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Stockholders' Equity

9 Months Ended

Sep. 30, 2024

Stockholders

STOCKHOLDERS’ EQUITY

NOTE 9 – STOCKHOLDERS’ EQUITY

Common Stock

During the nine-month period ended September 30, 2024, vested and outstanding restricted stock units were exercised for 2,062,903 shares of common stock of the Company.

Common Stock Warrants

The Company’s outstanding stock warrants have not changed during the nine-months ended September 30, 2024. The outstanding stock warrants as of September 30, 2024 are 4,904,016 with a weighted average remaining contractual life (in years) of 2.90 and a weighted average exercise price of $11.07, all of which are exercisable.

Stock-Based Compensation:

Equity plans

Under the 2018 Equity Plan, the number of shares issuable under the Plan on the first day of each fiscal year increase by an amount equal to the lower of (i) 100,000 shares (after a later 10 for 1 stock split) or (ii) 5% of the outstanding shares on the last day of the immediately preceding fiscal year. At the Company’s annual meeting on May 17, 2023, the stockholders approved an amendment to the 2021 Equity Plan that, amongst other things, increased the number of the shares available under the 2021 Equity Plan to 10,000,000 shares, and the shares available under the 2021 Equity Plan increased by 1,000,000 shares on January 1, 2024 to 11,000,000. Upon review of the previously granted shares in previous years and the availability of shares, on April 9, 2024, the Board of Directors approved the 2024 Omnibus Equity Plan (the “2024 Plan”) which will provide an initial 10,000,000 shares of common stock available for grant per the terms of the 2024 Plan and provides alignment with long-term stockholder value creation. The 2024 Omnibus Equity Plan was approved by the stockholders at the Company’s annual general meeting held on June 12, 2024. The 2024 Plan replaced and succeeded the Company’s 2018 Equity Incentive Plan and 2021 Equity Incentive Plan. The 2024 Plan provides that awards issued under the 2024 Plan, the 2018 Plan or the 2021 Plan that expire, lapse or are terminated, surrendered or canceled without having been fully exercised or are forfeited in whole or in part, in any case in a manner that results in any share of Common Stock covered by such award being reacquired by the Company or otherwise not being issued, such share of Common Stock shall again be available for the grant of awards under the 2024 Plan. Further, shares of Common Stock delivered (either by actual delivery or attestation) to the Company by a participant to (1) satisfy the applicable exercise or purchase price of an award, and/or (2) satisfy any applicable tax withholding obligation, in each case, shall be added to the number of shares of Common Stock available for the grant of awards under the 2024 Plan. Therefore, an additional 5,000,000 shares of Common Stock are being registered hereunder for those purposes, for an aggregate of 15,000,000 shares of Common Stock being registered hereunder.

The Company recognized stock-based compensation expense during the three and nine months ended September 30, 2024 and 2023, as follows:

		For the Three-Months ended September 30,								For the Nine-Months ended September 30,
		2024				2023				2024				2023
Performance-based restricted stock awards		$	2,913			$	(812,901	)		$	79,070			$	(479,343	)
Service-based restricted stock awards			4,125,992				4,096,717				11,161,386				4,146,709
Stock issued to consultants			-				-				-				307,069
Warrant expense			-				500,500				-				1,501,500
Option expense*			1,191,918				-				35,098				-
Total stock-based compensation**		$	5,320,823			$	3,784,316			$	11,275,554			$	5,475,935

*	The option expense for the nine-month period to September 30, 2024 contains a reversal of stock-based compensation expenses from 2023 for cancelled option awards, offset by option expense incurred during the period.

**	Stock-based compensation expense in the consolidated, condensed unaudited statement of operations includes $11.28 million of stock-based compensation.

Performance-based awards

Performance-based awards generally vest over a three-year performance period upon the successful completion of specified market and performance conditions.

The following table presents a summary of the Company’s performance-based awards restricted stock awards activity:

		Number of shares				Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2023			75,545				8.58
Expired/forfeited			(3,444	)			-
Outstanding as of September 30, 2024			72,101				7.81
Exercisable as of September 30, 2024			61,617				6.70

Service-based restricted stock awards

Service-based awards generally vest over a specified time period pursuant to the grant by the Compensation Committee of the Board of Directors and as specified in the award agreements or employment agreements.

The following table presents a summary of the Company’s service-based awards activity:

		Number of shares				Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2023			5,242,393				2.28
Issued			12,480,531				-
Exercised			(3,459,720	)			-
Outstanding as of September 30, 2024			14,263,204				1.54
Exercisable as of September 30, 2024			16,804				0.01

As of September 30, 2024, there was approximately $20.54 million of unrecognized compensation cost related to the service-based restricted stock awards, which is expected to be recognized over a remaining weighted-average vesting period of approximately four years.

Stock options awards

Stock options awards vest upon the successful completion of specified stock price threshold conditions.

The following table presents a summary of the Company’s Stock options awards activity:

		Number of shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (in years)				Aggregate Intrinsic Value
Outstanding as of December 31, 2023			3,500,417			$	1.23				9.70			$	6,923,000
Cancelled			(1,750,000	)			0.94				-				-
Issued			1,750,000				0.94				-				-
Outstanding as of September 30, 2024			3,500,417			$	1.07				9.45			$	605,500
Exercisable as of September 30, 2024			417			$	0.00				-			$	-

As of September 30, 2024, there was approximately $0.61 million of unrecognized compensation cost related to the stock options awards, which is expected to be recognized over a remaining weighted-average vesting period of approximately eight months.