along with repayment terms of the amount funded, which may be paid, in the Company’s sole discretion, in one lump sum or in four (4) equal quarterly payments. If the Company does not make such quarterly payments timely for any quarter, then the Company shall pay the prorated Revenue Share amount, retroactive on the entire remaining balance owed, that would have been earned during such quarter until the default payments have been made and the payment schedule is no longer in default. See below a summary of the Participation Agreements: Warrants Term Buy-back Buy-back Minimum Premium % Premium % Agreement Date of Amount Exercise Revenue Payment pre-18 post 18 # Funding Funded Price Share Threshold mos. mos. 1 April 13, 2020 $ 100,000 3,750 5 Years $ 9.60 1.500% $ - 40% 40% 2 April 13, 2020 150,000 5,625 5 Years 9.60 2.250% - 40% 40% 3 April 13, 2020 150,000 5,625 5 Years 9.60 2.250% - 40% 40% 4 May 7, 2020 250,000 9,375 5 Years 9.60 3.750% - 40% 40% 5 June 1, 2020 275,000 10,313 5 Years 8.80 4.125% 82,500 40% 50% 6 June 3, 2020 225,000 8,438 5 Years 8.80 3.375% 67,500 40% 50% 7 July 8, 2020 100,000 3,750 5 Years 9.60 1.500% 30,000 40% 50% 8 Aug. 24, 2020 125,000 4,688 5 Years 9.60 1.875% 37,500 40% 50% 9 Sept. 14, 2020 150,000 5,625 5 Years 9.60 2.250% 45,000 40% 50% 10 Sept.15, 2020 50,000 1,875 5 Years 9.60 0.750% 15,000 40% 50% 11 Sept.15, 2020 50,000 1,875 5 Years 9.60 0.750% 15,000 40% 50% 12 Sept.25, 2020 300,000 5,625 5 Years 9.60 4.500% 420,000 40% 50% 13 Oct. 8, 2020 500,000 18,750 5 Years 9.60 7.500% 150,000 40% 40% 14 Oct. 4, 2020 100,000 3,750 5 Years 9.60 1.500% 40,000 40% 50% 15 Oct. 4, 2020 250,000 9,375 5 Years 9.60 3.750% - 40% 40% 16 Oct. 9, 2020 50,000 1,875 5 Years 9.60 0.750% 15,000 40% 40% 17 Dec. 16, 2020 10,000 375 5 Years 9.60 0.150% 17,000 40% 50% 18 Jan. 22, 2021 40,000 1,500 5 Years 11.20 0.600% 12,000 40% 50% 19 Jan. 25, 2021 40,000 1,500 5 Years 11.20 0.600% 12,000 40% 50% 20 Jan. 27, 2021 25,000 938 5 Years 11.20 0.375% 12,000 40% 50% 21 May 14,2021 45,000 1,688 5 Years 10.40 0.675% 13,500 40% 50% $ 2,985,000 106,315 44.775% $ 984,000 Certain of the Participation Agreements are owned by related parties. Participation Agreements numbers 8, 14, and 19 totaling $265,000 are owned by HEP Investments, Participation Agreement 21 in the amount of $45,000 is owned by MKY MTS LLC an entity controlled by the owners of HEP Investments, and Participation Agreement 13 in the amount of $500,000 is owned by an investment company owned by a significant shareholder Mark Strome (“Strome”). |
STOCKHOLDERS EQUITY (DEFICIENCY
STOCKHOLDERS EQUITY (DEFICIENCY) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS EQUITY (DEFICIENCY) | |
STOCKHOLDERS' EQUITY (DEFICIENCY) | NOTE 10 - STOCKHOLDERS’ EQUITY (DEFICIT) Recapitalization - Reverse Stock Split On May 27, 2021, the Company filed a certificate of amendment to its articles of incorporation with the Secretary of State of the State of Nevada (the “Certificate of Amendment”) to (i) effectuate a reverse stock split (the “Reverse Stock Split”) of its issued and outstanding shares of common stock and treasury shares on a 1-for-80 basis and (ii) decrease the number of total authorized shares of common stock of the Company from 1,200,000,000 to 150,000,000 shares. As of the Effective Time, every 80 shares of issued and outstanding common stock were converted into one share of common stock. No fractional shares were issued in connection with the Reverse Stock Split. Instead, a holder of record of old common stock as of immediately prior to the Effective Time who would otherwise have been entitled to a fraction of a share was entitled to receive cash in lieu thereof. The Company’s transfer agent, Issuer Direct Corporation acted as the exchange agent for the Reverse Stock Split. The Reverse Stock Split did not alter the par value of the Company’s common stock or modify any voting rights or other terms of the common Stock. In addition, pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under all of the Company’s outstanding stock options and warrants to purchase shares of common Stock, and the number of shares authorized and reserved for issuance pursuant to the Company’s equity incentive plan will be reduced proportionately. All issued and outstanding common stock and per share amounts contained in the financial statements have been retroactively adjusted to reflect this Reverse Stock Split for all periods presented. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options, restricted stock units and warrants to purchase shares of common stock. A proportionate adjustment was also made to the number of shares reserved for issuance pursuant to the Company’s equity incentive compensation plans to reflect the Reverse Stock Split. Board of Directors Fees On October 12, 2021, our Board of Directors approved the Non-Employee Director Compensation Policy. Pursuant to that policy, the Board granted to each of the four non-employee directors $50,000 in value of common stock options. The Company used the Black Scholes option pricing model to determine the number of shares that would derive a value of $50,000 for each non-employee director. The Black Scholes pricing model use the following assumptions: term of 10 years; volatility 142.54%; annual rate of dividends 0%; discount rate 1.59%. The model yielded an award grant of 45,664 total options, 11,416 for each of the four non-employee directors. In addition, the Board granted Ms. Cornell a pro rata number of options for her tenure from February 2, 2021, through October 11, 2021; a grant of 7,660 shares valued at $33,549 using the same Black Scholes assumptions. On July 28, 2022, our Board of Directors awarded options pursuant to the Non-Employee Director Compensation Policy. The Board granted to each of the three non-employee directors $50,000 in value of common stock options. The Company used the Black Scholes option pricing model to determine the number of shares that would derive a value of $50,000 for each non-employee director. The Black Scholes pricing model used the following assumptions: term of 5.31 years; volatility 120.99%; annual rate of dividends 0%; discount rate 2.69%. The model yielded an award grant of 47,391 total options, 15,797 for each of the three non-employee directors. On December 16, 2022, our Board of Directors awarded options to each of the three non-employee directors of $10,000 in value of common stock options. The Company used the Black Scholes option pricing model to determine the number of shares that would derive a value of $10,000 for each non-employee director. The Black Scholes pricing model used the following assumptions: term of 5 years; volatility 116.42%; annual rate of dividends 0%; discount rate 3.61%. The model yielded an award grant of 12,732 total options, 4,244 for each of the three non-employee directors. On December 19, 2022, our Board of Directors appointed Ms. Alison Cornell as lead independent director. In recognition of that appointment the Board of Directors awarded to Ms. Cornell $300,000 in value of common stock options. The Company used the Black Scholes option pricing model to determine the number of shares that would derive a value of $300,000 for the lead independent director. The Black Scholes pricing model used the following assumptions: term of 5 years; volatility 116.47%; annual rate of dividends 0%; discount rate 3.70%. The model yielded an award grant of 139,444 total options. The Company recorded directors’ fees of $1,155,722 and $710,481 (as adjusted) for the years ended December 31, 2022 and 2021, respectively, representing the cash fees paid or accrued and the expense associated with the common stock options described above. Stock Based Compensation On January 1, 2021, in connection with his appointment as the Company’s Chief Financial Officer, Mr. Marchiando received a stock option award issued pursuant to the 2019 Plan to purchase 162,500 shares of the Company’s common stock, with an exercise price of $11.20 per share. Vesting of these options shall be as follows: 37,500 shares vested immediately upon grant of the option award, and 15,625 shares will vest on each 6 month anniversary of January 1, 2021. The Company, on June 15, 2021, issued 5,000 shares of unregistered common stock to CorProminence, LLC (d/b/a COREir) for services in accordance with the consulting agreement between COREir and the Company (See “ Note 11 - Commitments and Contingencies On October 21, 2021, the Board of directors granted options under its 2021 equity incentive plan (the “2021 Plan”) to purchase 924,000 shares of common stock to several directors and officers of the Company. The options have a term of ten years and 260,000 shares granted to board members vest over one year, and the 664,000 shares granted to the officers vest over three years. The options were valued at $3,476,392 using the Black Scholes pricing model relying on the following assumptions: volatility 141.38%; annual rate of dividends 0%; discount rate 1.68%. On February 22, 2022, the Board of directors granted options under its 2021 equity incentive plan (the “2021 Plan”) to purchase 172,500 shares of common stock to certain employees of the Company. The options have a term of ten years and vest over three years. The options were valued at $493,536 using the Black Scholes pricing model relying on the following assumptions: simplified term of 5.75 years; volatility 130.18%; annual rate of dividends 0%; discount rate 1.88%. On August 29, 2022, the Board of directors granted options under its 2021 equity incentive plan (the “2021 Plan”) to purchase 173,000 shares of common stock to certain employees of the Company. The options have a term of ten years and vest over three years. The options were valued at $590,896 using the Black Scholes pricing model relying on the following assumptions: simplified term of 5.75 years; volatility 121.19%; annual rate of dividends 0%; discount rate 3.25%. Stock Issuances During the year ended December 31, 2021, the Company issued 139,664 shares for proceeds of $1,514,969 to investors in private placements. In addition, during this same period, a related party purchased 4,464 shares of the Company’s common stock at $11.20 per share for proceeds of $50,000. On June 2, 2021, the Company completed its public offering of common stock and common stock warrants. The Company issued 2,760,000 units at $5.00 (each unit consisting of one share of the Company’s common stock and one warrant (“registered warrant”) with an exercise price $5.50 per share) for gross proceeds of $13,804,240, and net proceeds of $12,181,602 after related underwriting and other costs of $1,622,638. On July 2, 2021, the underwriter of the June 2021 Offering exercised its overallotment option and purchased an additional 150,000 shares of the Company’s common stock at $4.99 per share for gross proceeds of $748,500, and net proceeds of $673,159 after related underwriting and other costs of $75,191. Stock Warrants Exercised During the twelve months ended December 31, 2021, warrants to purchase 139,100 shares of the Company’s common stock were exercised on a “cashless” basis resulting in the issuance of 54,361 shares of common stock. In September 2021, two groups of the Company’s registered warrants were exercised resulting in the Company issuing 198,503 shares of common stock. The exercise price of the registered warrants was $5.50 per share, resulting in gross cash proceeds to the Company of $1,091,767. Sale of Common Stock Warrants During the twelve months ending December 31, 2021, and in connection with the Participation Agreements (see “ Note 9 - Deferred R&D Obligation - Participation Agreements On June 2, 2021, the Company completed its public offering of common stock and warrants. As part of the transaction, the Company sold 414,000 warrants (“registered warrants”) with an exercise price of $5.50 per share, from the overallotment option that was exercised by the underwriter for $4,140. Additionally, the Company issued the underwriter 8% of the number of shares of common stock in the offering in 220,800 unregistered warrants for shares of common stock, for an aggregate price to the Company of $100. These warrants are exercisable 180 days after the offering date and expire five years after the first day they are exercisable. The warrants were valued at $946,675 based on the Black Scholes pricing model relying on the following assumptions: volatility 132.46%; annual rate of dividends 0%; discount rate 0.80%. This was recognized by the company as an underwriting cost and was accounted for as an offset to funds raised. 2021 Equity Incentive Plan On October 12, 2021, after approval from the stockholders at the Company’s 2021 annual meeting of stockholders, the Company adopted the 2021 Plan for the purpose of enhancing the Company’s ability to attract and retain highly qualified directors, officers, key employees and other persons and to motivate such persons to improve the business results and earnings of the Company by providing an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company. The 2021 Plan is administered by the compensation committee of the Board who will, amongst other duties, have full power and authority to take all actions and to make all determinations required or provided for under the 2021 Plan. Pursuant to the 2021 Plan, the Company may grant options, share appreciation rights, restricted shares, restricted share units, unrestricted shares and dividend equivalent rights. The 2021 Plan has a duration of 10 years. Subject to adjustment as described in the 2021 Plan, the aggregate number of shares of common stock available for issuance under the 2021 Plan is initially set at 1,000,000 shares; this number is automatically increased each January 1st by an amount equal to 5% of the number of common stock shares outstanding at that date. As of December 31, 2022, 1,327,407 options have been issued under the 2021 Plan, and 143,576 shares remained available for issuance. 2019 Omnibus Long-Term Incentive Plan Prior to the adoption of the 2021 Equity Incentive Plan, the Company maintained a 2019 Omnibus Long-Term Incentive Plan (the “2019 Plan”). Following the approval by the shareholders of the 2021 Equity Incentive Plan, no additional awards have been or will be made under the 2019 Plan. As of December 31, 2022, 781,250 stock options had been issued under the 2019 Plan with terms between 5 years and 10 years, of which 362,500 remained outstanding. Common Stock Options A summary of the status of the Company’s options issued under the Company’s equity incentive plans is presented below. As of December 31, 2022 there is no intrinsic value in any of the Company's outstanding options as the market price of the Company's common stock is in all cases lower than the exercise price of options. December 31, 2022 December 31, 2021 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of year 1,721,074 $ 7.38 606,250 $ 9.67 Forfeited (767,250 ) 6.81 (37,500 ) 11.84 Issued 736,083 3.73 1,152,324 6.32 Outstanding, end of period 1,689,907 $ 6.05 1,721,074 $ 7.38 Options outstanding and exercisable by price range as of December 31, 2022 were as follows: Outstanding Options Exercisable Options Range of Exercise Price Number Average Weighted Remaining Contractual Life in Years Range of Exercise Price Number Weighted Average Exercise Price $ 2.00-2.99 343,192 9.97 $ 2.00-2.99 343,192 $ 2.76 3.00-3.99 220,391 9.65 3.00-3.99 54,850 3.87 $ 4.00-4.99 53,324 8.78 $ 4.00-4.99 53,324 $ 4.48 5.00-5.99 710,500 8.89 5.00-5.99 443,062 5.50 8.00-8.99 6,250 2.54 8.00-8.99 7,813 8.80 9.00-9.99 25,000 2.63 9.00-9.99 25,000 9.60 11.00-11.99 162,500 7.80 11.00-11.99 84,375 11.20 12.00-12.99 168,750 2.14 12.00-12.99 168,750 12.80 1,689,907 8.31 1,180,366 $ 6.14 As of December 31, 2022, total compensation cost related to non-vested awards not yet recognized is $1,061,925; and the weighted-average period over which it is expected to be recognized is 0.79 years. Common Stock Warrants - Unregistered A summary of the status of the Company’s unregistered warrants is presented below. December 31, 2022 December 31, 2021 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of year 2,553,635 $ 7.57 2,502,291 $ 7.67 Issued - - 226,426 5.64 Exercised - - (139,099 ) 6.41 Cancelled - - - - Expired (951,437 ) 7.10 (35,983 ) 6.52 Outstanding, end of period 1,602,198 $ 7.85 2,553,635 $ 7.57 Unregistered warrants outstanding and exercisable by price range as of December 31, 2022 were as follows: Outstanding Warrants Exercisable Warrants Range of Number Average Weighted Remaining Contractual Life in Years Exercise Price Number Weighted Average Exercise Price $ 5.00-5.99 220,800 3.42 $ 5.00-5.99 220,800 5.50 6.00-6.99 156,875 2.50 6.00-6.99 156,875 6.40 8.00-8.99 950,084 0.79 8.00-8.99 950,084 8.04 9.00-9.99 231,938 2.69 9.00-9.99 231,938 9.60 10.00-10.99 1,688 3.37 10.00-10.99 1,688 10.40 11.00-11.99 35,813 1.00 11.00-11.99 35,813 11.20 14.00-14.99 5,000 1.99 14.00-14.99 5,000 14.40 1,602,198 1.61 1,602,198 $ 7.85 Common Stock Warrants - Registered A summary of the status of the Company’s registered warrants is presented below: December 31, 2022 December 31, 2021 Number of Registered Warrants Weighted Average Exercise Price Number of Registered Warrants Weighted Average Exercise Price Outstanding, beginning of year 2,975,497 $ 5.50 - $ - Issued - - 3,174,000 5.50 Exercised - - (198,503 ) 5.50 Cancelled - - - - Expired - - - - Outstanding, end of period 2,975,497 $ 5.50 2,975,497 $ 5.50 Registered warrants outstanding and exercisable by price range as of December 31, 2022, were as follows: Outstanding Registered Warrants Exercisable Registered Warrants Exercise Price Number Average Weighted Remaining Contractual Life in Years Exercise Price Number Weighted Average Exercise Price $ 5.50 2,975,497 1.5 $ 5.50 2,975,497 5.50 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments And Contingencies Disclosure Abstract | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 - COMMITMENTS AND CONTINGENCIES Employment Agreements At December 31, 2022, the Company had compensation agreements with its President / Chief Executive Officer, and Chief Financial Officer. Corporate Advisory Agreement In August 2021, the Company entered into an agreement with an Investment Opportunity Provider (IOP). The IOP has been engaged as an exclusive financial advisor in connection with a proposed transaction involving the creation of a ZIVO Photobioreactor Facility (“Phase 1”) and additional Photobioreactor Facilities (“Phase 3”). The Company has agreed to pay the IOP, upon the completion of Phase 1, a fee of 6% of the aggregate value of the transaction (50% in cash, and 50% in equity) and upon the completion of Phase 3, a fee of 3% of the aggregate value of the transaction in cash. As of December 31, 2022, in connection with this agreement, no successful transactions have taken place. Investor / Public Relations On February 15, 2021, the Company signed a consulting agreement with CorProminence, LLC (dba COREir) to provide us with investor relations and public relations services. The COREir agreement includes a provision to issue to COREir on the four (4) month anniversary of the effective date, or as soon thereafter as is practically possible, 10,000 authorized restricted shares of common stock of the Company, of which 5,000 shares shall vest immediately upon receipt, 2,500 shall vest on the eight (8) month anniversary of the contract effective date and 2,500 shares shall vest on the twelve (12) month anniversary of the effective date of the COREir agreement. In addition, the agreement requires the Company to pay COREir $15,000 per month, plus out of pocket expenses, for their consulting services. On October 15, 2021, the Company, per its consulting agreement with CorProminence, LLC (dba COREir), issued 2,500 shares of common stock to CorProminence, LLC. The shares were valued on October 15, 2021, at $4.15 per share for a total expense in the aggregate of $10,375. On October 31, 2021, the Company informed CorProminence LLC that it was immediately terminating the consulting agreement. Under the termination clause of the agreement, the Company may be liable for an additional 2,500 shares to be issued to CorProminence. Legal Contingencies On April 13, 2022, AEGLE Partners, 2 LLC (“AEGLE”) initiated an arbitration in Michigan against the Company with the American Arbitration Association. AEGLE asserted claims related to a certain Supply Chain Consulting Agreement entered into between AEGLE and the Company in 2019 (as amended from time to time, the “Agreement”), and a disagreement between AEGLE and the Company regarding whether AEGLE is entitled to payment of certain fees and warrants pursuant to the Agreement. AEGLE's complaint seeks, among other things, three times the payment of such alleged fees and warrants and recovery of AEGLE's costs and expenses. We believe that the claims made by AEGLE in its complaint are without merit and we intend to vigorously defend ourselves against them. Arbitration in this matter is scheduled to begin in April 2023. We may become a party to litigation in the normal course of business. In the opinion of management, there are no legal matters involving us that would have a material adverse effect upon our financial condition, results of operation or cash flows. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
LOAN PAYABLE, RELATED PARTIES | |
RELATED PARTY TRANSACTIONS | NOTE 12 - RELATED PARTY TRANSACTIONS Loan Payable - Related Party See “ Note 6 - Loan Payable, Related Parties Employment Agreement See “ Note 11 - Commitments and Contingencies Building Lease In January 2022 the Company terminated its agreement for the rental of its office space from M&M Keego Center LLC, an entity controlled by an immediate family member of a principal shareholder. Stock Issuances On June 2, 2021, the Company completed its public offering of units consisting of common stock and warrants. Two of the Company’s directors participated in the offering; Chris Maggiore purchased 100,000 units, and Alison Cornell purchased 15,000 units. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 13 - INCOME TAXES The following table presents the components of net loss before income taxes: Years Ended December 31, 2022 2021 Domestic $ (8,745,293 ) $ (8,755,881 ) (Loss) before provision for income taxes (8,745,293 ) (8,755,881 ) There was no income tax for the years ended December 31, 2022 and December 31, 2021. The Company’s tax expense differs from the “statutory” tax expense for the years ended December 31, 2022, and 2021 as noted below: For the Years Ended December 31, 2022 2021 Income tax (benefit) / Expense at federal statutory rate $ (1,836,512 ) 21.0 % $ (1,838,735 ) 21.0 % Apportioned state income taxes (131,407 ) 1.5 % - 0.0 % Stock based compensation 297,653 (3.3 )% (104,601 ) 1.2 % Rate change (31,180 ) 0.3 % (138,284 ) 1.6 % Return to provision adjustments (1,515 ) 0.0 % - 0.0 % Other non-deductible items - 0.0 % (21,692 ) 0.2 % Change in valuation allowance 1,702,961 (19.5 )% 2,103,312 (24.0 )% Total income tax provision $ - 0.0 % $ - 0.0 % Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards. The tax effects of significant items comprising the Company’s deferred taxes were as follows: For the Years Ended December 31, 2022 2021 Deferred tax assets/(liabilities) Federal net operating loss carryforwards $ 7,606,833 $ 6,661,795 State net operating loss carryforwards 74,353 - Stock based compensation 2,738,159 2,502,856 Section 174 research and experimental expenditures 374,926 (73,521 ) Other deferred tax assets (liabilities) (180 ) - Total deferred tax assets $ 10,794,091 $ 9,091,130 Valuation allowance (10,794,091 ) (9,091,130 ) Total deferred income taxes $ - $ - During 2022, immaterial errors were identified in deferred taxes related to certain federal and state net operating losses (NOLs). The 2021 amounts in the tables above have been adjusted which resulted in the reduction of the federal net operating loss carryforwards, the state net operating loss carryforwards, stock-based compensation, and Section 174 research and experimental expenditures as of December 31, 2021 within gross deferred tax assets as previously disclosed by approximately $11.0 million, $3.1 million, $400,000, and $100,000, respectively, with a corresponding decrease in the valuation allowance of $14.6 million. Corresponding adjustments were made to the rate reconciliation table including an adjustment to the apportioned state income taxes by approximately $(400,000) for the year ended December 31, 2021. ASC 740 Income Taxes As of December 31, 2022 and 2021 the Company’s deferred tax asset contains the tax effect of approximately $36.2 million and $31.7 million of Federal NOLs, respectively. The Federal NOLS' generated prior to December 31, 2017 were written off of the deferred tax asset, while NOLs generated subsequent to this date remain. Under the new Tax Cuts and Jobs Act, all Federal NOLs incurred after December 31, 2017 are carried forward indefinitely for Federal tax purposes. Net Operating Losses recorded as Federal deferred tax asset Net Operating Losses recorded as State deferred tax asset 2023 through 2037 $ - $ - Total expiring operating losses (incurred prior to December 31, 2017) - - Non-expiring operating losses (incurred after December 31, 2017) 36,223,016 1,351,870 Total Operating Loss $ 36,223,016 $ 1,351,870 In the ordinary course of its business the Company incurs costs that, for tax purposes, may be qualified research expenditures within the meaning of IRC Code Sec. 41 and are, therefore, may be eligible for the Increasing Research Activities credit under IRC Code Sec. 41. The Company has not claimed a credit pursuant to IRC Code Sec. 41 on its federal returns, i.e. no deferred tax asset on the books. As of December 31, 2022, the Company has no uncertain tax positions. It is the Company’s policy to account for interest and penalties related to uncertain tax positions as interest expense and general and administrative expense, respectively in its statements of operations. No interest or penalties have been recorded related to the uncertain tax positions. It is not expected that there will be a significant change in uncertain tax positions in the next 12 months. The Company is subject to U.S. federal and state income tax as well as to income tax in multiple state jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. As of the date of the financial statements, there are no tax examinations in progress. The statute of limitations for tax years ended after December 31, 2018, are open for federal and state tax purposes. The 2017 Tax Act amended Section 174 of the Internal Revenue Code which affects the Federal tax treatment of research and experimental (R&E) expenditures. Preceding this law change, R&E expenditures were expensed as incurred for Federal Income Tax purposes. In taxable years beginning after December 31, 2021, R&E expenditures must be capitalized and amortized over 5 years for expenditures incurred in the United States, or 15 years for expenditures incurred outside the United States. Due to the nature of the Company’s operations, R&E expenditures are a significant portion of total expenditures. The Company calculated an estimated amount for income tax provision purposes based on guidance available to determine the capitalized amount. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 14 - SUBSEQUENT EVENTS 2021 Plan Evergreen Provision Under the 2021 Plan, the shares reserved automatically increase on January 1st of each year, for a period of not more than ten years from the date the 2020 Plan is approved by the stockholders of the Company, commencing on January 1, 2022, and ending on (and including) January 1, 2029, by an amount equal to 5% of the shares of common stock outstanding as of December 31st of the preceding calendar year. Notwithstanding the foregoing, the Board of Directors may act prior to January 1st of a given year to provide that there will be no January 1st increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence. On January 1, 2023, 470,983 shares were added to the 2021 Plan as a result of the evergreen provision. Nasdaq Compliance On November 22, 2022, the Company received written notice from Nasdaq stating that the Company no longer complied with the minimum stockholders’ equity requirement under Nasdaq Listing Rule 5550(b)(1) for continued listing on The Nasdaq Capital Market. On January 6, 2023, the Company submitted its compliance plan to Nasdaq. On January 11, 2023, Nasdaq notified the Company that it had determined to grant the Company an extension until May 22, 2023 to regain compliance. There can be no assurance that the Company will be successful in implementing its plan to regain compliance with the minimum stockholders’ equity requirement. Short Term Loan On February 14, 2023, the Company entered into a short unsecured loan agreement to finance a portion of the Company's directors' and officers', and employment practices liability insurance premiums. The note in the amount of $605,600 carries a 8.4% annual percentage rate and will be paid down in nine equal monthly payments of $69,666 beginning on March 10, 2023. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | The consolidated financial statements include the accounts of Zivo Bioscience, Inc. and its wholly-owned subsidiaries, Health Enhancement Corporation, HEPI Pharmaceuticals, Inc., Wellmetrix, LLC, Wellmetris, LLC, Zivo Bioscience, LLC, Zivo Biologic, Inc., ZIVOLife, LLC, and Zivo Zoologic, Inc. All significant intercompany transactions and accounts have been eliminated in consolidation. |
Accounting Estimates | The Company’s consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements and reported amount of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results could differ from those estimates. Management uses its best judgment in valuing these estimates and may, as warranted, solicit external professional advice and other assumptions believed to be reasonable. |
Cash | For the purpose of the statements of cash flows, cash equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company maintains cash and cash equivalents balances at financial institutions and are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At times, balances in certain bank accounts may exceed the FDIC insured limits. At December 31, 2022 and 2021, the Company did not have any cash equivalents. |
Property and Equipment | Property and equipment consist of furniture and office equipment and are carried at cost less allowances for depreciation and amortization. Depreciation and amortization are determined by using the straight-line method over the estimated useful lives of the related assets. Repair and maintenance costs that do not improve service potential or extend the economic life of an existing fixed asset are expensed as incurred. |
Leases | ASC 842, Leases ROU assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are recorded as current portion of long-term operating lease, and within long-term liabilities as long-term operating lease, net of current portion on the Company’s Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021. Lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Generally, we do not consider any additional renewal periods to be reasonably certain of being exercised, as comparable locations could generally be identified within the same trade areas for comparable lease rates. Because the Company's leases do not provide an implicit rate of return, the Company used its incremental borrowing rate in determining the present value of lease payments. We have elected the practical expedient not to separate lease and nonlease components for all of our building leases. |
Revenue Recognition | Revenue is recognized in accordance with ASC 606, which utilizes five steps to determine whether revenue can be recognized and to what extent: (i) identify the contract with a customer; (ii) identify the performance obligation(s); (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) determine the recognition period. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, Revenue from Contracts with Customers Significant judgments exercised by management include the identification of performance obligations, and whether such promised goods or services are considered distinct. The Company evaluates promised goods or services on a contract-by-contract basis to determine whether each promise represents a good or service that is distinct or has the same pattern of transfer as other promises. A promised good or service is considered distinct if the customer can benefit from the good or service independently of other goods/services either in the contract or that can be obtained elsewhere, without regard to contract exclusivity, and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contact. If the good or service is not considered distinct, the Company combines such promises and accounts for them as a single combined performance obligation. |
Research and Development | Research and development (“R&D”) costs are expensed as incurred. The Company’s R&D costs, including internal expenses, consist of clinical study expenses as it relates to the biotech business and the development and growing of algae as it relates to the agtech business. External clinical studies expenses were approximately $1.4 million and $1.6 million for the years ended December 31, 2022 and 2021, respectively. Internal expenses, composed of staff salaries compose approximately $1.5 million and $800,000 for the years ended December 31, 2022 and 2021, respectively. These costs were offset by the amortization of the R&D obligation of $774,025 and $555,745 for the years ending December 31, 2022 and 2021, respectively; $193,610 of the year ended December 31, 2022 and $150,805 for the year ended December 31, 2021 of the amortization amount was attributable to related parties (see “ Note 9 - Deferred R&D Obligations - Participation Agreements |
Income taxes | The Company follows the authoritative guidance for accounting for income taxes. Deferred income taxes are determined using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The tax effects of temporary differences that gave rise to the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021 were primarily attributable to net operating loss carry forwards. Since the Company has a history of losses, and it is more likely than not that some portion or all of the deferred tax assets will not be realized, a full valuation allowance has been established. In addition, utilization of net operating loss carry-forwards is subject to a substantial annual limitation due to the “change in ownership” provisions of the Internal Revenue Code. The annual limitation may result in the expiration of net operating loss carry-forwards before utilization. |
Stock Based Compensation | The Company accounts for stock-based compensation in accordance with FASB ASC 718, Compensation - Stock Compensation. During 2022 and 2021, options were granted to employees, directors and consultants of the Company. As a result of these grants, the Company recorded expenses of $2.7 million during the year ended December 31, 2022, approximately $500,000 of this expense was for R&D and $2.2 million was attributed to G&A. During the year ending December 31, 2021 the Company recorded expenses of $3.0 million, approximately $300,000 of this expense was for R&D and $2.7 million was attributed to G&A. The fair value of options and warrants were estimated on the date of grant using the Black-Scholes option-pricing model based on the following weighted average assumptions: Year Ended December 31, 2022 2021 Expected volatility 116.42% to130.18% 123.40% to 143.97% Expected dividends 0 % 0 % Expected term 5 to 5.75 years 3.25 to 5.87 years Risk free rate 1.88 to 3.70% 0.24% to 1.34% The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of highly subjective assumptions, including the expected stock price volatility. In considering the expected term of the options, the Company employs the simplified method. The Company uses this method as it does not have a history of option exercises to establish a robust estimated term based on experience. The simplified term is used for the determination of expected volatility as well as the identification of the risk free rate. |
Income (Loss) Per Share | Basic loss per share is computed by dividing the Company’s net loss by the weighted average number of shares of common stock outstanding during the period presented. Diluted loss per share is based on the treasury stock method and includes the effect from potential issuance of common stock such as shares issuable pursuant to the exercise of options and warrants and conversions of debentures. Potentially dilutive securities as of December 31, 2022, consisted of 53,546 shares of common stock from convertible debentures and related accrued interest and 6,267,602 shares of common stock underlying outstanding options and warrants. Potentially dilutive securities as of December 31, 2021, consisted of 53,076 shares of common stock from convertible debentures and related accrued interest and 7,250,206 shares of common stock underlying outstanding options and warrants. For 2022 and 2021, diluted and basic weighted average shares were the same, as potentially dilutive shares are anti-dilutive. |
Segment Reporting | The Company’s Chief Executive Officer, who is considered to be the chief operating decision maker (CODM), reviews financial information presented on a consolidated basis, accompanied by information about operating segments for purposes of making operating decisions and assessing financial performance. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the CODM in deciding how to allocate resources and in assessing performance. The Company operates solely in the United States. |
Fair Value of Financial Instruments | We account for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring basis adhering to the Financial Accounting Standards Board (“FASB”) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: · Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement date. · Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. · Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. As of December 31, 2022 and 2021, fair values of cash, prepaid, other assets, accounts payable and accrued expenses approximated their carrying values because of the short-term nature of these assets or liabilities. As of December 31, 2022 and 2021 the fair value of the convertible notes approximated their carrying value. |
Concentrations of Credit Risk | Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents. The Company has historically maintained cash balances at financial institutions which exceed the current FDIC limit of $250,000 at times during the year. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such account. Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted this ASU beginning January 1, 2023. The Company has determined there is no impact of this standard on its financial statements. In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This update provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. This update is effective for fiscal years beginning after December 15, 2021. The Company has determined there is no impact of this standard on its financial statements. Recent Accounting Pronouncements Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06"), Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2021 (or December 15, 2023 for companies who meet the SEC definition of Smaller Reporting Companies), and interim periods within those fiscal years. The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures. |
REVISION OF PREVIOUSLY ISSUED_2
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Table) | 12 Months Ended |
Dec. 31, 2022 | |
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | |
CONSOLIDATED BALANCE SHEET as of December 31, 2021 | CONSOLIDATED BALANCE SHEET as of December 31, 2021 As Previously Reported Adjustment As Revised Additional paid-in capital $ 114,259,830 $ (1,167,804 ) $ 113,092,026 Accumulated deficit (108,227,041 ) 1,167,804 (107,059,237 ) |
CONSOLIDATED STATEMENTS OF OPERATIONS for the Year Ended December 31, 2021 | CONSOLIDATED STATEMENTS OF OPERATIONS for the Year Ended December 31, 2021 As Previously Reported Adjustment As Revised General and Administrative $ 6,932,921 $ (238,302) $ 6,694,619 Research and Development 2,119,684 (169,184) 1,950,500 Total costs and expenses 9,052,605 (407,486) 8,645,119 LOSS FROM OPERATIONS (9,052,605 ) 407,486 (8,645,119 ) NET LOSS (9,163,366 ) 407,485 (8,775,881 ) BASIC AND DILUTED LOSS PER SHARE $ (1.20 ) $ 0.05 $ (1.15 ) |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) For the Year Ended December 31, 2021 | CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) For the Year Ended December 31, 2021 As Previously Reported Adjustment As Revised Balance, December 30, 2020 - Additional Paid in Capital $ 87,747,898 $ (760,319 ) $ 86,987,579 Balance, December 30, 2020 - Accumulated Deficit (99,063,675 ) 760,319 (98,303,356 ) Employee and director equity-based compensation - Additional Paid in Capital 3,377,512 (407,485 ) 2,970,027 Employee and director equity-based compensation - Total 3,377,512 (407,485 ) 2,970,027 Net loss for the year ended December 31, 2021 - Accumulated Deficit (9,163,366 ) 407,485 (8,775,881 ) Net loss for the year ended December 31, 2021 - Total (9,163,366 ) 407,485 (8,775,881 ) Balance, December 31, 2021 - Additional Paid in Capital 114,259,830 (1,167,804 ) 113,092,026 Balance, December 31, 2021 - Accumulated Deficit $ (108,227,041 ) $ 1,167,804 $ (107,059,237 ) |
CONSOLIDATED STATEMENT OF CASH FLOWS for the Year Ended December 31, 2021 | CONSOLIDATED STATEMENT OF CASH FLOWS for the Year Ended December 31, 2021 As Previously Reported Adjustment As Revised Net Loss $ (9,163,366 ) $ 407,485 $ (8,775,881 ) Employee and director equity compensation 3,377,512 (407,485 ) 2,970,027 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule Of Status Of Warrants | 2022 2021 Expected volatility 116.42% to130.18% 123.40% to 143.97% Expected dividends 0 % 0 % Expected term 5 to 5.75 years 3.25 to 5.87 years Risk free rate 1.88 to 3.70% 0.24% to 1.34% |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Schedule of operating lease | Assets: December 31, 2022 December 31, 2021 Operating lease right-of-use asset $ 189,282 $ 27,225 Liabilities: Current portion of long-term operating lease $ 99,259 $ 15,178 Long-term operating lease, net of current portion 105,918 - $ 205,177 $ 15,178 |
Schedule of Components of lease expense | For the Year ended December 31, 2022 December 31, 2021 Operating lease expense $ 102,249 $ 25,879 |
Summary of other information related to leases | For the Year ended December 31, 2022 December 31, 2021 Weighted-average remaining lease term: Operating leases 1.94 Years 1.08 Years Discount rate: Operating leases 11.00 % 11.00 % |
Schedule of Supplemental cash flow information | For the Year ended December 31, 2022 December 31, 2021 Cash paid for amounts included in the measurement of lease liabilities: $ 74,307 $ 32,913 Non-cash investment in ROU asset 241,694 - |
Schedule of maturities of operating lease liability | Year Ended: Operating Lease December 31, 2023 $ 116,933 December 31, 2024 111,956 Total minimum lease payments $ 228,889 Less: Interest (23,711) Present value of lease obligations $ 205,178 Less: Current portion 99,259 Long-term portion of lease obligations $ 105,919 |
DEFERRED RD OBLIGATIONS PARTICI
DEFERRED RD OBLIGATIONS PARTICIPATION AGREEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DEFERRED RD OBLIGATIONS PARTICIPATION AGREEMENTS (Tables) | |
Schedule of default payment | Warrants Term Buy-back Buy-back Minimum Premium % Premium % Agreement Date of Amount Exercise Revenue Payment pre-18 post 18 # Funding Funded Price Share Threshold mos. mos. 1 April 13, 2020 $ 100,000 3,750 5 Years $ 9.60 1.500% $ - 40% 40% 2 April 13, 2020 150,000 5,625 5 Years 9.60 2.250% - 40% 40% 3 April 13, 2020 150,000 5,625 5 Years 9.60 2.250% - 40% 40% 4 May 7, 2020 250,000 9,375 5 Years 9.60 3.750% - 40% 40% 5 June 1, 2020 275,000 10,313 5 Years 8.80 4.125% 82,500 40% 50% 6 June 3, 2020 225,000 8,438 5 Years 8.80 3.375% 67,500 40% 50% 7 July 8, 2020 100,000 3,750 5 Years 9.60 1.500% 30,000 40% 50% 8 Aug. 24, 2020 125,000 4,688 5 Years 9.60 1.875% 37,500 40% 50% 9 Sept. 14, 2020 150,000 5,625 5 Years 9.60 2.250% 45,000 40% 50% 10 Sept.15, 2020 50,000 1,875 5 Years 9.60 0.750% 15,000 40% 50% 11 Sept.15, 2020 50,000 1,875 5 Years 9.60 0.750% 15,000 40% 50% 12 Sept.25, 2020 300,000 5,625 5 Years 9.60 4.500% 420,000 40% 50% 13 Oct. 8, 2020 500,000 18,750 5 Years 9.60 7.500% 150,000 40% 40% 14 Oct. 4, 2020 100,000 3,750 5 Years 9.60 1.500% 40,000 40% 50% 15 Oct. 4, 2020 250,000 9,375 5 Years 9.60 3.750% - 40% 40% 16 Oct. 9, 2020 50,000 1,875 5 Years 9.60 0.750% 15,000 40% 40% 17 Dec. 16, 2020 10,000 375 5 Years 9.60 0.150% 17,000 40% 50% 18 Jan. 22, 2021 40,000 1,500 5 Years 11.20 0.600% 12,000 40% 50% 19 Jan. 25, 2021 40,000 1,500 5 Years 11.20 0.600% 12,000 40% 50% 20 Jan. 27, 2021 25,000 938 5 Years 11.20 0.375% 12,000 40% 50% 21 May 14,2021 45,000 1,688 5 Years 10.40 0.675% 13,500 40% 50% $ 2,985,000 106,315 44.775% $ 984,000 |
STOCKHOLDERS EQUITY (DEFICIT) (
STOCKHOLDERS EQUITY (DEFICIT) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS EQUITY (DEFICIENCY) | |
Summary of the status of the Company's Options related to the 2019 Incentive Plan | December 31, 2022 December 31, 2021 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of year 1,721,074 $ 7.38 606,250 $ 9.67 Forfeited (767,250 ) 6.81 (37,500 ) 11.84 Issued 736,083 3.73 1,152,324 6.32 Outstanding, end of period 1,689,907 $ 6.05 1,721,074 $ 7.38 |
Schedule of Options outstanding and exercisable | Outstanding Options Exercisable Options Range of Exercise Price Number Average Weighted Remaining Contractual Life in Years Range of Exercise Price Number Weighted Average Exercise Price $ 2.00-2.99 343,192 9.97 $ 2.00-2.99 343,192 $ 2.76 3.00-3.99 220,391 9.65 3.00-3.99 54,850 3.87 $ 4.00-4.99 53,324 8.78 $ 4.00-4.99 53,324 $ 4.48 5.00-5.99 710,500 8.89 5.00-5.99 443,062 5.50 8.00-8.99 6,250 2.54 8.00-8.99 7,813 8.80 9.00-9.99 25,000 2.63 9.00-9.99 25,000 9.60 11.00-11.99 162,500 7.80 11.00-11.99 84,375 11.20 12.00-12.99 168,750 2.14 12.00-12.99 168,750 12.80 1,689,907 8.31 1,180,366 $ 6.14 |
Summary of unregistered warrants | December 31, 2022 December 31, 2021 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of year 2,553,635 $ 7.57 2,502,291 $ 7.67 Issued - - 226,426 5.64 Exercised - - (139,099 ) 6.41 Cancelled - - - - Expired (951,437 ) 7.10 (35,983 ) 6.52 Outstanding, end of period 1,602,198 $ 7.85 2,553,635 $ 7.57 |
Schedule of unregistered warrants outstanding and exercisable by price range | Outstanding Warrants Exercisable Warrants Range of Number Average Weighted Remaining Contractual Life in Years Exercise Price Number Weighted Average Exercise Price $ 5.00-5.99 220,800 3.42 $ 5.00-5.99 220,800 5.50 6.00-6.99 156,875 2.50 6.00-6.99 156,875 6.40 8.00-8.99 950,084 0.79 8.00-8.99 950,084 8.04 9.00-9.99 231,938 2.69 9.00-9.99 231,938 9.60 10.00-10.99 1,688 3.37 10.00-10.99 1,688 10.40 11.00-11.99 35,813 1.00 11.00-11.99 35,813 11.20 14.00-14.99 5,000 1.99 14.00-14.99 5,000 14.40 1,602,198 1.61 1,602,198 $ 7.85 |
Schedule of Common Stock Warrants - Registered | December 31, 2022 December 31, 2021 Number of Registered Warrants Weighted Average Exercise Price Number of Registered Warrants Weighted Average Exercise Price Outstanding, beginning of year 2,975,497 $ 5.50 - $ - Issued - - 3,174,000 5.50 Exercised - - (198,503 ) 5.50 Cancelled - - - - Expired - - - - Outstanding, end of period 2,975,497 $ 5.50 2,975,497 $ 5.50 |
Schedule of registered warrants outstanding and exercisable by price range | Outstanding Registered Warrants Exercisable Registered Warrants Exercise Price Number Average Weighted Remaining Contractual Life in Years Exercise Price Number Weighted Average Exercise Price $ 5.50 2,975,497 1.5 $ 5.50 2,975,497 5.50 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of component of net loss | Years Ended December 31, 2022 2021 Domestic $ (8,745,293 ) $ (8,755,881 ) (Loss) before provision for income taxes (8,745,293 ) (8,755,881 ) |
Schedule Of The Company's tax expense differs from the "statutory" tax expense | For the Years Ended December 31, 2022 2021 Income tax (benefit) / Expense at federal statutory rate $ (1,836,512 ) 21.0 % $ (1,838,735 ) 21.0 % Apportioned state income taxes (131,407 ) 1.5 % - 0.0 % Stock based compensation 297,653 (3.3 )% (104,601 ) 1.2 % Rate change (31,180 ) 0.3 % (138,284 ) 1.6 % Return to provision adjustments (1,515 ) 0.0 % - 0.0 % Other non-deductible items - 0.0 % (21,692 ) 0.2 % Change in valuation allowance 1,702,961 (19.5 )% 2,103,312 (24.0 )% Total income tax provision $ - 0.0 % $ - 0.0 % |
Schedule Of Deferred Tax Assets And Liabilities | For the Years Ended December 31, 2022 2021 Deferred tax assets/(liabilities) Federal net operating loss carryforwards $ 7,606,833 $ 6,661,795 State net operating loss carryforwards 74,353 - Stock based compensation 2,738,159 2,502,856 Section 174 research and experimental expenditures 374,926 (73,521 ) Other deferred tax assets (liabilities) (180 ) - Total deferred tax assets $ 10,794,091 $ 9,091,130 Valuation allowance (10,794,091 ) (9,091,130 ) Total deferred income taxes $ - $ - |
Summary Of Operating Loss Carryforwards | Net Operating Losses recorded as Federal deferred tax asset Net Operating Losses recorded as State deferred tax asset 2023 through 2037 $ - $ - Total expiring operating losses (incurred prior to December 31, 2017) - - Non-expiring operating losses (incurred after December 31, 2017) 36,223,016 1,351,870 Total Operating Loss $ 36,223,016 $ 1,351,870 |
REVISION OF PREVIOUSLY ISSUED_3
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Additional paid in capital | $ 115,784,488 | $ 113,092,026 |
Accumulated deficit | (115,804,530) | (107,059,237) |
Accumulated deficit | $ 115,804,530 | 107,059,237 |
Previously Reported [Member] | ||
Additional paid in capital | 114,259,830 | |
Accumulated deficit | (108,227,041) | |
Accumulated deficit | 108,227,041 | |
Revised [Member] | ||
Additional paid in capital | 113,092,026 | |
Accumulated deficit | (107,059,237) | |
Accumulated deficit | 107,059,237 | |
Adjustment [Member] | ||
Additional paid in capital | (1,167,804) | |
Accumulated deficit | (1,167,804) | |
Accumulated deficit | $ 1,167,804 |
REVISION OF PREVIOUSLY ISSUED_4
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Research and development | $ 2,240,270 | $ 1,950,500 |
Loss from operations | (8,731,974) | (8,645,119) |
Net Loss | (8,745,293) | (8,755,881) |
General and administrative | (6,491,704) | (6,694,619) |
Research and development | (2,240,270) | (1,950,500) |
NET LOSS | (8,745,293) | (8,755,881) |
General and administrative | $ 6,491,704 | 6,694,619 |
Previously Reported [Member] | ||
Research and development | 2,119,684 | |
Total cost and expenses | 9,052,605 | |
Loss from operations | (9,052,605) | |
Net Loss | $ (9,163,366) | |
Basic and diluted loss per share | $ (1.20) | |
General and administrative | $ (6,932,921) | |
Research and development | (2,119,684) | |
NET LOSS | (9,163,366) | |
General and administrative | 6,932,921 | |
Revised [Member] | ||
Research and development | 1,950,500 | |
Total cost and expenses | 8,645,119 | |
Loss from operations | (8,645,119) | |
Net Loss | (8,775,881) | |
General and administrative | (6,694,619) | |
Research and development | (1,950,500) | |
NET LOSS | (8,775,881) | |
General and administrative | $ 6,694,619 | |
Basic and diluted loss per share | $ (1.15) | |
Adjustment [Member] | ||
Research and development | $ 169,184 | |
Total cost and expenses | (407,486) | |
Loss from operations | 407,486 | |
Net Loss | $ 407,485 | |
Basic and diluted loss per share | $ 0.05 | |
General and administrative | $ (238,302) | |
Research and development | (169,184) | |
NET LOSS | 407,485 | |
General and administrative | $ 238,302 |
REVISION OF PREVIOUSLY ISSUED_5
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details 2) | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Previously Reported [Member] | |
Balance amount - Additional Paid in Capital - Beginning Balance | $ 87,747,898 |
Balance amount- Accumulated Deficit - Beginning Balance | (99,063,675) |
Employee and director equity-based compensation - Additional Paid in Capital | 3,377,512 |
Employee and director equity-based compensation - Total | 3,377,512 |
Net loss for the year ended - Accumulated Deficit | (9,163,366) |
Net loss for the year ended - Total | (9,163,366) |
Balance amount - Additional Paid in Capital - Ending Balance | 114,259,830 |
Balance amount- Accumulated Deficit - Ending Balance | (108,227,041) |
Revised [Member] | |
Balance amount - Additional Paid in Capital - Beginning Balance | 86,987,579 |
Balance amount- Accumulated Deficit - Beginning Balance | (98,303,356) |
Employee and director equity-based compensation - Additional Paid in Capital | 2,970,027 |
Employee and director equity-based compensation - Total | 2,970,027 |
Net loss for the year ended - Accumulated Deficit | (8,775,881) |
Net loss for the year ended - Total | (8,775,881) |
Balance amount - Additional Paid in Capital - Ending Balance | 113,092,026 |
Balance amount- Accumulated Deficit - Ending Balance | (107,059,237) |
Adjustment [Member] | |
Balance amount - Additional Paid in Capital - Beginning Balance | (760,319) |
Balance amount- Accumulated Deficit - Beginning Balance | 760,319 |
Employee and director equity-based compensation - Additional Paid in Capital | (407,485) |
Employee and director equity-based compensation - Total | (407,485) |
Net loss for the year ended - Accumulated Deficit | 407,485 |
Net loss for the year ended - Total | 407,485 |
Balance amount - Additional Paid in Capital - Ending Balance | (1,167,804) |
Balance amount- Accumulated Deficit - Ending Balance | $ 1,167,804 |
REVISION OF PREVIOUSLY ISSUED_6
REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details 3) | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Previously Reported [Member] | |
Employee and director equity compensations | $ 3,377,512 |
Net loss | (9,163,366) |
Revised [Member] | |
Employee and director equity compensations | 2,970,027 |
Net loss | (8,775,881) |
Adjustment [Member] | |
Employee and director equity compensations | (407,485) |
Net loss | $ 407,485 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accumulated Deficit | $ (115,804,530) | $ (107,059,237) |
Retained Earning [Member] | ||
Accumulated Deficit | $ (115,800,000) |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Expected Dividends | 0% | 0% |
Minimum [Member] | ||
Expected Volatility | 116.42% | 123.40% |
Expected Term | 5 years | 3 years 3 months |
Risk Free Rate | 1.88% | 0.24% |
Maximum [Member] | ||
Expected Term | 5 years 9 months | 5 years 10 months 13 days |
Risk Free Rate | 3.70% | 1.34% |
Expected Volatility | 130.18% | 143.97% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Expenses for options and warrants granted to employees | $ 2,700,000 | $ 3,000,000 |
Epenses for R & D obligation | 500,000 | 300,000 |
Expenses was attributed to SG&A | $ 2,200,000 | $ 2,700,000 |
Common Shares From Convertible Debentures And Related Accrued Interest | 53,546 | 53,076 |
Current Federal Deposit Insurance | $ 250,000 | |
External Expenses | 1,400,000 | $ 1,600,000 |
Internal Expenses | 1,500,000 | 800,000,000,000 |
Amortization Of The R & D Obligation | 774,025 | 555,745 |
Amortization attributable to related parties | $ 193,610 | $ 150,805 |
Common Shares Issuable Upon The Exercise Of Outstanding Stock Options And Warrants | 6,267,602 | 7,250,206 |
Current FDIC limit | $ 250,000 |
LEASES (Details)
LEASES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
LEASES | ||
Operating Lease Right-of-use Asset | $ 189,282 | $ 27,225 |
Current Portion Of Long-term Operating Lease | 99,259 | 15,178 |
Long-term Operating Lease, Net Of Current Portion | 105,918 | 0 |
Operating Leases | $ 205,177 | $ 15,178 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||
Operating Lease Expense | $ 102,249 | $ 25,879 |
LEASES (Details 2)
LEASES (Details 2) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||
Operating Leases Weighted-average Remaining Lease Term | 1 year 11 months 8 days | 1 year 29 days |
Discount Rate Operating Leases | 11% | 11% |
LEASES (Details 3)
LEASES (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||
Cash Paid For Amounts Included In The Measurement Of Lease Liabilities | $ 74,307 | $ 32,913 |
Non-cash investment in ROU asset | $ 241,694 | $ 0 |
LEASES (Details 4)
LEASES (Details 4) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
LEASES | ||
December 31, 2023 | $ 116,933 | |
December 31, 2024 | 111,956 | |
Total Minimum Lease Payments | 228,889 | |
Less: Interest | (23,711) | |
Present Value Of Lease Obligations | 205,178 | |
Less: Current Portion | 99,259 | $ 15,178 |
Long-term Portion Of Lease Obligations | $ 105,919 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 1 Months Ended | |
Jan. 14, 2022 | Dec. 17, 2020 | |
LEASES | ||
Operating Lease Rent Expense | $ 232,464 | $ 54,743 |
Operating Lease Commencement Date | Apr. 29, 2022 | Feb. 01, 2021 |
Rent Description | Rent is $7,265 per month from commencement to November 30, 2022, $7,466 from November 30, 2022 to November 30, 2023, and $7,668 from November 30, 2023 to the lease end date | Rent is $3,291 per month from January 15, 2021 to January 31, 2022 and $1,154 from February 1, 2022 to January 31, 2023 |
LOAN PAYABLE RELATED PARTIES (D
LOAN PAYABLE RELATED PARTIES (Details Narrative) - HEP Investments, LLC - USD ($) | 12 Months Ended | 21 Months Ended |
Dec. 31, 2022 | Dec. 31, 2021 | |
Proceeds from Loans | $ 265,000 | $ 9,000 |
Loans Balance | $ 9,000 |
CONVERTIBLE DEBT (Details Narra
CONVERTIBLE DEBT (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||
Dec. 02, 2011 | Oct. 31, 2018 | Sep. 30, 2018 | Aug. 24, 2016 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 02, 2021 | Feb. 23, 2021 | |
Other Debt Description | The Company’s 1% convertible debentures allow for rolling 30-day extensions until notice is given by the lender to the Company to the contrary | |||||||
Accrued Interest | $ 98,286 | $ 95,886 | ||||||
HEP Investments, LLC | ||||||||
Accrued Interest | $ 14,380,298 | $ 2,161,845 | ||||||
Common Shares For Debt Convertible, Price Per Share | $ 8 | $ 8 | ||||||
Convertible Secured Promissory Note Converted Into Common Shares | 1,796,287 | 160,798 | ||||||
Warrants To Purchase Shares Of Common Stock, Exercise Price Per Share | $ 9.60 | |||||||
Convertible Secured Promissory Note Principal Amount | $ 20,000,000 | |||||||
Convertible notes converted into common share | 781,524 | |||||||
Principal Amount And Outstanding Debt | 4,090,342 | $ 4,090,342 | ||||||
Principal Amount And Accrued Interest | 6,252,187 | |||||||
Life insurance policy premiums amount per month | $ 2,565 | |||||||
Convertible Secured Promissory Note Principal Amount Funded | $ 18,470,640 | |||||||
Warrants To Purchase Shares Of Common Stock | 20,833 | |||||||
Loan Agreement Amount | $ 20,000,000 | $ 20,000,000 | ||||||
Restricted Common Stock Price Per Shares | $ 8 | |||||||
Warrants Expired | Sep. 30, 2016 | |||||||
Paulson Investment Company, LLC | ||||||||
Common Shares For Debt Convertible, Price Per Share | $ 8 | |||||||
Loan Agreement Amount | $ 2,000,000 | |||||||
Restricted Common Stock Price Per Shares | $ 8 | |||||||
Funding Received From Related Party | $ 1,250,000 | |||||||
Loans Maturity Amount | $ 650,000 | $ 600,000 | ||||||
Finance Fee Cash Percentage Rate Convertible Debt | 10% | |||||||
Finance Fee Cash Convertible Debt Year Of Term | 5 years | |||||||
Paulson Investment Company, LLC | Debt Extension and Conversion Agreement | ||||||||
Accrued Interest | $ 436,369 | |||||||
Common Shares For Debt Convertible, Price Per Share | $ 8 | |||||||
Convertible Secured Promissory Note Converted Into Common Shares | 160,798 | |||||||
Principal Amount And Outstanding Debt | $ 850,000 | |||||||
Principal Amount And Accrued Interest | $ 1,286,369 |
NOTE PAYABLE (Details Narrative
NOTE PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |||||
Sep. 09, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | May 07, 2020 | Apr. 29, 2020 | |
NOTE PAYABLE | ||||||
Paycheck protection program loan amount | $ 121,700 | $ 121,700 | ||||
Accrued Interest Paycheck Protection | 1,653 | $ 820 | ||||
Interest Due | $ 122,520 | |||||
Debt Principal | $ 121,700 | |||||
Principal amount | $ 121,700 | |||||
PPP Loan, interest accrues on outstanding principal rate | 1% | |||||
Description of short term loan | The note in the amount of $628,600 carried a 4.15% annual percentage rate and was paid down in nine equal payments of $71,058 beginning in March 2022. The loan was fully paid off, and there was no remaining principal balance as of December 31, 2022. | |||||
Loan amount eligible payroll costs, percentage rate | 60% | |||||
Offset interest expense | $ 833 |
DEFERRED RD OBLIGATIONS - PAR_2
DEFERRED RD OBLIGATIONS - PARTICIPATION AGREEMENTS (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Amount Funded | $ 2,985,000 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 106,315 |
Revenue Share | 44.775% |
Minimum Payment Threshold | $ 984,000 |
Agreement 8 | |
Amount Funded | $ 125,000 |
Date Of Funding | Aug. 24, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 4,688 |
Minimum Payment Threshold | $ 37,500 |
Revenue Share | 1.875% |
Agreement 9 | |
Amount Funded | $ 150,000 |
Date Of Funding | Sept. 14, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 5,625 |
Revenue Share | 2.25% |
Minimum Payment Threshold | $ 45,000 |
Agreement 21 | |
Amount Funded | $ 45,000 |
Date Of Funding | May 14,2021 |
Term | 5 |
Exercise Price | $ / shares | $ 10.40 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 1,688 |
Revenue Share | 0.675% |
Minimum Payment Threshold | $ 13,500 |
Agreement 10 | |
Amount Funded | $ 50,000 |
Date Of Funding | Sept.15, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 1,875 |
Revenue Share | 0.75% |
Minimum Payment Threshold | $ 15,000 |
Agreement 11 | |
Amount Funded | $ 50,000 |
Date Of Funding | Sept.15, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 1,875 |
Revenue Share | 0.75% |
Minimum Payment Threshold | $ 15,000 |
Agreement 12 | |
Amount Funded | $ 300,000 |
Date Of Funding | Sept.25, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 5,625 |
Revenue Share | 4.50% |
Minimum Payment Threshold | $ 420,000 |
Agreement 13 | |
Amount Funded | $ 500,000 |
Date Of Funding | Oct. 8, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 40% |
Warrants | shares | 18,750 |
Revenue Share | 7.50% |
Minimum Payment Threshold | $ 150,000 |
Agreement 14 | |
Amount Funded | $ 100,000 |
Date Of Funding | Oct. 4, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 3,750 |
Revenue Share | 1.50% |
Minimum Payment Threshold | $ 40,000 |
Agreement 18 | |
Amount Funded | $ 40,000 |
Date Of Funding | Jan. 22, 2021 |
Term | 5 |
Exercise Price | $ / shares | $ 11.20 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 1,500 |
Revenue Share | 0.60% |
Minimum Payment Threshold | $ 12,000 |
Agreement 15 | |
Amount Funded | $ 250,000 |
Date Of Funding | Oct. 4, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 40% |
Warrants | shares | 9,375 |
Revenue Share | 3.75% |
Minimum Payment Threshold | $ 0 |
Agreement 16 | |
Amount Funded | $ 50,000 |
Date Of Funding | Oct. 9, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 40% |
Warrants | shares | 1,875 |
Revenue Share | 0.75% |
Minimum Payment Threshold | $ 15,000 |
Agreement 17 | |
Amount Funded | $ 10,000 |
Date Of Funding | Dec. 16, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 375 |
Revenue Share | 0.15% |
Minimum Payment Threshold | $ 17,000 |
Agreement 19 | |
Amount Funded | $ 40,000 |
Date Of Funding | Jan. 25, 2021 |
Term | 5 |
Exercise Price | $ / shares | $ 11.20 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 1,500 |
Revenue Share | 0.60% |
Minimum Payment Threshold | $ 12,000 |
Agreement 20 | |
Amount Funded | $ 25,000 |
Date Of Funding | Jan. 27, 2021 |
Term | 5 |
Exercise Price | $ / shares | $ 11.20 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 938 |
Revenue Share | 0.375% |
Minimum Payment Threshold | $ 12,000 |
Agreement 1 | |
Amount Funded | $ 100,000 |
Date Of Funding | April 13, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 40% |
Warrants | shares | 3,750 |
Revenue Share | 1.50% |
Minimum Payment Threshold | $ 0 |
Agreement 2 | |
Amount Funded | $ 150,000 |
Date Of Funding | April 13, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 40% |
Warrants | shares | 5,625 |
Revenue Share | 2.25% |
Minimum Payment Threshold | $ 0 |
Agreement 3 | |
Amount Funded | $ 150,000 |
Date Of Funding | April 13, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 40% |
Warrants | shares | 5,625 |
Revenue Share | 2.25% |
Minimum Payment Threshold | $ 0 |
Agreement 4 | |
Amount Funded | $ 250,000 |
Date Of Funding | May 7, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 40% |
Warrants | shares | 9,375 |
Revenue Share | 3.75% |
Minimum Payment Threshold | $ 0 |
Agreement 5 | |
Amount Funded | $ 275,000 |
Date Of Funding | June 1, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 8.80 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 10,313 |
Revenue Share | 4.125% |
Minimum Payment Threshold | $ 82,500 |
Agreement 6 | |
Amount Funded | $ 225,000 |
Date Of Funding | June 3, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 8.80 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 8,438 |
Revenue Share | 3.375% |
Minimum Payment Threshold | $ 67,500 |
Agreement 7 | |
Amount Funded | $ 100,000 |
Date Of Funding | July 8, 2020 |
Term | 5 |
Exercise Price | $ / shares | $ 9.60 |
Buy-back Premium Percentage Pre-18 Mos. | 40% |
Buy-back Premium Percentage Post-18 Mos. | 50% |
Warrants | shares | 3,750 |
Revenue Share | 1.50% |
Minimum Payment Threshold | $ 30,000 |
DEFERRED RD OBLIGATIONS - PAR_3
DEFERRED RD OBLIGATIONS - PARTICIPATION AGREEMENTS (Details Narrative) | 2 Months Ended | 12 Months Ended | 21 Months Ended | |
May 31, 2021 USD ($) | Dec. 31, 2022 USD ($) integer shares | Dec. 31, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Number Of License Co-development Participation Agreements | integer | 21 | |||
Revenue Share | 44.78% | |||
Proceeds From Sales As Future Revenues | $ 2,985,000 | $ 2,985,000 | ||
Warrants Issued And Sold | shares | 106,315 | |||
Warrants Issued And, Value | $ 953,897 | |||
Deferred Revenue | $ 2,031,103 | |||
Annual Rate Of Dividends | 0% | 0% | ||
Research And Development Expense | $ 774,025 | $ 555,745 | ||
Revenue Share Minimum Percentage | 140% | |||
Revenue Share Minimum Percentage | 30% | |||
Buy-back Premium Percentage Pre-18 Mos. | 40% | |||
Buy-back Premium Percentage Post-18 Mos. | 50% | |||
R&D obligation | $ 701,331 | 1,475,357 | $ 1,475,357 | |
Contra R&D expense related to personnel and third-party expenses | 193,610 | 150,805 | ||
R&D obligation attributed to a related party | $ 175,427 | $ 369,037 | 369,037 | |
Minimum [Member] | ||||
Volatilities Rate | 129.13% | |||
Discount Rates | 0.26% | |||
Maximum [Member] | ||||
Volatilities Rate | 154.26% | |||
Discount Rates | 0.87% | |||
HEP Investments, LLC | ||||
Proceeds From Loans | $ 265,000 | $ 9,000 | ||
MKY MTS LLC | ||||
Proceeds From Loans | 45,000 | |||
Strome | ||||
Proceeds From Loans | $ 500,000 |
STOCKHOLDERS EQUITY (DEFICIT)_2
STOCKHOLDERS EQUITY (DEFICIT) (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Registered Warrant | ||
Number of options outstanding, beginning | 2,975,497 | 2,975,497 |
Number of options issued | 0 | 3,174,000 |
Number of options exercised | 198,503 | |
Number of options expired | 0 | 0 |
Number of options outstanding, ending | 2,975,497 | 2,975,497 |
Weighted average exercise price outstanding, beginning | $ 5.50 | $ 0 |
Weighted average exercise price issued | 0 | 5.50 |
Weighted average exercise price expired | 0 | 0 |
Weighted average exercise price cancelled | 0 | 0 |
Weighted average exercise price exercised | 0 | 5.50 |
Weighted average exercise price outstanding, ending | $ 5.50 | $ 5.50 |
Unregistered Warrant [Member] | ||
Number of options outstanding, beginning | 2,553,635 | 2,502,291 |
Number of options issued | 226,426 | |
Number of options exercised | 139,099 | |
Number of options expired | 951,437 | 35,983 |
Number of options outstanding, ending | 1,602,198 | 2,553,635 |
Weighted average exercise price issued | $ 0 | $ 5.64 |
Weighted average exercise price expired | 7.10 | 6.52 |
Weighted average exercise price cancelled | 0 | 0 |
Weighted average exercise price exercised | 0 | 6.41 |
Weighted average exercise price outstanding, beginning | 7.57 | 7.67 |
Weighted average exercise price outstanding, ending | $ 7.85 | $ 7.57 |
Unregistered Warrant [Member] | 5.00-5.99 | ||
Number of options outstanding, ending | 220,800 | |
Unregistered Warrant [Member] | 12.00-12.99 | ||
Number of options outstanding, ending | 35,813 | |
2019 Stock Incentive Plan | ||
Number of options outstanding, beginning | 1,721,074 | 606,250 |
Number of options issued | 736,083 | 1,152,324 |
Number of options cancelled | 767,250 | 37,500 |
Number of options outstanding, ending | 1,689,907 | 1,721,074 |
Weighted average exercise price outstanding, beginning | $ 7.38 | $ 9.67 |
Weighted average exercise price issued | 3.73 | 6.32 |
Weighted average exercise price cancelled | 6.81 | 11.84 |
Weighted average exercise price outstanding, ending | $ 6.05 | $ 7.38 |
Number of options forfeited | (767,250) | (37,500) |
2019 Stock Incentive Plan | 4.00-4.99 | ||
Number of options outstanding, beginning | 53,324 | |
Number of options outstanding, ending | 53,324 | |
2019 Stock Incentive Plan | 5.00-5.99 | ||
Number of options outstanding, beginning | 710,500 | |
Number of options outstanding, ending | 710,500 | |
2019 Stock Incentive Plan | 8.00-8.99 | ||
Number of options outstanding, beginning | 6,250 | |
Number of options outstanding, ending | 6,250 | |
2019 Stock Incentive Plan | 11.00-11.99 | ||
Number of options outstanding, beginning | 162,500 | |
Number of options outstanding, ending | 162,500 | |
2019 Stock Incentive Plan | 12.00-12.99 | ||
Number of options outstanding, beginning | 168,750 | |
Number of options outstanding, ending | 168,750 |
STOCKHOLDERS EQUITY (DEFICIT)_3
STOCKHOLDERS EQUITY (DEFICIT) (Details 1) - 2019 Stock Incentive Plan - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of options outstanding | 1,689,907 | 1,721,074 | 606,250 |
Weighted average remaining contractual life (in years) | 8 years 3 months 21 days | ||
Number of exercisable options | 1,180,366 | ||
Weighted average exercise price exercisable | $ 6.14 | ||
4.00-4.99 | |||
Number of options outstanding | 53,324 | 53,324 | |
Weighted average remaining contractual life (in years) | 8 years 9 months 10 days | ||
Number of exercisable options | 53,324 | ||
Weighted average exercise price exercisable | $ 4.48 | ||
Exercise price range | 4.00-4.99 | ||
5.00-5.99 | |||
Number of options outstanding | 710,500 | 710,500 | |
Weighted average remaining contractual life (in years) | 8 years 10 months 20 days | ||
Number of exercisable options | 443,062 | ||
Weighted average exercise price exercisable | $ 5.50 | ||
Exercise price range | 5.00-5.99 | ||
8.00-8.99 | |||
Number of options outstanding | 6,250 | 6,250 | |
Weighted average remaining contractual life (in years) | 2 years 6 months 14 days | ||
Number of exercisable options | 7,813 | ||
Weighted average exercise price exercisable | $ 8.80 | ||
Exercise price range | 8.00-8.99 | ||
11.00-11.99 | |||
Number of options outstanding | 162,500 | 162,500 | |
Weighted average remaining contractual life (in years) | 7 years 9 months 18 days | ||
Number of exercisable options | 84,375 | ||
Weighted average exercise price exercisable | $ 11.20 | ||
Exercise price range | 11.00-11.99 | ||
12.00-12.99 | |||
Number of options outstanding | 168,750 | 168,750 | |
Weighted average remaining contractual life (in years) | 2 years 1 month 20 days | ||
Number of exercisable options | 168,750 | ||
Weighted average exercise price exercisable | $ 12.80 | ||
Exercise price range | 12.00-12.99 | ||
2.00-2.99 | |||
Number of options outstanding | 343,192 | ||
Weighted average remaining contractual life (in years) | 9 years 11 months 19 days | ||
Number of exercisable options | 343,192 | ||
Weighted average exercise price exercisable | $ 2.76 | ||
Exercise price range | 2.00-2.99 | ||
3.00-3.99 | |||
Number of options outstanding | 220,391 | ||
Weighted average remaining contractual life (in years) | 9 years 7 months 24 days | ||
Number of exercisable options | 54,850 | ||
Weighted average exercise price exercisable | $ 3.87 | ||
Exercise price range | 3.00-3.99 | ||
9.00-9.99 | |||
Number of options outstanding | 25,000 | ||
Weighted average remaining contractual life (in years) | 2 years 7 months 17 days | ||
Number of exercisable options | 25,000 | ||
Weighted average exercise price exercisable | $ 9.60 | ||
Exercise price range | 9.60 |
STOCKHOLDERS EQUITY (DEFICIT)_4
STOCKHOLDERS EQUITY (DEFICIT) (Details 2) - $ / shares | 1 Months Ended | 12 Months Ended | ||
Jul. 28, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Average weighted remaining contructual life in years | 5 years 3 months 21 days | |||
Unregistered Warrant [Member] | ||||
Number of options outstanding | 1,602,198 | 2,553,635 | 2,502,291 | |
Average weighted remaining contructual life in years | 1 year 7 months 9 days | |||
Number of exercisable options | 1,602,198 | |||
Weighted average exercise price exercisable | $ 7.85 | |||
Unregistered Warrant [Member] | 5.00-5.99 | ||||
Number of options outstanding | 220,800 | |||
Average weighted remaining contructual life in years | 3 years 5 months 1 day | |||
Number of exercisable options | 220,800 | |||
Weighted average exercise price exercisable | $ 5.50 | |||
Unregistered Warrant [Member] | 3.00-3.99 | ||||
Number of options outstanding | 156,875 | |||
Average weighted remaining contructual life in years | 2 years 6 months | |||
Number of exercisable options | 156,875 | |||
Weighted average exercise price exercisable | $ 6.40 | |||
Unregistered Warrant [Member] | 8.00-8.99 | ||||
Number of options outstanding | 950,084 | |||
Average weighted remaining contructual life in years | 9 months 14 days | |||
Number of exercisable options | 950,084 | |||
Weighted average exercise price exercisable | $ 8.04 | |||
Unregistered Warrant [Member] | 9.00-9.99 | ||||
Number of options outstanding | 231,938 | |||
Average weighted remaining contructual life in years | 2 years 8 months 8 days | |||
Number of exercisable options | 231,938 | |||
Weighted average exercise price exercisable | $ 9.60 | |||
Unregistered Warrant [Member] | 10.00-10.99 | ||||
Number of options outstanding | 1,688 | |||
Average weighted remaining contructual life in years | 3 years 4 months 13 days | |||
Number of exercisable options | 1,688 | |||
Weighted average exercise price exercisable | $ 10.40 | |||
Unregistered Warrant [Member] | 14.00-14.99 | ||||
Number of options outstanding | 5,000 | |||
Average weighted remaining contructual life in years | 1 year 11 months 26 days | |||
Number of exercisable options | 5,000 | |||
Weighted average exercise price exercisable | $ 14.40 | |||
Unregistered Warrant [Member] | 12.00-12.99 | ||||
Number of options outstanding | 35,813 | |||
Average weighted remaining contructual life in years | 1 year | |||
Number of exercisable options | 35,813 | |||
Weighted average exercise price exercisable | $ 11.20 |
STOCKHOLDERS EQUITY (DEFICIT)_5
STOCKHOLDERS EQUITY (DEFICIT) (Details 3) - Registered Warrant - 5.50 | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Exercise price range | 5.50 |
Number of exercisable Register warrant | 2,975,497 |
Number of exercisable options | 2,975,497 |
Weighted average exercise price exercisable term | 1 year 6 months |
Weighted average exercise price exercisable | $ / shares | $ 5.50 |
STOCKHOLDERS EQUITY (DEFICIT)_6
STOCKHOLDERS EQUITY (DEFICIT) (Details Narative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Oct. 21, 2021 | Oct. 15, 2021 | Oct. 12, 2021 | Oct. 11, 2021 | Sep. 30, 2021 | Jun. 15, 2021 | Jun. 03, 2021 | May 28, 2021 | Dec. 19, 2022 | Dec. 16, 2022 | Aug. 29, 2022 | Jul. 28, 2022 | Feb. 22, 2022 | Jan. 31, 2021 | Nov. 29, 2019 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Grants shares | 7,660 | 12,732 | 47,391 | ||||||||||||||||
Grants shares, amount | $ 33,549 | $ 139,444 | $ 4,244 | $ 15,797 | |||||||||||||||
Common stock and treasury shares, Description | 1-for-80 basis and (ii) decrease the number of total authorized shares of common stock of the Company from 1,200,000,000 to 150,000,000 shares. | ||||||||||||||||||
Reverse stock split of common stock | As of the Effective Time, every 80 shares of issued and outstanding common stock were converted into one share of common stock. | ||||||||||||||||||
Common stock purchased, related party | 4,464 | ||||||||||||||||||
Proceed from related party | $ 50,000 | ||||||||||||||||||
Purchase price | $ 5.50 | $ 5.50 | $ 11.20 | ||||||||||||||||
Other costs | $ 1,622,638 | ||||||||||||||||||
Director fee | $ 1,155,722 | ||||||||||||||||||
Common stock unit issued | 2,760,000 | ||||||||||||||||||
Gross proceeds of stock | $ 13,804,240 | ||||||||||||||||||
Average weighted remaining contructual life in years | 5 years 3 months 21 days | ||||||||||||||||||
Net proceeds of stock | $ 1,091,767 | $ 12,181,602 | |||||||||||||||||
Stock warrant exercised | 198,503 | 139,100 | |||||||||||||||||
Issuance of common stock | 54,361 | ||||||||||||||||||
Sale of common stock warrants, Shares | 5,626 | ||||||||||||||||||
Sale of common stock warrants, Description | On June 2, 2021, the Company completed its public offering of common stock and warrants. As part of the transaction, the Company sold 414,000 warrants (“registered warrants”) with an exercise price of $5.50 per share, from the overallotment option that was exercised by the underwriter for $4,140. Additionally, the Company issued the underwriter 8% of the number of shares of common stock in the offering in 220,800 unregistered warrants for shares of common stock, for an aggregate price to the Company of $100. These warrants are exercisable 180 days after the offering date and expire five years after the first day they are exercisable. The warrants were valued at $946,675 based on the Black Scholes pricing model relying on the following assumptions: volatility 132.46%; annual rate of dividends 0%; discount rate 0.80%. This was recognized by the company as an underwriting cost and was accounted for as an offset to funds raised. | ||||||||||||||||||
Underwriters description | On July 2, 2021, the underwriter of the June 2021 Offering exercised its overallotment option and purchased an additional 150,000 shares of the Company’s common stock at $4.99 per share for gross proceeds of $748,500, and net proceeds of $673,159 after related underwriting and other costs of $75,191. | ||||||||||||||||||
Professional fee | $ 710,481 | ||||||||||||||||||
Proceeds from warrant exercises | $ 1,091,767 | $ 1,091,767 | |||||||||||||||||
Proceed from stock issuances | 0 | $ 1,514,970 | |||||||||||||||||
Sale of common stock warrants, Amount | $ 50,000 | ||||||||||||||||||
Dividend rate | 0% | 0% | |||||||||||||||||
Common stock value | 300,000 | 10,000 | $ 50,000 | 9,420 | $ 9,420 | $ 9,420 | |||||||||||||
Maximum [Member] | |||||||||||||||||||
Discount rates | 0.87% | ||||||||||||||||||
Volatility range | 154.26% | ||||||||||||||||||
Chief Financial Officer [Member] | |||||||||||||||||||
Option to purchase common stock | 162,500 | ||||||||||||||||||
Options, grants in period, exercise price | $ 11.20 | ||||||||||||||||||
Chief Financial Officer [Member] | Tranche One [Member] | |||||||||||||||||||
Options, vested and expected to vest, outstanding, number | 37,500 | ||||||||||||||||||
Chief Financial Officer [Member] | Tranche Two [Member] | |||||||||||||||||||
Options, vested and expected to vest, outstanding, number | 15,625 | ||||||||||||||||||
CorProminence, LLC [Member] | |||||||||||||||||||
Market price | $ 4.15 | $ 4.48 | |||||||||||||||||
Common stock share issued, restricted | 2,500 | 5,000 | |||||||||||||||||
Total expense | $ 10,375 | $ 22,400 | |||||||||||||||||
Black Scholes Pricing Model [Member] | |||||||||||||||||||
Average weighted remaining contructual life in years | 5 years 9 months | 5 years 9 months | |||||||||||||||||
Dividend rate | 0% | 1.59% | 0% | 0% | |||||||||||||||
Discount rates | 1.68% | 3.25% | 1.88% | ||||||||||||||||
Volatility range | 141.38% | 121.19% | 130.18% | ||||||||||||||||
Common stock value | $ 3,476,392 | $ 50,000 | $ 173,000 | ||||||||||||||||
Private Investors [Member] | |||||||||||||||||||
Shares issued | 139,664 | ||||||||||||||||||
HEP Investments | Third Party Investors | |||||||||||||||||||
Proceed from related party | $ 50,000 | $ 300,000 | $ 10,000 | $ 50,000 | |||||||||||||||
Participation Agreements [Member] | Black Scholes Pricing Model [Member] | |||||||||||||||||||
Sale of common stock warrants, Amount | $ 55,697 | $ 55,697 | |||||||||||||||||
Dividend rate | 0% | ||||||||||||||||||
Participation Agreements [Member] | Black Scholes Pricing Model [Member] | Maximum [Member] | |||||||||||||||||||
Average weighted remaining contructual life in years | 5 years | 5 years | |||||||||||||||||
Dividend rate | 0% | 1.59% | 0% | 0% | |||||||||||||||
Discount rates | 1.59% | 3.70% | 0.87% | 0.41% | |||||||||||||||
Volatility range | 0% | 142.54% | 116.47% | 116.42% | 0.87% | ||||||||||||||
Total options | $ 11,416 | ||||||||||||||||||
2021 Incentive Plan [Member] | |||||||||||||||||||
Shares granted | 260,000 | ||||||||||||||||||
Share purchased | 924,000 | ||||||||||||||||||
Aggregate number of common shares available for issuance | 664,000 | ||||||||||||||||||
2019 Incentive Plan [Member] | |||||||||||||||||||
Aggregate number of common shares available for issuance | 1,061,925 | ||||||||||||||||||
Plan term | 9 months 14 days | ||||||||||||||||||
Issuance of additional options | 1,000,000 | ||||||||||||||||||
Incentive plan, description | Equity Incentive Plan, the Company maintained a 2019 Omnibus Long-Term Incentive Plan (the “2019 Plan”). Following the approval by the shareholders of the 2021 Equity Incentive Plan, no additional awards have been or will be made under the 2019 Plan. As of December 31, 2022, 781,250 stock options had been issued under the 2019 Plan with terms between 5 years and 10 years, of which 362,500 remained outstanding. | ||||||||||||||||||
Investor Private Placement Member | |||||||||||||||||||
Proceed from stock issuances | $ 1,514,969 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 1 Months Ended | |||||
Oct. 15, 2021 USD ($) $ / shares shares | Aug. 31, 2021 integer | Feb. 15, 2021 USD ($) shares | Dec. 31, 2022 shares | Dec. 31, 2021 shares | Oct. 31, 2021 shares | |
Issuance of Common Share | 9,419,660 | 9,419,660 | ||||
Corporate Advisory Agreement [Member] | ||||||
First completion of Phase | integer | 1 | |||||
Percentage of fees first phase per transaction | 6% | |||||
Second completion of Phase | integer | 3 | |||||
Percentage of fees Second phase per transaction | 3% | |||||
Description of phases transaction | 50% in cash, and 50% in equity | |||||
Investor Public Relations [Member] | ||||||
Vesting shares | 5,000 | |||||
Vest on Anniversary Eight Month | 2,500 | |||||
Vest on Anniversary Twelve Month | 2,500 | |||||
consulting services | $ | $ 15,000 | |||||
Issuance of Common Share | 2,500 | 2,500 | ||||
Restricted Shares | 10,000 | |||||
Per share Price | $ / shares | $ 4.15 | |||||
Total Expense | $ | $ 10,375 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 shares | |
Chris Maggiore [Member] | |
Number of unit offered | 100,000 |
Alison Cornell [Member] | |
Number of unit offered | 15,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | 24 Months Ended |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Domestic | $ (8,745,293) | $ (8,755,881) |
Loss before provision for income taxes | $ (8,745,293) | $ (8,755,881) |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Income tax (benefit) / Expense at federal statutory rate | $ (1,836,512) | $ (1,838,735) |
Apportioned state income taxes | (131,407) | 0 |
Stock based compensation | 297,653 | (104,601) |
Rate change | (31,180) | (138,284) |
Return to provision adjustments | (1,515) | 0 |
Other non-deductible items | 0 | (21,692) |
Change in valuation allowance | 1,702,961 | 2,103,312 |
Total income tax provision | $ 0 | $ 0 |
Income tax (benefit) / Expense at federal statutory rate, percent | 21% | 21% |
Apportioned state income taxes, percent | 1.50% | 0% |
Stock based compensation, percent | (3.30%) | 1.20% |
Rate change | 0.30% | 1.60% |
Return to provision adjustments , percent | 0% | 0% |
Other non-deductible items, percent | 0% | 0.20% |
Change in valuation allowance, percent | (19.50%) | (24.00%) |
Total income tax provision, percent | 0% | 0% |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred tax assets: | ||
Federal net operating loss carryforwards | $ 7,606,833 | $ 6,661,795 |
State net operating loss carryforwards | 74,353 | 0 |
Stock based compensation | 2,738,159 | 2,502,856 |
Other deferred tax assets (liabilities) | (180) | 0 |
Total deferred tax assets | 10,794,091 | 9,091,130 |
Valuation allowance | (10,794,091) | (9,091,130) |
Total deferred income taxes | 0 | 0 |
Section 174 research and experimental expenditures | ||
Deferred tax assets: | ||
Section 174 research and experimental expenditures | $ 374,926 | $ (73,521) |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) | Dec. 31, 2022 USD ($) |
Net Operating Losses recorded as Federal deferred tax asset [Member] | |
2023 through 2037 | $ 0 |
Total expiring operating losses (incurred prior to December 31, 2017) | 0 |
Non-expiring operating losses (incurred after December 31, 2017) | 36,223,016 |
Total Operating Loss | 36,223,016 |
Net Operating Losses recorded as State deferred tax asset [Member] | |
2023 through 2037B3 | 0 |
Total expiring operating losses (incurred prior to December 31, 2017) | 0 |
Non-expiring operating losses (incurred after December 31, 2017) | 1,351,870 |
Total Operating Loss | $ 1,351,870 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income taxes | $ (400,000,000,000) | |
Valuation allowance | 14,600,000 | |
Increase in valuation allowance | $ 1,700,000 | $ 2,100,000 |
Gross deferred tax assets description | the state net operating loss carryforwards, stock-based compensation, and Section 174 research and experimental expenditures as of December 31, 2021 within gross deferred tax assets as previously disclosed by approximately $11.0 million, $3.1 million, $400,000, and $100,000, respectively, with a corresponding decrease in the valuation allowance of $14.6 million | |
Deferred tax asset | (180) | $ 0 |
Domestic Tax Authority [Member] | ||
Net operating loss carried forward | $ 36,200,000 | |
State and Local Jurisdiction [Member] | ||
Net operating loss carried forward | 31,700,000 | |
Deferred tax asset | 3,100,000 | |
Minimum [Member] | ||
Statutory expense | 100,000 | |
Maximum [Member] | ||
Statutory expense | 400,000 | |
Tax Year 2021 [Member] | ||
Deferred tax asset | $ 11,000,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Feb. 14, 2023 | Jan. 31, 2023 | Sep. 30, 2022 | Apr. 29, 2020 | |
Stockholders' equity decreases | $ 2,500,000 | |||
Loan Amount | $ 121,700 | |||
Subsequent Event [Member] | 2021 Plan [Member] | ||||
Shares repurchased | $ 470,983 | |||
Percent of common stock | 5% | |||
Subsequent Event [Member] | 2021 Plan [Member] | ||||
Loan Amount | $ 605,600 | |||
Interest rate | 8.40% | |||
Monthly Payment | $ 69,666 |