NextTrip, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS. Sigma Labs, Inc. Condensed Balance Sheets March 31, 2022 (Unaudited) December 31, 2021 ASSETS Current Assets: Cash $ 9,277,929 $ 11,447,047 Accounts Receivable, net 261,022 412,192 Inventory 782,099 710,080 Prepaid Assets 165,274 114,278 Total Current Assets 10,486,324 12,683,597 Other Assets: Property and Equipment, net 288,924 232,282 Intangible Assets, net 978,984 925,111 Total Other Assets 1,267,908 1,157,393 TOTAL ASSETS $ 11,754,232 $ 13,840,990 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts Payable $ 320,547 $ 206,442 Deferred Revenue 160,276 148,855 Accrued Expenses 416,643 625,942 Total Current Liabilities 897,466 981,239 TOTAL LIABILITIES 897,466 981,239 Stockholders’ Equity Preferred Stock, $ 0.001 par; 10,000,000 shares authorized; 465 shares issued and outstanding, respectively 1 1 Common Stock, $ 0.001 par; 24,000,000 shares authorized; 10,498,802 shares issued and outstanding , respectively 10,499 10,499 Additional Paid-In Capital 53,661,061 53,442,431 Accumulated Deficit ( 42,814,795 ) ( 40,593,180 ) Total Stockholders’ Equity 10,856,766 12,859,751 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 11,754,232 $ 13,840,990 See accompanying notes to condensed financial statements. 3 Sigma Labs, Inc. Condensed Statements of Operations (Unaudited) Three Months Ended March 31, 2022 March 31, 2021 REVENUES $ 51,844 $ 458,140 COST OF REVENUE 40,091 128,331 GROSS PROFIT 11,753 329,809 OPERATING EXPENSES: Salaries & Benefits 1,292,010 847,171 Stock-Based Compensation 170,976 117,477 Operations and R&D Costs 143,418 196,340 Investor & Public Relations 94,326 108,341 Organization Costs 58,749 77,616 Legal & Professional Service Fees 211,416 176,847 Office Expenses 205,432 148,225 Depreciation & Amortization 31,584 23,031 Other Operating Expenses 87,787 86,356 Total Operating Expenses 2,295,698 1,781,404 LOSS FROM OPERATIONS ( 2,283,945 ) ( 1,451,595 ) OTHER INCOME (EXPENSE) Interest Income 1,571 55 Gain on Derivative Liability - 802,285 State Incentives 76,628 - Exchange Rate Loss ( 330 ) ( 51 ) Interest Expense ( 1,319 ) ( 1,353 ) Total Other Income (Expense) 76,550 800,936 LOSS BEFORE PROVISION FOR INCOME TAXES ( 2,207,395 ) ( 650,659 ) Provision for Income Taxes - - Net Loss $ ( 2,207,395 ) $ ( 650,659 ) Preferred Dividends ( 14,220 ) ( 60,908 ) Net Loss Applicable to Common Stockholders $ ( 2,221,615 ) $ ( 711,567 ) Net Loss per Common Share - Basic and Diluted $ ( 0.21 ) $ ( 0.09 ) Weighted Average Number of Shares Outstanding - Basic and Diluted 10,498,802 7,790,121 See accompanying notes to condensed financial statements. 4 Sigma Labs, Inc. Statement of Stockholders’ Equity For The Quarters Ended March 31, 2022 and March 31, 2021 (Unaudited) Preferred Stock Common Stock Additional Shares Outstanding Preferred Stock Shares Outstanding Common Stock Paid-in Capital Accumulated Deficit Total Balances, December 31, 2021 465 $ 1 10,498,802 $ 10,499 $ 53,442,431 $ ( 40,593,180 ) $ 12,859,751 Net Loss - - - - - ( 2,207,395 ) ( 2,207,395 ) Preferred Stock Dividends - - - - 14,220 ( 14,220 ) - Preferred Stock Dividends, shares Common Shares Issued for Third Party Services - - - - 11,713 - 11,713 Stock Options Awarded to Directors for Services - - - - 21,721 - 21,721 Stock Options Awarded to Employees - - - - 170,976 - 170,976 Balances, March 31, 2022 465 1 10,498,802 10,499 53,661,061 ( 42,814,795 ) 10,856,766 Preferred Stock Common Stock Additional Shares Outstanding Preferred Stock Shares Outstanding Common Stock Paid-in Capital Accumulated Deficit Total Balances, December 31, 2020 715 $ 1 5,995,320 $ 5,995 $ 38,262,744 $ ( 33,105,008 ) $ 5,163,732 Net Loss - - - - - ( 650,659 ) ( 650,659 ) Common Shares Sold in Public Offerings - - 3,901,783 3,902 14,865,997 - 14,869,899 Derivative Liability Value on Issuance Date - - - - ( 5,708,212 ) - ( 5,708,212 ) Common Shares issued for Exercise of Warrants - - 475,995 476 1,135,534 - 1,136,010 Preferred Stock Dividends - - 19,000 19 60,889 ( 60,908 ) - Common Shares Issued for Conversion of Preferred Shares ( 250 ) - 100,000 100 ( 100 ) - - Common Shares Issued for Third Party Services - - 1,500 2 30,979 - 30,981 Stock Options Awarded to Directors for Services - - - - 61,471 - 61,471 Stock Options Awarded to Employees - - - - 117,477 - 117,477 Offering Costs - - - - ( 1,600,967 ) - ( 1,600,967 ) Balances, March 31, 2021 465 $ 1 10,493,598 $ 10,494 $ 47,225,812 $ ( 33,816,575 ) $ 13,419,732 See accompanying notes to condensed financial statements. 5 Sigma Labs, Inc. Condensed Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2022 March 31, 2021 OPERATING ACTIVITIES Net Loss $ ( 2,207,395 ) $ ( 650,659 ) Adjustments to reconcile Net Loss to Net Cash used in operating activities: Noncash Expenses: Depreciation and Amortization 31,584 23,031 Gain on Derivative Liability - ( 802,285 ) Stock Based Compensation Employees 170,976 117,477 Stock Based Compensation – Third Party Services 11,713 30,981 Stock Based Compensation - Directors 21,721 61,471 Change in assets and liabilities: Accounts Receivable 151,170 ( 56,488 ) Inventory ( 72,019 ) ( 88,129 ) Prepaid Assets ( 50,996 ) ( 44,718 ) Accounts Payable 114,105 151,500 Deferred Revenue 11,421 ( 1,540 ) Accrued Expenses ( 209,299 ) 18,773 NET CASH USED IN OPERATING ACTIVITIES ( 2,027,019 ) ( 1,240,586 ) INVESTING ACTIVITIES Purchase of Property and Equipment ( 83,248 ) ( 5,350 ) Purchase of Intangible Assets ( 58,851 ) ( 16,619 ) NET CASH USED IN INVESTING ACTIVITIES ( 142,099 ) ( 21,969 ) FINANCING ACTIVITIES Gross Proceeds from Public and Private Issuances of Securities - 14,869,899 Less Offering Costs - ( 1,600,967 ) Proceeds from Exercise of Warrants - 1,136,010 NET CASH PROVIDED BY FINANCING ACTIVITIES - 14,404,942 NET CHANGE IN CASH FOR PERIOD ( 2,169,118 ) 13,142,387 CASH AT BEGINNING OF PERIOD 11,447,047 3,700,814 CASH AT END OF PERIOD $ 9,277,929 $ 16,843,201 Supplemental Disclosures: Noncash investing and financing activities disclosure: Issuance of Common Shares for Preferred Dividends 14,220 60,908 Other noncash operating activities disclosure: Issuance of Securities for Services 33,434 92,452 Disclosure of cash paid for: Interest $ 1,319 $ 1,353 Income Taxes $ - $ - See accompanying notes to condensed financial statements. 6 SIGMA LABS, INC. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS MARCH 31, 2022 (Unaudited) NOTE 1 - Summary of Significant Accounting Policies Nature of Business -Sigma Labs, Inc., a Nevada corporation, was founded by a group of scientists, engineers and businessmen to develop and commercialize novel and unique manufacturing and materials technologies. Sigma believes that some of these technologies will fundamentally redefine conventional quality assurance and process control practices by embedding them into the manufacturing processes in real time, enabling process intervention and ultimately leading to closed loop process control. The Company anticipates that its core technologies will allow its clientele to combine advanced manufacturing quality assurance and process control protocols with novel materials to achieve breakthrough product potential in many industries including aerospace, defense, oil and gas, bio-medical, and power generation. The terms the “Company,” “Sigma,” “we,” “us” and “our” refer to Sigma Labs, Inc. Basis of Presentation - The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2022 and 2021 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The Company suggests these condensed financial statements be read in conjunction with the December 31, 2021 audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K. The results of operations for the periods ended March 31, 2022 and 2021 are not necessarily indicative of the operating results for the full year. Reclassification - Certain amounts in prior-period financial statements have been reclassified for comparative purposes to conform to presentation in the current-period financial statements. 7 Fair Value of Financial Instruments - The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables, accounts payable, and accrued liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The Company does not use derivative instruments for hedging of market risk or for trading or speculative purposes. On March 26, 2021, the Company closed an offering in which it issued warrants to purchase an aggregate of 2,190,000 shares of common stock in a private placement concurrently with a registered direct offering of our common stock The warrants became exercisable on May 24, 2021 , the date the Company obtained stockholder approval to increase its authorized common shares from 12,000,000 to 24,000,000 and will expire two years after the initial exercise date. Pursuant to ASC 815-40-25-10, because the Company did not have sufficient authorized and unissued shares of common stock available to settle the warrants at the issue date, such warrants were accounted for as a derivative liability. For the three months ended March 31, 2021, the Company recorded a gain of $ 802,285 due to the change in the fair value of the derivative liability as measured on a recurring basis. On May 24, 2021, upon receiving shareholder approval to increase its authorized common shares, the Company reclassified the warrant liability to equity pursuant to ASC 815.40.35.8. Loss Per Share – The computation of loss per share is based on the weighted average number of shares outstanding during the period in accordance with ASC Topic No. 260, “Earnings Per Share.” Shares underlying the Company’s outstanding warrants, options and preferred shares were excluded due to the anti-dilutive effect they would have on the computation. At March 31, 2022 and 2021, the Company had the following common shares underlying these instruments: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share Three Months Ended March 31, 2022 2021 Warrants 3,825,781 1,797,931 Stock Options 1,547,797 856,082 Preferred Stock 148,918 124,483 Total Underlying Common Shares 5,522,496 2,778,496 8 The following data shows the amounts used in computing loss per share and the effect on income and the weighted average number of shares of dilutive potential common stock for the periods ended March 31, 2022 and 2021: Schedule of Computing Loss Per Share Three Months Ended March 31 2022 2021 Net Loss per Common Share - Basic and Diluted $ ( 0.21 ) $ ( 0.09 ) Loss from continuing operations available to common stockholders (numerator) $ ( 2,221,615 ) $ ( 711,567 ) Weighted average number of common shares outstanding used in loss per share during the period (denominator) 10,498,802 7,790,121 Accounting Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated by management. Significant accounting estimates that may materially change in the near future are impairment of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts and inventory obsolescence. NOTE 2 – Inventory At March 31, 2022 and December 31, 2021, the Company’s inventory was comprised of: Schedule of Inventory March 31, 2022 December 31, 2021 Raw Materials $ 204,303 $ 202,015 Work in Process 251,580 224,079 Finished Goods 326,216 283,986 Total Inventory $ 782,099 $ 710,080 NOTE 3 – Deferral of Social Security Tax Payments Pursuant to sections 2302(a)(1) and (a)(2) of the CARES Act, the Company has elected to defer payments of its share of Social Security tax due during the “payroll tax deferral period.” The payroll tax deferral period began on March 27, 2020 and ended on December 31, 2020. At March 31, 2022, the total remaining amount of the deferral was $ 37,728 . Per the terms of the deferral program, such amount is due by December 31, 2022 , at 0 % interest. 9 NOTE 4 - Stockholders’ Equity Common Stock In January 2021, the Company closed a public offering of its securities in which it issued 1,711,783 shares of common stock at a price of $ 3.00 per share, resulting in net proceeds of approximately $ 4,532,445 after deducting underwriting commissions and other offering expenses payable by the Company. Pursuant to the Underwriting Agreement, the Company also issued to the Underwriter or its designee warrants to purchase 136,943 shares of common stock. Such warrants have a term of five years and an exercise price of $ 3.75 per share. In February 2021, the Company issued 263,200 shares of common stock pursuant to the exercise of warrants issued in our January 2020 private placement. In March 2021, the Company issued 119,000 shares of common stock in exchange for the conversion of 250 shares of Series D Convertible Preferred Stock, including 19,000 shares of common stock as in-kind payment of preferred stock dividends. Also in March 2021, the company issued 191,204 shares of common stock pursuant to the exercise of warrants issued in our April 2020 offering, and 21,591 shares of common stock issued pursuant to the cashless exercise of placement agent warrants. In March 2021, the Company closed a public offering of its securities in which it issued 2,190,000 shares of common stock at $ 4.445 per share, resulting in net proceeds to the Company of approximately $ 8,736,487 after deducting placement agent commissions and other offering costs payable by the Company. Pursuant to the Purchase Agreement, the purchasers severally agreed to vote the shares of common stock purchased under the Purchase Agreement in favor of any resolution presented to the stockholders of the Company for the purpose of obtaining approval of an increase in the authorized shares of the Company’s Common Stock from 12,000,000 to 24,000,000 shares (“Stockholder Approval”). In a concurrent private placement under the Purchase Agreement, the Company issued to the purchasers warrants (“Warrants”) to purchase an aggregate of 2,190,000 shares of Common Stock at an exercise price of $ 4.32 per share. Each Warrant became exercisable commencing May 24, 2021 , the date the Company obtained Stockholder Approval and will expire two years after the initial exercise date. The Company also issued to designees of the Placement Agent warrants to purchase up to 175,200 shares of Common Stock (the “Placement Agent Warrants”) constituting 8 % of the aggregate number of shares of Common Stock sold in the public offering, The Placement Agent Warrants have substantially the same terms as the Warrants, except that the Placement Agent Warrants have an exercise price equal to 125 % of the offering price per share (or $ 5.55625 per share). Upon any exercise of the Warrants for cash, we have also agreed to pay the Placement Agent warrants to purchase 8.0 % of the number of shares of our Common Stock issued upon such exercise. In March 2021, Company issued 1,500 shares of common stock valued at $ 4.99 per share to an investor relations firm previously engaged by the Company as partial compensation for services rendered. 10 Preferred Stock The Company is authorized to issue 10,000,000 shares of preferred stock, $ 0.001 par value. 465 shares of preferred stock were issued and outstanding at March 31, 2022 and December 31,2021, respectively. In January 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain institutional investors (the “Institutional Private Placement”). Pursuant to the SPA, the Company issued and sold 1,640 shares of the Company’s newly created Series D Convertible Preferred Stock (the “Series D Preferred Stock”) at an initial stated value of $ 1,000 per share (the “Stated Value”). Dividends accrue at a rate of 9 % per annum (subject to increase upon the occurrence (and during the continuance) of certain triggering events described therein) and, on a monthly basis, shall be payable in kind by the increase of the Stated Value of the Series D Preferred Shares by said amount. The holders of the Series D Preferred Shares have the right at any time to convert all or a portion of the Series D Preferred Shares (including, without limitation, accrued and unpaid dividends and make-whole dividends through the third anniversary of the closing date) into shares of the Company’s Common Stock at the conversion price then in effect, which is $ 2.50 (subject to adjustment for stock splits, dividends, recapitalizations and similar events and full ratchet price protection). Alternatively, a holder may at any time convert all, or any part, of its Series D Preferred Shares at an alternative conversion price equal to the lower of the applicable conversion price then in effect, and the greater of (x) $1.80 and (y) 85% of the average volume weighted average price (“VWAP”) of the Common Stock for a five (5) trading day period prior to such conversion. Upon the occurrence of certain triggering events, described in the Certificate of Designations, including, but not limited to payment defaults, breaches of transaction documents, failure to maintain listing on the Nasdaq Capital Market, and other defaults set forth therein, the Series D Preferred Shares would become subject to redemption, at the option of a holder, at a 125% premium to the underlying value of the Series D Preferred Stock being redeemed . At March 31, 2022, there were 132 shares of Series D Preferred Stock outstanding, which if converted as of March 31, 2022, including the make-whole dividends, would result in the issuance of 87,267 shares of common stock. Concurrent with the Institutional Private Placement, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued and sold to certain of its directors and the Company’s previously largest shareholder 333 shares of the Company’s newly created Series E Convertible Preferred Stock (the “Series E Preferred Stock”) at an initial stated value of $ 1,000 per share. Dividends accrue at a dividend rate of 9 % per annum and, on a monthly basis, shall be payable in kind by the increase of the stated value of the Series E Preferred Stock by said amount. The Series E Preferred Stock is initially convertible into 48,544 shares of common stock (subject to adjustment for stock splits, dividends, recapitalizations and similar events). At March 31, 2022, all of the issued Series E Preferred Stock was outstanding, which if converted as of March 31, 2022, including the make-whole dividends, would result in the issuance of 61,651 shares of common stock. 11 Stock Options As of March 31, 2022, an aggregate of 187,762 shares of common stock were reserved for future issuance under the 2013 Plan. In March 2022, the Company granted options to its non-employee directors to purchase up to an aggregate of 56,000 shares of common stock at a strike price of $ 2.50 . As of March 31, 2022, 25 % of such grants were fully vested and exercisable, and the remaining 75 % will vest in equal installments at the end of each of the next three quarters. During the three months ended March 31, 2022, the Company granted four employees options to purchase up to an aggregate of 22,000 shares of common stock in connection with their employment. The options have a strike price of $ 2.50 and will vest in equal annual installments on the first through third anniversaries of the grant dates, provided that the employees remain employed by the Company on such dates. In addition, in February 2022, the Company granted its President and CEO an option to purchase up to 70,000 shares of common stock in connection with his employment. The option has a strike price of $ 2.50 and will vest in equal monthly installments over 36 months beginning March 2022, provided that the President and CEO remains employed by the Company on such dates. Also in March 2022, the Company granted two consultants options to purchase up to an aggregate of 14,000 shares of common stock for services to be rendered. The options have a strike price of $ 2.50 , and are fully vested and exercisable as to 50 % of such grants. The remaining 50 % will vest on June 30, 2022 , provided that the consultants remain as service providers to the Company as of such date. The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company’s stock on the dates of grant. Stock options are typically granted throughout the year and generally vest over a period from one to three years of service and expire five years from the grant date, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award. Total stock-based compensation expense included in the statements of operations for the three months ended March 31, 2022 and 2021 was $ 170,976 and $ 117,477 , respectively, all of which is related to stock options. The fair value of share-based awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the three months ended March 31, 2022 and the year ended December 31, 2021: Schedule of Share Based Payments Award Stock Options Valuation Assumptions Assumptions: 2022 2021 Dividend yield 0.00 % 0.00 % Risk-free interest rate 0.95 - 1.65 % 0.19 - 0.67 % Expected volatility 106.4 - 110.0 % 117.0 – 124.0 % Expected life (in years) 5 5 12 Option activity for the three months ended March 31, 2022 and the year ended December 31, 2021 was as follows: Schedule of Stock Option Activity Options Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Life (Yrs.) Aggregate Intrinsic Value ($) Options outstanding at December 31, 2020 713,010 5.15 4.40 477,802 Granted 698,831 3.29 4.39 46,800 Exercised ( 5,204 ) 2.50 - - Forfeited or cancelled ( 10,755 ) 3.49 - - Options outstanding at December 31, 2021 1,395,882 4.24 3.89 - Granted 162,000 2.50 4.94 - Exercised - - - - Forfeited or cancelled ( 10,085 ) 3.60 - - Options outstanding March 31, 2022 1,547,797 4.06 3.78 - Options expected to vest in the future as of March 31, 2022 526,617 3.29 4.12 - Options exercisable at March 31, 2022 1,021,180 4.46 3.60 - Options vested, exercisable, and options expected to vest at March 31, 2022 1,547,797 4.06 3.78 - The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the $ 2.04 closing price of our Common Stock on March 31, 2022. At March 31, 2022, no option grants had an exercise price below $ 2.04 . At March 31, 2022, there was $ 1,222,243 of unrecognized share-based compensation expense related to unvested stock options with a weighted average remaining recognition period of 1.94 years. Stock Appreciation Rights On June 23, 2020, the board of directors (the “Board”) of the Company adopted the Sigma Labs, Inc. 2020 Stock Appreciation Rights Plan (the “Plan”). The purposes of the Plan are to: (i) enable the Company to attract and retain the types of employees, consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s long-range success; (ii) provide incentives that align the interests of Service Providers with those of the shareholders of the Company; and (iii) promote the success of the Company’s business. The Plan provides for incentive awards only in the form of stock appreciation rights payable in cash (“SARs”) and no shares of common stock are reserved in connection with the adoption of the Plan since no shares will be issued pursuant to the Plan. SARs may be granted to any Service Provider. A SAR is the right to receive an amount equal to the Spread with respect to a share of the Company’s common stock (“Share”) upon the exercise of the SAR. The “Spread” is the difference between the exercise price per share specified in a SAR agreement on the date of grant and the fair market value per share on the date of exercise of the SAR. The exercise price per share will not be less than 100% of the fair market value of a Share on the date of grant of the SAR. The administrator of the Plan will have the authority to, among other things, prescribe the terms and conditions of each SAR, including, without limitation, the exercise price and vesting provisions, and to specify the provisions of the SAR Agreement relating to such grant. On January 3, 2022, the Company granted a total of 12,033 SARs to eleven employees at an exercise price of $ 1.87 , the closing price of the Company’s common stock on the date of grant. The SARs expire on the fifth anniversary of the grant date and were fully vested and exercisable on the date of the grant. On February 16, 2022, the Company granted 30,000 SARs to its President and CEO at an exercise price of $ 2.50 , the closing price of the Company’s common stock on the date of grant. The SARs expire on the fifth anniversary of the grant date and will vest equally over 36 months beginning March 2022, provided that the CEO remains an employee of the Company on such dates. On March 31, 2022, the Company granted 3,000 SARs to a consultant as partial compensation for services pursuant to a consulting agreement.at an exercise price of $ 2.50 , The SARs expire on the fifth anniversary of the grant date. As of March 31, 2022, 50 % of such grant was fully vested and exercisable, and the remaining 50 % will vest on June 30, 2022 , provided that the consultant remains a service provider to the Company on that date. The Company recognizes compensation expense and a corresponding liability for the fair value of the SARs over the requisite service period for each SAR award. The SARs are revalued at each reporting date in accordance with ASC 718 “Compensation-Stock Compensation”, and any changes in fair value are reflected in the Statement of Operations as of the applicable reporting date. 13 The fair value of SAR awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the three months ended March 31, 2022 and the year ended December 31, 2021: Schedule of Share Based Payments Award Stock Options Valuation Assumptions Assumptions: 2022 2021 Dividend yield 0.00 % 0.00 % Risk-free interest rate 0.82 - 1.65 % 0.39 - 0.40 % Expected volatility 108.4 %- 119.0 % 123.0 % Expected life (in years) 5 5 SARs activity for the three months ended March 31, 2022 and the year ended December 31, 2021 was as follows: Schedule of Stock Option Activity Options Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Life (Yrs.) Aggregate Intrinsic Value ($) - SARs outstanding at December 31, 2020 127,679 2.61 4.52 97,919 Granted 242,945 3.43 4.61 - Exercised - - - - Forfeited or cancelled - - - - SARs outstanding at December 31, 2021 370,624 3.15 4.24 - Granted 45,033 2.33 4.86 - Exercised - - - - Forfeited or cancelled - - - - SARs outstanding March 31, 2022 415,657 3.06 4.08 2,046 SARs expected to vest in the future as of March 31, 2022 339,732 3.16 4.16 - SARs exercisable at March 31, 2022 75,925 2.63 3.74 2,046 SARs vested, exercisable, and SARs expected to vest at March 31, 2022 415,657 3.06 1.08 2,046 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock for those awards that have an exercise price currently below the $ 2.04 closing price of our common stock on March 31, 2022. 12,033 of the SARs grants have an exercise price below $ 2.04 . At March 31, 2022, there was $ 660,001 of unrecognized share-based compensation expense related to unvested SARs with a weighted average remaining recognition period of 2.21 years. Warrants Warrant activity for the three months ended March 31, 2022 the year ended December 31, 2021 was as follows: Schedule of Warranty Activity Warrants Weighted Average Exercise Price ($) Weighted Average Remaining Contractual Life (Yrs.) Warrants outstanding at December 31, 2020 1,881,429 7.57 4.16 Granted 2,602,143 4.36 1.63 Exercised ( 495,641 ) - - Forfeited or cancelled - - - Warrants outstanding at December 31, 2021 3,987,931 6.10 2.10 Granted - - - Exercised - - - Forfeited or cancelled ( 162,150 ) 40.00 - Warrants outstanding at March 31, 2022 3,825,781 4.66 1.94 NOTE 5 - Subsequent Events The Company performed an evaluation of subsequent events through the date of filing of these condensed financial statements with the SEC. There were no material subsequent events which affected, or could affect, the amounts or disclosures in the condensed financial statements. 14