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 six months ended June 30, 2022, the Company issued 153,776 shares of common stock.

On April 4, 2022, the Company issued 121,149 shares of its Common Stock to Boustead Securities LLC. (“Boustead”), which is the warrants exercised by Boustead on September 7, 2021 with the exercise price $6.25 and the shares were valued at $1,776,044 upon cashless exercise option of warrants related to completion of the Company’s public offering.

On May 2, 2022, the Company issued 32,627 shares to consultants in exchange for professional services rendered. The shares were valued at $154,709 based on the closing price of the Company’s common stock on the dates that the shares were deemed earned, according to the agreements.

During the year ended December 31, 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 June 30, 2022 and December 31, 2021 and 2020, the Company had 43,413,517 shares and 43,259,741 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 $8,000 for the three months ended June 30, 2022, which the Company intends to issue stock as compensation for services rendered. Expenses incurred and paid in shares as of June 30, 2022 amounted to $154,709.

On August 30, 2021, the Company entered into a Representative Common Stock Purchase Warrant agreement (“Warrant Agreement”) with its placement agent, 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 year ended December 31, 2021, the Company recorded a loss from change in 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: 

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 warrants 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 year ended December 31, 2021, the Company has a gain on settlement of derivative liability which amounted to $550,406. 121,149 shares were issued to Boustead which amounted to $17,776,044 as of June 30, 2022.

Employee compensation

On February 11, 2022 (“Vesting Date”), the Company entered into a Restricted Stock Award Agreement (“Award Agreement”) with nine employees for 290,000 shares of the $0.001 par value voting common stock subject to the terms and to the fulfillment of the conditions set in the plan. The first 20% of the restricted shares was granted and vested on February 11, 2022. 20% of the restricted shares will vest on each anniversary of the Vesting Date until fourth anniversary of the Vesting Date. There were 58,000 shares granted as of March 31, 2022. The fair value of above employee compensation was $609,580 as of June 30, 2022.  

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 rewards 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.

During the six months ended June 30, 2022, the Company recognized VP of Finance and Head of Investor Relations of the Company employee compensation amount of $75,340. During the six months ended June 30, 2022 and 2021, the Company total employee compensation amount were $684,920 and $0, respectively.

Stock options

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

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

On December 31, 2021, each member of the Board was granted 15,000 options to purchase shares at $8.86 per share.

As of December 31, 2021, there were 420,000 options granted, 315,288 options vested, 104,713 options unvested, and 420,000 outstanding stock options.

For the six months ended June 31, 2022 and 2021, the Company’s stock option compensation expenses amounted to $456,750 and $213,675, 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, 2021 to June 30, 2022: