Note 7. Stockholders’ Equity and Stock-Based Compensation

At June 30, 2023, the Company had 12,484,799 common shares outstanding (including outstanding RSAs totaling 451,404 shares). Also outstanding were stock options relating to 525,903 shares of common stock (514,513 stock options were vested), all totaling 13,010,702 shares of common stock and all common stock equivalents, outstanding at June 30, 2023.

At December 31, 2022, the Company had 11,900,217 common shares outstanding (including outstanding RSAs totaling 416,316 shares). Also outstanding were stock options relating to 525,903 shares of common stock (514,513 stock options were vested), all totaling 12,426,120 shares of common stock and all common stock equivalents, outstanding at December 31, 2022.

Common Stock Equity Offerings

At-the-Market (ATM) Offerings

On November 9, 2022, the Company filed a prospectus supplement with the SEC pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to $20.0 million from time to time through its ATM. On April 4, 2023, the Company filed an additional prospectus supplement revising the amount available to a total of $17.9 million with $15.8 million available for future share issuances.

The Company records its ATM sales on a settlement date basis. The Company sold approximately 0.5 million shares under the ATM for the six months ended June 30, 2023 resulting in net proceeds of $2.3 million (stock issuance costs were $0.1 million). The Company sold approximately 1.2 million shares under the ATM for the six months ended June 30, 2022 resulting in net proceeds of $7.6 million (stock issuance costs were $0.3 million).

Stock-based Compensation

2020 Equity Incentive Plan

On March 9, 2020, the Board of Directors adopted the Company’s 2020 Omnibus Incentive Plan (the “2020 Plan”). On September 3, 2020, the shareholders approved the 2020 Plan to authorize grants of the following types of awards (a) Options, (b) Stock Appreciation Rights, (c) Restricted Stock and Restricted Stock Units, and (d) Other Stock-Based and Cash-Based Awards. The number of shares of common stock available for issuance under the 2020 Plan is 1,800,000 shares.

Stock Options

During the six months ended June 30, 2023, the Company issued 21,241 stock options to one consultant. These options were assigned a fair value of $1.07 per share (total fair value of $22,830). During the six months ended June 30, 2022, the Company issued 13,514 stock options to one consultant. These options were assigned a fair value of $3.70 per share (total fair value of $50,000). The value was determined using the Black-Scholes pricing model. The following assumptions for these option grants were used in the Black-Scholes pricing model:

Common Share Issuances

For the six months ended June 30, 2023 and 2022, the Company issued 7,408 shares and 4,058 shares of common stock, respectively, to its investor relations firm for services provided during the period.

On December 15, 2022, the Board of Directors approved an equity grant valued at $200,000 in total to its five directors, which resulted in the issuance of a total of 52,085 shares of common stock to the five directors, valued on the grant date at $3.84 per share and issued on January 3, 2023.

On November 18, 2021, the Board of Directors approved an equity grant valued at $210,000 in total to its six directors, which resulted in the issuance of a total of 19,644 shares of common stock to the six directors, valued on the grant date at $10.69 per share. There were 13,096 common shares issued to four directors on November 18, 2021 and the remaining 6,548 shares of common stock were issued to the two remaining directors on January 1, 2022.

Restricted Stock Awards Issued

On May 3, 2023, the Board of Directors approved an equity grant valued at $120,000 to one new officer of the Company, which resulted in the issuance of a total of 35,088 shares of common stock to the new employee, valued on the grant date at $3.42 per share and issued on May 3, 2023. These RSAs vest annually in equal installments over 3 years. These 35,088 shares were included in the total outstanding common shares at June 30, 2023 and compensation expense will be recognized straight line over the three-year vesting period.

As of June 30, 2023 and December 31, 2022, there were 451,404 and 416,316 RSAs included in the total issued and outstanding common stock, respectively. Compensation expense is recognized straight line over the three-year vesting period. A total of $0.6 million and $0.4 million of compensation expense was recorded for the six months ended June 30, 2023 and June 30, 2022, respectively, for the RSAs.

As of June 30, 2023, there was $2.2 million of total unrecognized compensation cost related to these unvested RSAs. The compensation expense will be recognized on a straight-line basis over the three-year vesting period and the total unrecognized compensation is expected to be recognized over a weighted-average period of 2.02 years.

The components of total stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2023 and 2022 are as follows (rounded in millions):