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 three months ended March 31, 2023, the Company issued 21,589,837 shares of common stock in a one-for-two dividend to its shareholders.

On January 17, 2023, the Company retired 400,000 shares from prior stock repurchase agreement as announced in a current report on October 7, 2022.

On February 13, 2023, the Company issued 41,500 shares to employee based on the Restricted Stock Award Agreements (see Employee compensation)

On February 21, 2023, the Company issued 7,238 shares to one of the prior board members who exercised his options with cashless exercise.

On March 23, 2023, the Company issued 21,589,837 stock dividends to its shareholders for a stock dividend of one share of common stock for every two shares of common stock issued and outstanding.

During the three months’ ended March 31, 2022, the Company did not issue any shares of common stock.

As of March 31, 2023 and December 31, 2022, the Company had 64,769,490 shares and 43,530,915 shares of common stock issued and outstanding, respectively.

Treasury stock

On August 10, 2022, the Company entered a stock purchase agreement with a private shareholder to repurchase 400,000 shares of its common stock for $2,000,000 and placed it in treasury. The private shareholder transferred the shares on October 4, 2022, forming a binding agreement, and on October 6, 2022, the Company wired the first $1,000,000 of the purchase price. The remaining $1,000,000 was paid on March 31, 2023. The Company terminated those 400,000 shares on January 17, 2023. As of March 31, 2023 and December 31, 2022, the Company has 0 and 400,000 shares of Treasury stock outstanding, respectively.

Employee compensation

On February 11, 2022 (“Vesting Date”), the Company entered into a Restricted Stock Award Agreement (“Award Agreement”) with eight employees for 280,000 shares of the $0.001 par value voting common stock subject to the terms and to the fulfillment of the conditions set in the Company’s equity incentive plan. The first 20% of the restricted shares were granted and vested on February 11, 2022. Twenty percent of the restricted shares will vest on each anniversary of the Vesting Date until fourth anniversary of the Vesting Date. There were 41,500 shares granted as of February 13, 2023. The fair value of above employee compensation was $136,904 as of March 31, 2023.

In November 2021, the Company entered into a one-year employment agreement with VP of Finance and Head of Investor Relations of the Company, pursuant to which the Company awarded a 10,000-share bonus consisting of shares of $0.001 par value voting common stock, which will be granted in 2,500 blocks every quarter based on certain performance metrics. In November 2022, the Company entered into an amendment agreement to amend the performance metrics. As of March 31, 2023, 2,500 shares have vested.

In October 2022, the Company entered into an employee agreement with VP of the Company, pursuant to which the Company awarded a 10,000-share bonus consisting of shares of $0.001 par value voting common stock, which will be granted in 2,500 shares every quarter. As of March 31, 2023, 2,500 shares have vested.

During the three months ended March 31, 2023 and 2022, the total employee compensation amount for all employees in the company, was $149,404 and $656,370, respectively.

Stock options

On August 6, 2019, each member of the Board was granted 45,000 options to purchase shares at $3.80 per share.

On January 4, 2021, each member of the Board was granted 22,500 options to purchase shares at $2.00 per share.

On December 31, 2021, each member of the Board was granted 22,500 options to purchase shares at $5.91 per share.

On December 31, 2022, each member of the Board was granted 22,500 options to purchase shares at $4.27 per share.

As of March 31, 2023, there were 615,061 options granted, 423,457 options vested, 116,620 options unvested, and 536,250 outstanding stock options.

For the three months ended March 31, 2023 and 2022, the Company’s stock option compensation expenses amounted to $133,403 and $228,375, respectively.

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

The following is a summary of the option activity from December 31, 2022 to March 31, 2023: