STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2024

NOTE 8 – STOCKHOLDERS’ EQUITY

Description of Preferred and Common Stock

Preferred Stock

The preferred stock may be issued in one or more series. The Company’s board of directors are authorized to issue the shares of preferred stock in such series and to fix from time to time before issuance thereof the number of shares to be included in any such series and the designation, powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of such series.

Common Stock

The rights of each share of common are the same with respect to dividends, distributions and rights upon liquidation. Holders of common stock each have one vote per share in the election of directors and other matters submitted to a vote of the stockholders.

Issuances of Common Stock

Common Stock Issued for Services

Through the nine months ended September 30, 2024, no stock has been issued for services.

In February 2023, we reached an agreement with the landlord of our Michigan facility to accept 52,800 shares of our common stock at a price of $1.25 per share as partial payment of rent for the nine-month period from October 2022 through March 2023. Those shares were issued in March, 2023. In May 2023, we reached a further agreement with the landlord that calls for us to pay cash each month to cover the cost of the mortgage and the lease for the lighting fixtures, but that will allow us to pay the balance of the rent by issuing shares of our stock valued at $0.75 per share. We have the option to continue to use stock to pay a portion of the rent through 2024. The landlord is a Related Party.

On May 30, 2023, the Company issued 76,922 shares of restricted common stock to a consultant as compensation for services. The shares are subject to forfeiture until vested. So long as the consulting services agreement remains in effect 4,273 shares vested in May for prior service, and another 4,273 shares vest at the end of May and each calendar month thereafter, with 4,277 shares vesting in December 2023. During 2024, 3,205 shares will vest at the end of each month, with 3,206 shares vesting at the end of December 2024.

In August 2023, the Company issued to each of three individuals who are serving on its advisory committee a total of 38,460 shares of restricted stock for their services during 2023. All shares vested ratably by December 31, 2023.

Sales of Common Stock and Derivative Equity Securities

During the quarter ended September 30, 2024, the Company sold 699,999 shares of common stock for proceeds of $525,000. For the nine months ended September 30, 2024 the company sold a total of 983,333 shares of common stock for proceeds of $737,500.

During the quarter ended September 30, 2023, the Company sold 533,331 shares of common stock for proceeds of $400,000. In addition, during the three-month period ended September 30, 2023, an investment made in April was cancelled and the $250,000 investment was reissued at $0.75 per share, resulting in a net increase in the outstanding stock of 136,482 shares. In connection with this sale, the company canceled the 196,813 warrants previously issued in April.

Stock Options

Stock options to purchase common stock outstanding at September 30, 2024 include those described below. No options were exercised during the period. No options have been included in diluted earnings per share as they would be anti-dilutive. During the three- and nine-month periods ending September 31, 2024, stock compensation expense totaled $771,495 and $787,830 respectively. During the three- and nine-month periods ending September 31, 2023, stock compensation expense totaled $119,999 and $410,392.

SCHEDULE OF STOCK OPTION PLAN ACTIVITY

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding December 31, 2023		2,270,483		$	0.67		2.72	$	76,725
Exercised		-			-		-		-
Issued		1,106,268			0.31		-		-
Expired & forfeited		(55,297	)		0.65		-		-
Outstanding September 30, 2024		3,321,454		$	0.55		3.55	$	738,666

Exercisable September 30, 2024		2,903,540		$	0.58		3.37	$	550,834

	September 30, 2024		December 31, 2023
Stock options		3,321,454		2,270,483
Stock warrants		7,525,265		7,525,265
Convertible debt (on an as converted basis)		368,624		349,824
Total		11,215,343		10,145,572

Warrants

As of September 30, 2024 and September 30, 2023, there were outstanding and exercisable warrants to purchase 7,525,265 shares of common stock. The outstanding warrants have a weighted average exercise price of $1.72 per share and a weighted average remaining contractual term of 31.72 months. As of September 30, 2024, there was no intrinsic value for the warrants. No warrants have been included in diluted earnings per share as they would be anti-dilutive.

2021 Equity Incentive Plan

On March 2, 2021, our Board adopted the 2021 Nano Magic 2021 Equity Incentive Plan (the “Plan”) to allow equity compensation for those who provide services to the Company and to encourage ownership in the Company by personnel whose service to the Company is important to its continued progress, to encourage recipients to act as owners and thereby in the stockholders’ interest and to enable recipients to share in the Company’s success.

On July 29, 2024, the Company granted 426,268 options under the 2021 Equity Plan at an exercise price of $0.31 per share.

Other Options

See Note 7 Related Parties for other options granted to officers and directors in 2023 and 2024.

- Definition

The entire disclosure for equity.

+ References

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+ Details

Nano Magic Inc. 10-Q