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

On March 23, 2023, the Company issued a fifty percent (50%) stock dividend of the Company’s common stock to its shareholders for a stock dividend of one share of common stock for every two shares of common stock held.

During the six months ended June 30, 2023, the Company issued 75,434 shares of common stock.

On January 17, 2023, the Company retired 600,000 shares obtained pursuant to a prior stock repurchase agreement as announced in a current report on October 7, 2022.

On February 13, 2023, the Company issued 62,250 shares to employees based on their Restricted Stock Award Agreements (see Employee compensation).

On February 21, 2023, the Company issued 10,857 shares to one of the prior board members who exercised his options with cashless exercise.

On April 3, 2023, the Company issued 2,327 shares to round up the stock dividend effective on March 23, 2023.

During the six months ended June 30, 2022, the Company issued 230,664 shares of common stock.

On April 4, 2022, the Company issued 181,724 shares of its common stock to Boustead Securities LLC (“Boustead”), which were for the warrants exercised by Boustead on September 7, 2021. The warrants were issued to Boustead in connection with the Company’s initial public offering with an exercise price of $4.16. The shares issued to Boustead were valued at $1,776,044 upon the cashless exercise option of the warrants.

On May 2, 2022, the Company issued 48,940 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 terms of the related agreements.

As of June 30, 2023 and December 31, 2022, the Company had 64,771,817 shares and 65,296,383 shares of common stock issued and outstanding, respectively.

Treasury stock

On August 10, 2022, the Company entered a stock purchase agreement (the “Stock Purchase Agreement”) with a private shareholder to repurchase 400,000 shares of its common stock for $2,000,000. The private shareholder transferred the shares on October 4, 2022, forming a binding agreement, which the Company placed in treasury; and on October 6, 2022, the Company wired the first $1,000,000 of the purchase price. Subsequently, on July 14, 2023, the Company entered into an amendment to the Stock Purchase Agreement that increased the number of shares of its common stock the Company would purchase to 1,300,000 shares and revised the total purchase price of the shares to $1,965,000 (See Note 14). The remaining $965,000 was paid on July 14, 2023. Upon receipt of the additional 900,000 shares, the Company also placed them in treasury. As of January 17, 2023, the Company retired the initial 400,000 shares and restored them to the status of authorized and unissued shares.

As part of the Company’s repurchase program, during the six months ended June 30, 2023 the Company repurchased 233,040 shares of its common stock for $420,686 and placed them in treasury.

As of June 30, 2023 and December 31, 2022, the Company had 233,040 and 400,000 treasury shares, respectively. The intention of the Company is to retire the additional 900,000 shares obtained pursuant to the amendment to the Stock Purchase Agreement along with the 233,040 shares repurchased during the six months ended June 30, 2023.

Employee stock-based compensation

During the six months ended June 30, 2023, the Company entered into employment contracts with three employees of its engineering staff. These employment contracts contained provisions for a total bonus of restricted stock grants valued at $50,000 based on the share price upon the date of completion of the performance metrics described in the employment contracts. The fair value of the above employee compensation was $11,250 as of June 30, 2023.

On February 11, 2022 (the “Vesting Date”), the Company entered into a restricted stock award agreement (the “Award Agreement”) with eight employees for 280,000 shares of the Company’s common stock subject to the terms and to the fulfillment of the conditions set forth in the Company’s equity incentive plan. The first 20% of the restricted shares were granted and vested on February 11, 2022. An additional 20% of the restricted shares will vest on each anniversary of the Vesting Date until the fourth anniversary of the Vesting Date. There were 41,500 shares granted as of February 13, 2023. The fair value of the above employee compensation was $136,904 as of June 30, 2023.

In November 2021, the Company entered into a one-year employment agreement with the then 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 the Company’s common stock, which will be granted in blocks of 2,500 shares for every quarter certain performance metrics are achieved. In November 2022, the Company entered into an amendment agreement to amend the performance metrics and extend the term. As of June 30, 2023, 5,000 shares have vested.

In October 2022, the Company entered into an employee agreement with the CFO of the Company, pursuant to which the Company awarded a 10,000-share bonus consisting of shares of the Company’s common stock, which will be granted in blocks of 2,500 shares every quarter. As of June 30, 2023, 5,000 shares have vested.

During the six months ended June 30, 2023 and 2022, the total employee stock-based compensation amount for all employees in the company, was $168,304 and $692,920, 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 June 30, 2023, there were 615,061 options granted, 457,934 options vested and exercisable, 78,316 options unvested, and 536,249 outstanding stock options.

For the six months ended June 30, 2023 and 2022, the Company’s stock option compensation expenses amounted to $266,806 and $456,750, 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 June 30, 2023: