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Note 12 - Stockholders' Equity
 12 Months Ended
Dec. 31, 2021
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

NOTE 12 - STOCKHOLDERS' EQUITY

 

Common Stock – The Company has 100,000,000 authorized shares of common stock, $0.001 par value. As of December 31, 2021 and 2020, respectively, there were 21,285,706 and 21,655,461 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 shares of preferred stock, $0.001 par value. As of December 31, 2021 and 2020 there were no preferred shares issued and outstanding.

 

Stock Issuances 

 

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 awards 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 recognized the stock-based compensation of the awards over the requisite service period.

 

On April 9, 2021, the Company issued 80,000 restricted shares of Common Stock pursuant to the Securities Purchase Agreement executed on March 24, 2021.

 

On August 17, 2021, the Company entered an exchange agreement with an existing shareholder to exchange an aggregate of 500,000 shares of common stock for prefunded warrants of equivalent value. The prefunded warrants will be exercisable at any time on or after the closing date.

 

On September 3, 2021, the Company issued 8,333 shares of Common Stock to settle RSUs. The RSUs were valued at $57,500 for services provided by the Board of Directors. The Company recognized the stock-based compensation of the awards over the requisite service period.

 

For the years ended December 31, 2021 and 2020, the Company has recorded stock-based compensation expense of $481,105 and $343,780, respectively.  

 

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).

 

On August 17, 2021, the Company entered an exchange agreement with an existing shareholder to exchange an aggregate of 500,000 shares of Common Stock for equivalent shares of a prefunded warrants (the “Exchange Agreement”). The prefunded warrants will be exercisable at an exercise price of $0.001 per share, subject to adjustments as provided under the terms of the prefunded warrants. The prefunded warrants will be exercisable at any time on or after the closing date. The Exchange Agreement contained additional terms typical of exchange agreements including representations and warranties of the parties. In connection with the Exchange Agreement, as of the date of the Exchange Agreement, the Company issued the prefunded warrants to the Shareholders. The exercise price of each prefunded warrant is equal to $0.001 per share, and the prefunded warrants are exercisable on or after August 17, 2021, subject to the limitations on exercise and conditions set forth by the prefunded warrants. The prefunded warrants are subject to customary adjustments in the event of stock splits and dividends, fundamental transactions, and subsequent offerings of rights to purchase stock.

 

The following is a summary of the periodic changes in warrants outstanding for the year ended December 31, 2021:

 

  

2021

 

Warrants outstanding at January 1

  515,000 

Common stock exchanged to prefunded warrant

  500,000 

Exercises and conversions

  - 

Warrants outstanding at December 31

  1,015,000 

 

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 December 31, 2021, 149,636 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 to management for 2021 as part of the Incentive Plan, totaling 52,941 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 $481,105 and $343,780 for the years ended December 31, 2021 and 2020, respectively. On December 31, 2021, the Company had $529,259 of unrecognized compensation cost related to non-vested stock grants.

 

A summary of the status of the RSUs outstanding as of December 31, 2021 and changes during the period are presented below: 

 

  

December 31, 2021

 
  

Number of

units

  

Weighted

Average
Grant-Date

Fair value

  

Aggregated

Intrinsic
Value

 
             

Outstanding, December 31, 2020

  128,299  $5.79  $283,541 

Granted

  71,582   7.51   - 

Vested and settled with share issuance

  (50,245

)

  5.85   - 

Forfeited

          - 

Outstanding, December 31, 2021

  149,636  $6.59