NOTE 4. PREPAID EXPENSES

Prepaid expenses at September 30, 2022 and December 31, 2021 consist of the following:

On February 26, 2021, the Company entered into a lease agreement for use of an office facility for a 12-month term beginning March 1, 2021 through February 28, 2022. In addition to monthly base rent of $6,000, the agreement required the issuance of 5,333 shares of its common stock valued at $49,600. Stock-based compensation expense related to this agreement for the nine-month periods ended September 30, 2022 and 2021 are $8,267 and $28,933, respectively.

On May 25, 2022, the Company purchased Directors & Officers insurance prepaying annual premiums of $349,455 through a nine-month financing arrangement (see Note 9). The Company recorded $87,364 and $116,485 of insurance expense related to the prepaid Directors & Officers insurance for the three and nine-month periods ended September 30, 2022, respectively.

In June and July 2022, the Company purchased General Liability, Workers’ Compensation, Property and Automobile insurance prepaying annual premiums of $10,335. The Company recorded $2,478 and $3013 of insurance expense related to these prepaid policies for the three and nine-month periods ending September 30, 2022, respectively.

On May 31, 2022, the Company entered into a new office facility lease agreement for a 12-month term beginning July 1, 2022 through June 30, 2023 with a monthly base rent of $15,736. The lease agreement required a deposit equivalent to one month’s base rent to be held by the lessor for the term of the lease.

On April 1, 2022, the Company made a payment of $300,000 to a consultant as a prepayment for strategic advisory and digital marketing services to be provided during a nine -month period beginning on May 16, 2022 through November 15, 2022. In addition, the Company issued 500,000 common shares on June 29, 2022 to the consultant as additional compensation for the services to be provided at $0.91 per share with a fair value on the date of issuance of $455,000. The Company recorded professional consulting service expense of $377,500 and $566,250 for the three and nine-month periods ended September 30, 3022, respectively.

On May 16, 2022, the Company made a payment of $100,000 to a consultant as prepayment for business development consulting services to be provided during a six-month period beginning on May 16, 2022 through November 15, 2022. In addition, the Company issued 300,000 common shares on June 8, 2022 to the consultant as additional compensation for services to be provided at $0.88 per share with a fair value on the date of issuance of $264,000. The Company recorded professional consulting service expense of $182,000 and $273,000 for the three and nine-month periods ended September 30, 2022, respectively.