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Note 8 - Stockholders' Equity
 6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

NOTE 8 - STOCKHOLDERS' EQUITY

 

Common Stock – The Company has 100,000,000 authorized shares of common stock, $0.001 par value ("Common Stock"). As of June 30, 2021 and 2020, respectively, there were 21,777,373 and 21,649,213 common shares issued and outstanding.

 

Voting -- Holders of common stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders, including the election of directors, and do not have any right to cumulate votes in the election of directors. 

 

Dividends -- Subject to the rights and preferences of the holders of any series of preferred stock, if any, which may at the time be outstanding, holders of common stock are entitled to receive ratably such dividends as our Board of Directors from time to time may declare out of funds legally available.  

 

Liquidation Rights -- In the event of any liquidation, dissolution or winding-up of affairs, after payment of all of our debts and liabilities and subject to the rights and preferences of the holders of any outstanding shares of any series of our preferred stock, the holders of common stock will be entitled to share ratably in the distribution of any of our remaining assets.  

 

Other Matters -- Holders of common stock have no conversion, preemptive or other subscription rights, and there are no redemption rights or sinking fund provisions with respect to our common stock. All of the issued and outstanding shares of common stock on the date of this Annual Report are validly issued, fully paid and non-assessable.

 

Preferred Stock -- Our Board of Directors has the authority to issue preferred stock in one or more classes or series and to fix the designations, powers, preferences and rights, the qualifications, limitations or restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, without further vote or action by the stockholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock.

 

The Company has 2,500,000 authorized Preferred stock, $0.001 par value. As of June 30, 2021, there were no mandatory convertible preferred shares issued and outstanding.

 

Stock Issuance 

 

Since  January 1, 2021, the Company has made the following issuances of common stock: 

 

On January 6, 2021, the Company issued 11,218 shares of Common Stock to settle RSUs. The RSUs were valued at $70,000 for services provided by the Board of Directors in 2020. The Company recognized the stock-based compensation of the award over the requisite service period.

 

On February 26, 2021, the Company issued 30,694 shares of Common Stock to settle RSUs. The RSUs were valued at $166,667 for services provided by management in 2020. The Company is recognizing the stock-based compensation of the award over the requisite service period.

 

On April 9, 2021, the Company issued 80,000 restricted shares of Common Stocks pursuant to the Convertible Note agreement executed on April 8, 2021.

 

Warrants 

 

In connection with the Securities Purchase Agreement entered into in May 2020, we issued a prefunded warrant (“the Warrant”) to purchase an aggregate of 515,000 shares of Common Stock at a purchase price of $5.00 per share. Subject to certain beneficial ownership limitations, the Warrant is immediately exercisable and may be exercised for no additional consideration. The Warrant does not expire. A holder of the Warrant will not have the right to exercise any portion of the Warrant if the holder, together with Affiliates and Attribution Parties (as such terms are defined in the Warrant), would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Warrant. Upon notice from the holder to the Company, however, the holder may decrease or increase the beneficial ownership limitation (but not above 9.99% of the number of shares of Common Stock outstanding).

 

The following is a summary of the periodic changes in warrants outstanding for the six months ended June 30, 2021:

 

  

2021

 

Warrants outstanding at January 1

  515,000 

Exercises and conversions

  - 

Warrants outstanding at June 30

  515,000 

 

Stock-based Compensation 

 

In 2013, the Company’s Board of Directors adopted a Share Incentive Plan (the “Incentive Plan”). Under the terms and conditions of the Incentive Plan, the Board of Directors is empowered to grant RSUs to officers and directors of the Company. At June 30, 2021, 145,460 RSUs were granted and outstanding under the Incentive Plan. Directors of the Company receive share compensation as follows: (i) an initial grant of 25,000 RSUs of Common Stock that vest over a three-year period upon appointment to the Board, followed by an annual grant of $35,000 ($70,000 for the Chairman of the Board) in RSUs per annum after full vesting of the initial grant. Further, the Company has granted shares of Common Stock to management for 2020 as part of the Incentive Plan, totaling 40,432 shares that vest over a three-year period.

 

The Company recognizes compensation costs for RSU grants to directors and management based on the stock price on the date of the grant.

 

The Company recognized stock-based compensation expense related to RSU grants of $125,076 and $82,335 for the three-month periods ended June 30, 2021 and 2020, respectively. For the six months period ended June 30, 2021 and 2020 respectively, the stock-based compensation related to share grants was $227,464 and $223,557. On June 30, 2021, the Company had $771,035 of unrecognized compensation cost related to non-vested stock grants.

 

A summary of the status of the RSU's as of June 30, 2021 and changes during the period are presented below:

 

  

June 30, 2021

 
  

Number of

units

  

Weighted

Average
Grant-Date

Fair value

  

Aggregated

Intrinsic
Value

 
             

Outstanding, December 31, 2020

  128,299  $5.79  $283,541 

Granted

  59,073   8.90   - 

Vested and settled with share issuance

  (41,912

)

  (5.65

)

  - 

Forfeited

  -   -   - 

Outstanding, June 30, 2021

  145,460  $7.09  $33,456 

 

Stock Options 

 

In August 2015, the Company’s Board of Directors adopted a Stock Option Plan (the “Plan”). Under the terms and conditions of the Plan, the Board of Directors is empowered to grant stock options to employees, officers, and directors of the Company. On June 30, 2021, no options were granted and outstanding under the Plan. 

 

The Company recognizes compensation costs for stock option awards to employees based on their grant-date fair value. The value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model.