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Share based compensation
 3 Months Ended
Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Share based compensation

Note 22. Share based compensation

 

2022 Equity Incentive Plan

 

Share-based compensation expense recognized for the three months ended March 31, 2023 and March 31, 2022 totaled $1.6 million and $0 respectively.

 

The 2022 Plan was approved by the Company’s stockholders on June 28, 2022. The 2022 Plan permits the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and performance compensation awards. The Company has not issued stock appreciation rights, restricted stock, stock bonus awards, or performance compensation awards in the three months ended March 31, 2023 and March 31, 2022. In conjunction with the 2023 Plan, as of March 31, 2023, the Company had granted stock options and restricted stock units which are described in more detail below.

 

Stock options

 

Stock options are awarded to encourage ownership of the Company’s common stock by employees and to provide increased incentive for employees to render services and to exert maximum effort for the success of the Company. The Company’s incentive stock options generally permit net-share settlement upon exercise. The option exercise price, vesting schedule and exercise period are determined for each grant by the administrator (person appointed by board to administer the stock plans) of the applicable plan. The Company’s stock options generally have a 10-year contractual term.

 

The assumptions used to determine the fair value of options granted in the three months ended March 31, 2023, using the Black-Scholes-Merton model are as follows:

 

Dividend yield   0%
Risk-free interest rate   3.62 % to 4.23%
Expected volatility (weighted-average and range, if applicable)   100%
Expected term   6 to 6.5 years 

 

The expected term of the options granted is calculated based on the simplified method by taking average of contractual term and vesting period the awards. The shares of the Company were listed on the stock exchange for a limited period of the time and the share price has also dropped significantly from the date of listing, based on these factors the Management has considered the expected volatility at 100% for the current period. The risk-free interest rate used is the current yield on US Treasury notes with a term equal to the expected term of the options at the grant date. The expected dividend yield is based on annualized dividends on the underlying share during the expected term of the option.

 

A summary of the Company’s stock option activities and related information for the three months ended March 31, 2023 is as follows:

Stock Option  No. of Stock Option   Weighted-
Average Grant
Date Fair Value
Per Stock Option		   Aggregate
Fair Value		 
December 31, 2022   2,170,000    3.53    7,665,707 
Granted   336,730   $1.03    345,835 
Exercised   -    -    - 
Expired   -    -    - 
Cancelled / Forfeited   (64,875)   3.13    (202,851)
March 31, 2023   2,441,855   $3.20    7,808,691 

 

On March 31, 2023, there were no unrecognized compensation costs related to non-vested stock options to be recognized. Share based compensation did not impact on Company’s cash flow in three months ended March 31, 2023 or year ended December 31, 2022.

 

 

Restricted Stock Units (“RSUs”)

 

A summary of the Company’s RSU activities and related information for the three months ended March 31, 2023 is as follows:

 

Restricted Stock Units  No. of RSU   Weighted-
Average Grant
Date Fair Value
Per RSU		   Aggregate
Fair Value		 
December 31, 2022   -    -    - 
Granted   963,528   $1.31    1,262,222 
Exercised   -    -    - 
Expired   -    -    - 
Cancelled / Forfeited   -    -    - 
March 31, 2023   963,528   $1.31    1,262,222 

 

The fair value as of the respective vesting dates of RSUs that vested during the three months ended March 31, 2023 and 2022 was $857,530 and $0. As of March 31, 2023, there is $404,692 of unrecognized share-based compensation expense related to RSU awards.