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STOCKHOLDERS’ EQUITY (DEFICIT)
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
STOCKHOLDERS’ EQUITY (DEFICIT)

NOTE 8 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

a) Preferred stock

 

The Company is authorized to issue a total number of 25,000,000 shares of “blank check” preferred stock with a par value of $0.001. As of September 30, 2023, and December 31, 2022, there were no shares of preferred stock issued or outstanding.

 

b) Common stock

 

The Company is authorized to issue a total number of 2,000,000,000 shares of common stock with a par value of $0.001.

 

As of September 30, 2023, there were 46,666,760 (December 31, 2022 - 40,528,191) shares of common stock issued and outstanding.

 

During the nine months ended September 30, 2023, the Company completed the following issuances:

 

●The Company issued 240,000 shares of common stock to Nicholas DeVito as part of the Confidential Settlement Agreement, dated November 18, 2022 (see Note 10).
   
●The Company issued 2,652,159 shares of common stock on exercise of warrants granted as part of the Somahlution acquisition, completed on July 30, 2020.
   
●The Company issued 600,000 shares to Mr. Frank Maresca in order to reimburse Mr. Maresca for the shares of Common Stock that were previously cancelled.
   
●The Company issued 1,346,410 shares on conversion of the debt (see Note 7).
   
●The Company issued 300,000 shares to Mr. Richmond in order to reimburse Mr. Richmond for the shares of Common Stock that were cancelled in previous years.
   
●The Company settled trade payables of $100,000 through issuance of 1,000,000 shares. The common shares were valued at $180,000, resulting in a loss of $80,000 on settlement of debt.

 

c) Options

 

On May 18, 2021, the Company’s Board of Directors approved the Marizyme, Inc. Amended and Restated 2021 Stock Incentive Plan (“SIP”). The SIP incorporates stock options issued prior to May 18, 2021. The SIP authorized 5,300,000 options for issuance. On December 27, 2022, the Board of Directors requested that stockholders ratify an amendment to the SIP to increase the maximum number of shares of common stock available for issuance pursuant to awards granted under the SIP by 1,900,000 to 7,200,000, which was approved by the stockholders. As of September 30, 2023, there remains 2,924,057 options available for issuance (December 31, 2022 – 2,924,057).

 

 

During the three and nine months ended September 30, 2023, the Company granted Nil (December 31, 2022 – 400,000) share purchase options to directors of the Company.

 

The summary of option activity for the nine months ended September 30, 2023, is as follows:

 

   Number of Options   Weighted Average Exercise Price   Weighted Average Contractual Life   Total Intrinsic Value 
Outstanding at December 31, 2021   3,650,943   $1.24    8.34      
Granted   400,000    2.20           
Expired   (62,502)   1.25           
Forfeited   (62,498)   1.25           
Outstanding at December 31, 2022   3,925,943   $1.33    6.06   $- 
Granted/forfeited   -    -    -    - 
Outstanding at September 30, 2023   3,925,943    1.33    5.31      
Exercisable at September 30, 2023   3,582,886   $1.28    5.02   $- 

 

As of September 30, 2023, the Company had the following options outstanding:

 

Exercise Price   Number of Options Outstanding   Number of Options Exercisable   Weighted Average Remaining Contractual Years   Intrinsic Value 
$1.01    1,985,943    1,985,943    2.75   $- 
 1.25    540,000    536,943    7.41    - 
 1.37    200,000    200,000    6.88    - 
 1.75    800,000    600,000    8.16    - 
 2.20    400,000    260,000    8.69    - 
$1.33    3,925,943    3,582,886    5.31    - 

 

 

d) Restricted share units

 

During the year ended December 31, 2021, the Company granted restricted share awards for an aggregate of 350,000 shares of common stock to directors, senior officers and consultants of the Company, with underlying performance conditions. As of September 30, 2023, only two out of four performance conditions have been achieved. Compensation cost of $Nil for the restricted share awards was recognized in stock-based compensation for the three and nine months ended September 30, 2023 (September 30, 2022 - $Nil and $295,750, respectively).

 

e) Warrants

 

As of September 30, 2023 and December 31, 2022, there were 575,466,865 and 20,048,487 warrants outstanding, respectively.

 

   Number   Weighted Average Price 
Balance, December 31, 2021   12,144,834   $2.90 
Issued pursuant to Unit Purchase Agreement   8,360,147    2.25 
Issued   878,398    1.16 
Exercised   (300,000)   0.01 
Expired   (113,637)   3.00 
Cancelled pursuant to FINRA   (578,398)   1.75 
Cancelled as part of debt extinguishment   (342,857)   2.25 
Balance, December 31, 2022   20,048,487   $2.64 
Warrants modified pursuant to debt extinguishment (Note 7)   355,577,447    0.10 
Issued pursuant to debt agreements (Note 7)   162,962,773    0.15 
Issued pursuant to Hexin Promissory Note (Note 6)   39,530,317    0.13 
Exercised   (2,652,159)   0.10 
Balance, September 30, 2023   575,466,865   $0.12 

 

●On April 13, 2023, the Company delivered offer letter agreements (the “Somahlution Warrant Offer Letter Agreements”) to the Former Somahlution Owners, which offered to allow the Former Somahlution Owners to exercise the Somahlution Warrants to purchase the number of restricted shares of common stock issuable under the Somahlution Warrants at an exercise price reduced by the Company from $5.00 per share to $0.10 per share, on or prior to April 21, 2023, for maximum total cash proceeds of $299,996. As of the conclusion of this offer period, four of the Former Somahlution Owners had entered into Somahlution Warrant Offer Letter Agreements and had exercised their Somahlution Warrants to purchase a total of 2,652,159 shares of common stock for gross proceeds of approximately $265,216 (the “Somahlution Warrants Exercise”).

 

As a result of this warrant exercise, pursuant to the terms applicable to the Convertible Notes and the Class C Warrants (see Note 7), the conversion price of the Convertible Notes adjusted from $1.75 per share to $0.10 per share, the exercise price of the Class C Warrants adjusted from $2.25 per share to $0.10 per share, and the number of shares that the Class C Warrants may be exercised to purchase was increased proportionately. In connection with these developments and the lack of sufficient authorized shares of common stock under the Company’s articles of incorporation to meet its obligations under outstanding convertible or exercisable securities, the Company also obtained additional conversion and exercise rights waivers from Convertible Note and Class C Warrant holders. As a result of these adjustment provisions and the conversion and exercise terms applicable to the Class C Warrants, including the effect of the applicable waivers, the number of shares that the Class C Warrants may be exercised to purchase adjusted from 5,109,904 shares of common stock to 114,973,110 shares.

 

●Concurrently with the issuance of Replacement Placement Agent Notes (see Note 7), the Company issued to Univest and Mr. Richmond Class C Warrants (the “Replacement Placement Agent Class C Warrants”), such that up to 3,548,148 and 5,322,223 shares of common stock, respectively, are issuable upon exercise thereof. Additionally, to compensate Univest and Mr. Richmond for the cancelled in previous years securities, the Company issued to Univest and Mr. Richmond Placement Agent Warrants (the “Replacement Placement Agent Warrants”), such that up to 4,048,782 and 6,073,182 shares of common stock are issuable upon exercise thereof, respectively. The Replacement Placement Agent Warrants were fair valued at $259,619 and $389,429, respectively, and recorded in other general and administrative expenses in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023.

 

●From May 2023 and through to September 2023, the Company issued OID Convertible Notes for aggregate principal of $6,163,697 and convertible into up to 61,636,970 shares of common stock not including shares convertible from interest under the Convertible Notes, Class E Warrants exercisable for the purchase of 77,046,194 shares of common stock at $0.10 per share, and Class F Warrants for the purchase of 77,046,194 shares of common stock at $0.20 per share. The OID Convertible Notes, Class E Warrants and Class F Warrants will not be convertible or exercisable until the Capital Event Amendment becomes effective. As described in Note 7, Class E and Class F warrants were accounted for as a liability, were fair valued at an aggregate amount of $25,555,092 and were recorded as a short-term derivative liability on the condensed consolidated balance sheets at September 30, 2023. 

 

 

●Pursuant to the Hexin Promissory Note (see Note 6), on May 22, 2023, the Company issued Hexin a Class E Warrant that may be exercised to purchase 7,500,000 shares of common stock for $0.10 per share, and a Class F Warrant that may be exercised to purchase 3,750,000 shares of common stock for $0.20 per share (collectively, the “Hexin Warrants”). The Hexin Warrants will be exercisable in accordance with the exercise terms and conditions of the other Class E and Class F Warrants described above (see Note 7). The warrants issued had an average term of 5 years, vested immediately, and were fair valued at $1,333,127 and were recorded in other general and administrative expenses in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023.

 

●The Company agreed to issue Placement Agent Warrants (the “OID Units Placement Agent Warrants”) to Univest and/or its designee(s) at each closing of the OID Units Private Placement. The required OID Units Placement Agent Warrants will consist of Placement Agent Warrants for the purchase of 8% of the aggregate number of shares of common stock initially issuable upon conversion of the OID Convertible Notes, 8% of the aggregate number of shares of common stock initially issuable upon exercise of the Class E Warrants at $0.10 per share, and 8% of the aggregate number of shares of common stock initially issuable upon exercise of the Class F Warrants at $0.20 per share, subject to adjustment. Univest notified the Company that the Company would be permitted to defer the issuance of the OID Units Placement Agent Warrants until the final closing of the OID Units Private Placement. Under the terms of the OID Units Placement Agent Warrants, such warrants will be exercisable from the date of issuance until August 16, 2028. In the nine months ended September 30, 2023, the Company issued 11,694,656 Class E and 6,463,697 Class F warrants, which were fair valued at $1,316,003 and $624,670, respectively, and recorded in other general and administrative expenses in the Statement of Operations for the three and nine months ended September 30, 2023.

 

f) Stock-based compensation

 

During the three and nine months ended September 30, 2023, the Company recorded $86,132 and $457,860 in non-cash share-based compensation, respectively (September 30, 2022 - $271,517 and $1,664,191, respectively).