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Stockholders’ Equity
 3 Months Ended
Mar. 31, 2024
Equity [Abstract]  
Stockholders’ Equity

13. Stockholders’ Equity

 

Twin Vee

 

Common Stock Warrants

 

As of March 31, 2024, the Company had outstanding warrants to purchase 150,000 shares of common stock issuable at a weighted-average exercise price of $7.50 per share that were issued to the representative of the underwriters on July 23, 2021 in connection with the Company’s initial public offering that closed on July 23, 2021 (the “IPO”). The representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on July 20, 2026.. On March 31, 2024, pursuant to the terms of an underwriting agreement entered into on September 28, 2022 with ThinkEquity LLC, the Company issued to the underwriter warrants to purchase up to 143,750 shares of common stock. The warrants will be exercisable at a per share price of $3.4375. There was no warrant activity during the three months ended March 31, 2024.

 

Equity Compensation Plan

 

The Company maintains an equity compensation plan (the “Plan”) under which it may award employees, directors and consultants’ incentive and non-qualified stock options, restricted stock units, stock appreciation rights and other stock-based awards with terms established by the Compensation Committee of the Board of Directors which has been appointed by the Board of Directors to administer the Plan. The number of awards under the Plan automatically increased on January 1, 2024. As of March 31, 2024, there were 450,430 shares remaining available for grant under this Plan.

 

Accounting for Stock -Based Compensation

 

Stock Compensation Expense

 

For the three months ended March 31, 2024 and 2023, the Company recorded $426,283 and $482,964, respectively, of stock-based compensation expense. Stock-based compensation expense is included in salaries and wages on the accompanying condensed consolidated statement of operations.

 

Stock Options

 

Under the Company’s 2021 Stock Incentive Plan the Company has issued stock options. A stock option grant gives the holder the right, but not the obligation, to purchase a certain number of shares at a predetermined price for a specific period of time. The Company typically issues options that vest pro rata on a monthly basis over various periods. Under the terms of the Plan, the contractual life of the option grants may not exceed ten years.

 

The Company utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. The Company utilized the following assumptions for option grants during the three months ended March 31, 2024 and 2023:

 

          
     Three months ended  
     March 31, 2024  
    2024    2023 
Expected term    5 years      4.94 - 5 years  
Expected average volatility   27 - 46%     49 - 50%  
Expected dividend yield   —    — 
Risk-free interest rate   1.50 –4.45%     1.50 – 2.96% 

 

The expected volatility of the option is determined using historical volatilities based on historical stock price of comparable boat manufacturing companies. The Company estimated the expected life of the options granted based upon historical weighted average of comparable boat manufacturing companies. The risk-free interest rate is determined using the U.S. Department of the Treasury yield curve rates with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%

 

                     
   Options Outstanding  Weighted Average   
   Number of
Options		  Weighted Average
Exercise Price		  Remaining life
(years)		  Grant Date Fair
value of option
             
Outstanding, December 31, 2023    1,271,016   $3.99    8.04    2,213,147 
Granted    —    —    —    — 
Exercised    —    —    —    — 
Expired    (8,906)   (2.73)   —    (11,109)
Forfeited/canceled    (25,695)   (1.77)   —    (18,929)
Outstanding, March 31, 2024    1,236,415   $4.04    3.75    2,183,109 
                      
Exercisable options, March 31, 2024    931,533   $4.39    4.37      

 

At March 31, 2024, 304,882 Twin Vee options are unvested and expected to vest over the next four years.

 


Restricted Stock Units

 

Under the Company’s 2021 Stock Incentive Plan the Company has issued restricted stock units (“RSUs”). RSUs are granted with fair value equal to the closing market price of the Company’s common stock on the business day of the grant date. An award may vest completely at a point in time (cliff-vest) or in increments over time (graded-vest). Generally, RSUs vest over three years.

 

                     
   Restricted Stock Units Outstanding  Weighted   
   Number of  Weighted Average
Grant – Date		  Average
Remaining life		  Aggregate Intrinsic
   Units  Fair Value Price  (years)  Value
             
Outstanding, December 31, 2023    67,250   $2.25    2.07   $57,842 
Granted    —    —    —    — 
Exercised    —    —    —    — 
Forfeited/canceled    (11,086)   (2.25)        (9,535)
Outstanding, March 31, 2024    56,164   $2.25    2.35   $48,307 

 

 Forza

 

Common Stock Warrants

 

Forza had outstanding warrants to purchase 172,500 shares of common stock issuable at a weighted-average exercise price of $6.25 per share that were issued to the representative of the underwriters on August 16, 2022 in connection with Forza’s IPO. Forza also had outstanding warrants to purchase 306,705 shares of common stock issuable at a weighted-average exercise price of $1.88 per share that were issued to the representative of the underwriters on June 14, 2023 in connection with Forza’s secondary offering. The representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on August 16, 2027 and June 16, 2028, respectively. There was no warrant activity during the nine months ended March 31, 2024.

 

 Equity Compensation Plan

 

Forza maintains an equity compensation plan under which it may award employees, directors and consultants’ incentive and non-qualified stock options, restricted stock, stock appreciation rights and other stock-based awards with terms established by the Compensation Committee of the Board of Directors which has been appointed by the Board of Directors to administer the plan. The number of awards under the Plan automatically increased on January 1, 2024 and will automatically increase on January 1, 2025. As of March 31, 2024, there were 789,297 shares remaining available for grant under this Plan. Stock based compensation expense is included in the Statements of Operations, under salaries and wages.

 

Accounting for Stock -Based Compensation

 

For the three months ended March 31, 2024 and 2023, Forza recorded $293,141 and $341,163, respectively, of stock-based compensation expense. Stock-based compensation expense is included in salaries and wages on the accompanying condensed statement of operations.

 

Stock Options

 

Under Forza’s 2022 Stock Incentive Plan (the “Forza Plan”), Forza has issued stock options. A stock option grant gives the holder the right, but not the obligation, to purchase a certain number of shares at a predetermined price for a specific period of time. Forza typically issues options that vest pro rata on a monthly basis over various periods. Under the terms of the Forza Plan, the contractual life of the option grants may not exceed ten years.

 

Forza utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. Forza utilized the following assumptions for option grants during the three months ended March 31, 2024:

 

     
    Three Months Ended 
    March 31, 
    2024 
Expected term   5 years 
Expected average volatility   108 - 113% 
Expected dividend yield   — 
Risk-free interest rate   2.98 - 4.72% 

 

The expected volatility of the option is determined using historical volatilities based on historical stock price of comparable boat manufacturing companies. Forza estimated the expected life of the options granted based upon historical weighted average of comparable boat manufacturing companies. The risk-free interest rate is determined using the U.S. Department of the Treasury yield curve rates with a remaining term equal to the expected life of the option. Forza has never paid a dividend, and as such the dividend yield is 0.0%.

 

                     
   Options Outstanding  Weighted Average   
   Number of  Weighted Average  Remaining life  Grant Date
   Options  Exercise Price  (years)  Fair value of option
             
Outstanding, December 31, 2022    1,441,500   $3.41    0.05   $4,009,913 
Granted    518,000    0.70    9.76    287,835 
Exercised    —    —           
Forfeited/canceled    (69,583)   1.24    9.62    (40,248)
Outstanding, December 31, 2023    1,889,917   $2.75    9.36   $4,257,500 
Granted    —    —    0      
Exercised    —    —    0      
Forfeited/canceled    (396,843)   1.66    8.98    (69,413)
Outstanding, Mach 31, 2024    1,493,074   $2.75    8.78   $4,188,087 
                      
Exercisable options, March 31, 2024    748,750   $3.48    8.58