Stockholders Equity

6 Months Ended

Jun. 30, 2023

Stockholders Equity

Stockholders' Equity

6. Stockholders’ Equity

Common Stock

During the three months ended June 30, 2023, the Company issued an additional 281,022 shares of common stock as a result of delivering 126,532 shares to settle vested RSUs, an additional 93,333 shares for the conversion of Chen Note (see Note 5), and 61,157 shares in exchange for a vehicle with a related party (see Note 11). As of June 30, 2023, there were 20,292,624 shares of common stock legally issued and outstanding.

Warrants

As of June 30, 2023 and December 31, 2022, warrants issued and outstanding in connection with financing are summarized as below:

	June 30,		December 31,
(In number of shares)	2023		2022
Public warrant with exercise price of $4.25		897,000		897,000
Private warrant with exercise price of $4.675		39,000		39,000
Total		936,000		936,000

As disclosed in Note 1, the Company issued public warrants together with common stocks in connection with its underwritten public offering effective August 8, 2022. The Company further issued private warrants to Maxim Group LLC, as representative of underwriter pursuance to an underwriting agreement. Each warrant has a contractual term of 5 years, expiring on August 8, 2027, and can be exercised for the purchase of one share of common stock of the Company.

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (the “ASC480), and ASC 815, Derivatives and Hedging (the “ASC 815”). The assessment considers whether the instruments are free standing financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent period end date while the instruments are outstanding. Management has concluded that the warrants issued in connection with the underwritten public offering qualify for equity accounting treatment and recorded in the additional paid-in capital.

In addition, the warrant issued by the Company to i2China in 2020 in exchange for consulting services is accounted for under ASC 718, Compensation - Stock Compensation. Refer to Note 8.

As of June 30, 2023, none of the warrants have been exercised nor have expired.