Equity Compensation Plan

12 Months Ended

Dec. 31, 2022

Share-based Payment Arrangement [Abstract]

12. Equity Compensation Plan

In 2015 the Company’s shareholders and board of directors adopted an Equity Compensation Plan (“the Plan”), which replaced the Company’s previous equity compensation plan which was adopted in 2007 and expired in 2015 (the “2007 Plan”) under which the Company’s employees, directors or other persons or entities providing significant services to the Company or its subsidiaries are eligible to receive stock-based awards including restricted stock, restricted stock units, unrestricted stock, bonus stock, performance stock, stock appreciation rights and options to purchase common stock. The Plan is administered by the Compensation Committee of the Company’s board of directors and the aggregate number of shares of common stock reserved under this plan cannot exceed 10% of the number of shares of Company’s common stock issued and outstanding at the time any award is granted. The Company’s Board of Directors may terminate the Plan at any time. As of December 31, 2022, a total of 555,479 restricted shares had been granted under the 2007 Plan since the first grant in the third quarter of 2007 and 608,365 restricted shares and options to purchase 250,000 common shares have been granted under the

Plan.

Restricted shares

On May 26, 2021, the Company granted 343,744 of

non-vested

restricted shares under the Plan to the Company’s CEO,

non-executive

members of Board of Directors of the Company and employees of the Manager. The fair value of each share granted was $2.99 which is equal to the market value of the Company’s common stock on that day. 50% of these shares vested on May 26, 2022 and the remaining 50% vest on May 26, 2023.

All unvested restricted shares are conditional upon the option holder’s continued service as an employee of the Company, or as a director until the applicable vesting date. Until the forfeiture of any restricted shares, the grantee has the right to vote such restricted shares, to receive and retain all regular cash dividends paid on such restricted shares and to exercise all other rights provided that the Company will retain custody of all distributions other than regular cash dividends made or declared with respect to the restricted shares.

The Company pays dividends on all restricted shares regardless of whether they have vested and there is no obligation of the employee to return the dividend when employment ceases. The Company did not pay any dividends in the years ended December 31, 2020, 2021 and 2022.

The stock based compensation expense for the vested and

non-vested

shares for the years ended December 31, 2020, 2021 and 2022 amounted to nil, $462,508 and $462,508, respectively, and is included in the consolidated statements of operations under the caption “General and administrative expenses”.

non-vested

shares existed as of December 31, 2020. A summary of the status of the Company’s

non-vested

restricted shares as of December 31, 2021 and 2022, is presented below:


	Number of restricted shares		Weighted average grant date fair value per non-vested share
Non-vested, January 1, 2021		—		—
Granted		343,744		2.99

Non-vested, December 31, 2021		343,744		2.99

Vested		171,872		2.99

Non-vested, December 31, 2022		171,872		2.99

The total fair value of shares vested during the years ended December 31, 2020, 2021 and 2022 was nil, nil and $465,773, respectively, based on the closing share price at each vesting date. The remaining unrecognized compensation cost relating to the shares granted amounting to $102,779 as of December 31, 2022, is expected to be recognized over the remaining period of 0.4 years, according to the contractual terms of those

non-vested

share awards.

Options to purchase common shares

On May 26, 2021, the Company granted options to acquire up to 250,000 shares of common stock under the Plan to the Company’s CEO. 50% of these options vested on May 26, 2022 and the remaining 50% vest on May 26, 2023. These options expire on May 25, 2031. The fair value of each option granted was $1.32. The fair value of each option granted was estimated on the date of the grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used in computing the fair value of the options granted: expected volatility of 46.75%; expected term of 5.75 years; risk-free interest rate of 0.96%. The expected term of the options granted was estimated to be the average of the vesting and the contractual term. The expected volatility was generally based on historical volatility as calculated using historical data during approximately 6 years prior to the grant

date.

The

Company had no stock option activity during the year ended December 31, 2020. A summary of the Company’s

non-vested

stock option activity and related information for the years ended December 31, 2021 and 2022, is as follows:


	Option shares #		Weighted-Average Exercise Price $
Outstanding – January 1, 2021		—		—
Granted		250,000		2.99
Exercised		—		—
Outstanding – December 31, 2021		250,000		2.99
Exercisable – December 31, 2021		—		—
Granted		—		—
Exercised		—		—
Outstanding – December 31, 2022		250,000		2.99
Exercisable – December 31, 2022		—		—

No options vested during the year ended December 31, 2021. 125,000 options vested during the year ended December 31, 2022. The remaining unrecognized compensation cost relating to the options granted amounting to $32,951 as of December 31, 2022, is expected to be recognized over the remaining period of 0.4 years, according to the contractual terms of those

non-vested

options.

The stock based compensation expense for the vested and

non-vested

options for the years ended December 31, 2020, 2021 and 2022 amounted to nil, $148,280 and $148,280, respectively, and is included in the consolidated statements of operations under the caption “General and administrative expenses”.

As at December 31, 2022, the intrinsic value of outstanding stock options was nil.