Quarterly report pursuant to Section 13 or 15(d)

CAPITAL STOCK

v3.22.2.2
CAPITAL STOCK
6 Months Ended
Jun. 30, 2022
CAPITAL STOCK  
CAPITAL STOCK

9. CAPITAL STOCK

 

Treasury Stock

 

During the first quarter in 2021, the Company retired 1,000,000 shares of treasury stock with a value of $516,528.

 

Preferred Stock and Common Stock

 

On July 26, 2021, the Company filed a Certificate of Designation, Preferences and Rights of the Series A-2 Convertible Preferred Stock, par value $0.001 per share (“Series A-2 Preferred Stock”) with the Secretary of State of Nevada, designating up to 45,000 shares of the Company’s preferred stock as Series A-2 Preferred Stock. The holders shall be entitled to receive, and the Company shall pay, dividends on shares of Series A-2 Preferred Stock equal (on an as-if-converted-to common stock basis) to and in the same form as dividends actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock. The Series A-2 Preferred Stock shall have no voting rights.

 

On January 5, 2022, the Company closed the second tranche of the equity financing and issued 12,258 shares of Series A-2 Preferred Stock, 4,301,004 shares of common stock and warrants to purchase 40,018,583 shares of common stock for gross proceeds of approximately $12.2 million and net proceeds of approximately $10.9 million after deduction of placement agent commissions and expenses of the offering. Such net proceeds are expected to be used by the Company for domestic and international expansion of its Bellissima brand, the expansion of the production facilities of the Company’s TopPop subsidiary, new product launches, marketing, and other general working capital purposes.

 

Between January 2022 and March 2022, stockholders converted 701 shares of Series A-2 Preferred Stock into 2,243,200 shares of common stock, par value $.001 per share, at $0.31 per share.

 

On March 23, 2021, the Company issued 401,670 shares of its common stock to an investors relations firm for services rendered to the Company. The $180,752 fair value of the 401,670 shares of common stock was expensed as investor relations.

 

On May 12, 2021, the Company issued a total of 1,100,000 shares of its common stock to 10 individuals for prior services rendered to the Company. The $429,000 fair value of the 1,100,000 shares of Iconic common stock was expensed as consulting fees in the six months ended June 30, 2021.

 

On May 19, 2021, the Company issued 300,000 shares of its common stock to Richard DeCicco and 100,000 shares of its common stock to Roseann Faltings for prior services rendered to the Company. The $160,000 fair value of the 400,000 shares of Iconic common stock was expensed as officers’ compensation in the six months ended June 30, 2021.

 

Warrants

 

In connection with the second tranche of the equity financing, on January 5, 2022, the Company granted 40,018,583 warrants to purchase common stock. The warrants expire in five years and have an exercise price of $0.31 per share.

 

A summary of warrant activity for the period January 1, 2022, to June 30, 2022, as follows:

 

 

 

Warrants

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Contractual

Term

Outstanding

 

Outstanding at January 1, 2022

 

 

87,593,083

 

 

$ 0.31

 

 

 

4.23

 

Granted

 

 

40,018,583

 

 

 

0.31

 

 

 

4.52

 

Outstanding at June 30, 2022

 

 

127,611,666

 

 

 

0.31

 

 

 

4.21

 

Options

 

During the three and six months ended June 30, 2022, the Company recognized $278,798 and $559,596, respectively, of expense for the option awards. There were no options outstanding as of June 30, 2021.

 

The following table summarizes the activity of our stock options for the six months ended June 30, 2022:

 

 

 

Shares

 

 

Weighted

Average

Exercise

Price

 

 

 Weighted

Average

Contractual

Term

Outstanding

 

Outstanding at December 31, 2021

 

 

7,408,200

 

 

$ 0.45

 

 

 

9.79

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited or expired

 

 

80,000

 

 

 

0.45

 

 

 

9.29

 

Outstanding at June 30, 2022

 

 

7,328,200

 

 

 

0.45

 

 

 

9.29

 

 

The aggregate intrinsic value of outstanding options as of December 31, 2021 was $298,544. The outstanding options had no aggregate intrinsic value as of June 30, 2022. The intrinsic value is calculated as the difference between the market value and the exercise price of the shares on balance sheet date. The market values based on the closing bid price as of June 30, 2022 and December 31, 2021 was $0.28 and $0.49, respectively.

 

As of June 30, 2022, there was approximately $2,537,000 of unrecognized compensation cost related to unvested stock options granted and outstanding, net of estimated forfeitures. The cost is expected to be recognized on a weighted average basis over a period of approximately three years.