Quarterly report pursuant to Section 13 or 15(d)

Stockholders??? Equity

v3.21.2
Stockholders’ Equity
 9 Months Ended
Sep. 30, 2021
Equity [Abstract]  
Stockholders’ Equity

Note 11 – Stockholders’ Equity

 

Shares authorized

 

Upon formation, the total number of shares of all classes of stock that the Company is authorized to issue is seventy-five million (75,000,000) shares of common stock, par value $0.001 per share.

 

Common stock

 

During the nine months ended September 30, 2021, the Company issued 2,300,000 shares of common stock.

 

On September 2, 2021, the Company closed its initial public offering (“IPO”) under a registration statement effective August 30, 2021, in which it issued and sold 2,000,000 shares of its Common Stock at a purchase price of $5.00 per share. On September 2, 2021, the Company closed on the IPO’s overallotment option, selling an additional 300,000 shares of Common Stock to the IPO’s underwriters at the public offering price of $5.00 per share. The Company received net proceeds of approximately $10.3 million from the IPO after deducting underwriting fee and offering expenses.

 

As of September 30, 2021 and December 31, 2020, the Company had 43,259,741 and 40,959,741 shares of common stock issued and outstanding, respectively.

 

Shares to be issued for compensation

 

The Company entered into agreements with third party consultants for financing and management consulting. The Company has incurred consulting service fees not paid in cash amounting to $36,000 for the nine months ended September 30, 2021, which the Company intends to issue stock as compensation for services rendered. Expenses incurred but not yet paid in shares as of September 30, 2021 and December 31, 2020 amounted to $134,709 and $98,709, respectively.

 

On August 30, 2021, the Company entered Representative Common Stock Purchase Warrant agreement (“Warrant Agreement”) with its placement agent, Boustead Securities LLC. (“Boustead”) for 161,000 shares and the exercise price is $6.25. Boustead exercised the warrants on September 7, 2021. The fair value of the warrants was $1,041,670 and $2,326,450 as of August 30 and September 7, 2021, respectively. For the nine months ended September 30, 2021, the Company change the fair value of warrant liability which amounted to a difference of $1,284,780.

 

These warrants were valued using a Black-Scholes pricing model with the following assumptions:

 

    August 30,        
    2021 (Initial     September 7,  
    Measurement)     2021  
Risk-free interest rate     0.77%       0.82%  
Expected term     5 years       5 years  
Expected volatility     194.37%       204.27%  
Expected dividend yield     0%       0%  
Fair value of units (using Black-Scholes)   $ 6.47     $ 14.45  

 

This Warrant Agreement allowed for cashless exercise option, which is calculated by the percentage difference between exercise and trading price, which resulted in a reduced number of warrants being exercisable. On September 7, 2021, Boustead exercised 121,149 shares with fair value of $1,776,044 upon cashless exercise option of warrants related to completion of the Company’s public offering. The shares will be issued six months after these warrants have been exercised. For the nine months ended September 30, 2021, the Company has a gain on settlement of derivative liability which amounted to $550,406. Shares to be issued as of September 30, 2021 and December 31, 2020 amounted to $1,776,044 and $0, respectively.

 

Stock options

 

On January 4, 2021, each member of the Board was granted 15,000 options to purchase shares at $3.00 per share.

 

On August 6, 2019, each member of the Board was granted 30,000 options to purchase shares at $5.70 per share.

 

As of September 30, 2021, there were 315,000 options granted, 288,750 options vested, 26,250 options unvested, and 315,000 outstanding stock options.

 

For the nine months ended September 30, 2021 and 2020, the Company’s stock option compensation expenses amounted to $320,512 and $605,150, respectively.

 

The fair value of the stock options listed above was determined using the Black-Scholes option pricing model with the following assumptions:

               
             
    September 30,     September 30,  
    2021     2020  
Risk-free interest rate     0.93%       1.71%  
Expected life of the options     10 years       10 years  
Expected volatility     122.93%       158.86%  
Expected dividend yield     0%       0%  

 

The following is a summary of options activity from December 31, 2020 to September 30, 2021: 

                               
                         
Options   Shares     Weighted average exercise price     Weighted Average Remaining Contractual Life     Aggregate Intrinsic Value  
Outstanding at December 31, 2020     210,000     $ 9.61       9.61       –  
Granted     105,000       3.00       –       –  
Exercised     –     $ –       –       –  
Forfeited or expired     –     $ –       –       –  
Outstanding at September 30, 2021     315,000     $ 4.80       8.33       594,300  
Vested as of September 30, 2021     288,750     $ 4.96       8.24       148,575  
Exercisable at September 30, 2021     315,000     $ 4.96       8.24       148,575  

 

The exercise price for options outstanding and exercisable at September 30, 2021:

                   
Outstanding     Exercisable  
Number of     Exercise     Number of     Exercise  
Options     Price     Options     Price  
  30,000     $ 5.70       30,000     $ 5.70  
  30,000       5.70       30,000       5.70  
  30,000       5.70       30,000       5.70  
  30,000       5.70       30,000       5.70  
  30,000       5.70       30,000       5.70  
  30,000       5.70       30,000       5.70  
  30,000       5.70       30,000       5.70  
  15,000       3.00       15,000       3.00  
  15,000       3.00       15,000       3.00  
  15,000       3.00       15,000       3.00  
  15,000       3.00       15,000       3.00  
  15,000       3.00       15,000       3.00  
  15,000       3.00       15,000       3.00  
  15,000       3.00       15,000       3.00  
  315,000               315,000