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Note 14 - Stockholders' Equity
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Equity [Text Block]

NOTE 14 - STOCKHOLDERS' EQUITY

 

Common Stock - The Company has 50,000,000 authorized shares of common stock, $0.001 par value. As of December 31, 2023 and 2022, respectively, there were 5,727,310 and 5,498,260 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, 2023 and 2022, there were no preferred shares issued and outstanding.

 

Reversed Stock Split - On May 26, 2023, the Company effected a 1-for-8 reverse split of its outstanding Common Stock, $0.001 par value (“Common Stock”). All outstanding Common Stock, warrants, and RSUs were adjusted to reflect the 1-for-8 reverse split, with respective exercise prices of the warrants proportionately increased. All stock and per share data throughout these condensed consolidated financial statements have been retroactively adjusted to reflect the reverse share split. The total number of authorized Common Stock was adjusted to reflect the 1-for-8 reverse split.

 

As a result of the reverse Common Stock split, an amount equal to the decreased value of Common Stock was reclassified from “Common Stock” to “Additional Paid-in Capital.”

 

Stock Issuances 

 

Since  January 1, 2023, the Company has made the following issuances of Common Stock: 

 

On January 3, 2023, the Company issued 2,340 shares of Common Stock to settle RSUs. The RSUs were valued at $110,254 for services provided by the Board of Directors in 2022. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2022.

 

On January 3, 2023, the Company issued 158,330 shares of Common Stock to settle RSUs. The RSUs were valued at $674,164 for services provided by management in 2022. The Company recognized the stock-based compensation of the award over the requisite service period during the year ended December 31, 2022.

 

On May, 2023, the Company issued 16,796 shares of Common Stock for individual shareholder round-ups in connection with the 1-for-8 reverse split of its outstanding Common Stock.

 

On June 26, 2023, the Company issued 24,500 shares of Common Stock to settle RSUs. The RSUs were valued at $73,500 for services provided by the Board of Directors in 2023. The Company recognized the stock-based compensation of the award over the requisite service period during the period ended June 30, 2023.

 

On August 25, 2023, the Company issued 1,042 shares of Common Stock to settle RSUs. The RSUs were valued at $57,500 for services provided by the Board of Directors in 2023. The Company recognized the stock-based compensation of the award over the requisite service period during the period ended September 30, 2023.

 

On September 12, 2023, the Company issued 26,042 shares of Common Stock to settle RSUs. The RSUs were valued at $116,667 for services provided by management in the last 12 months. The Company recognized the stock-based compensation of the award over the requisite service period during the period ended September 30, 2023.

 

Warrants 

 

On May 17, 2022, the Company entered a warrant purchase agreement with existing stockholders to purchase 3,803,133 shares of Common Stock at an offering price of $3.992 per prefunded warrant, which represents the offering price of $4.00 per share of the Company’s Common Stock less the $0.008 per share exercise price for each pre-funded warrant. The warrants represented gross proceeds of approximately $15,182,075 as part of the Company’s public offering of Common Stock and pre-funded warrants totaling $23,000,000 before underwriting discounts, commissions, and offering expenses payable by the Company.

 

On June 22, 2022, the Company completed a private placement of Senior Notes in an aggregate principal amount of $6,000,000 and warrants to purchase 531,250 shares of Common Stock of the Company to affiliates of Bleichroeder L.P., 21 April Fund, L.P., and 21 April Fund, Ltd. (together, the "Purchasers"), pursuant to a note and warrant purchase agreement (the “Note and Warrant Purchase Agreement”). Additionally, as part of the transaction, the Company issued 28,846 warrants to the placement agent. All warrants issued in this transaction have an exercise price of $5.20 per share, a term of five years, and are exercisable for cash at any time. 

 

On October 13, 2023, the Company entered into an amendment to the Note and Warrant Purchase Agreement effective as of September 30, 2023, pursuant to which the Company and the Purchasers extended the maturity date of the Notes from June 20, 2024, to January 1, 2026 (the “Extension”). As consideration for the Extension, the Company issued to the Purchasers additional warrants to purchase an aggregate of 531,250 shares of Common Stock at an exercise price of $5.20 per share. The warrants are exercisable at any time prior to the five-year anniversary of the initial exercise date of September 30, 2023.

 

 

The following is a summary of the periodic changes in warrants outstanding for the years ended December 31, 2023 and 2022:

 

  

2023

  

2022

 

Warrants outstanding at January 1

  4,490,104   126,875 

Warrants issued in connection with public offering and private placement

  531,250   4,363,229 

Common stock exchanged to prefunded warrant

  -   - 

Warrants outstanding at December 31

  5,021,354   4,490,104 

 

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, directors, and consultants of the Company. At December 31, 2023, 113,357 RSUs were granted and outstanding under the Incentive Plan. Directors of the Company receive share compensation consisting of annual grants of $36,750 ($73,500 for the Chairman of the Board) in RSUs per annum with one-year vesting.

 

In 2022, the Company’s Board of Directors adopted an Equity Incentive Plan (the “2022 Incentive Plan”). Under the terms and conditions of the 2022 Incentive Plan, the Board of Directors is empowered to grant RSUs to officers and directors of the Company. At December 31, 2023, 201,104 RSUs were granted and outstanding under the 2022 Incentive Plan.

 

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 $627,904 and $934,423 for the years ended December 31, 2023 and 2022, respectively. On December 31, 2023, the Company had $688,990 of unrecognized compensation cost related to non-vested stock grants.

 

A summary of the status of the RSUs as of December 31, 2023 and changes during the period are presented below:

 

  

December 31, 2023

 
  

Number of

units

  

Weighted

Average
Grant-Date

Fair value

  

Aggregated

Intrinsic
Value

 
             

Outstanding, December 31, 2022

  301,111  $4.80  $- 

Granted

  225,604   3.00   - 

Vested and settled with share issuance

  (212,254)  (4.86)  - 

Outstanding, December 31, 2023

  314,461  $3.46  $-