Annual report pursuant to Section 13 and 15(d)

Stockholder???s Equity

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Stockholder’s Equity
 12 Months Ended
Dec. 31, 2021
Equity [Abstract]  
Stockholder’s Equity

12. Stockholder’s Equity

 

On April 7, 2021, the Company filed a Certificate of Incorporation with the Secretary of State of the State of Delaware (see Note 1) which authorizes the Company to issue 50,000,000 shares of common stock and 10,000,000 shares of preferred stock, each with a par value of $0.001.

 

On May 13, 2021, the Company effected a forty-thousand (40,000)-for-one stock split to the shareholder of record as of May 13, 2021. The stock split was in the form of a common stock dividend of 3,999,900 new shares and all share and per share information has been retroactively adjusted to reflect the stock split.

 

On July 23, 2021, the Company, consummated its initial public offering (the “IPO”) of 3,000,000 shares of its common stock (“Shares”) at a public offering price of $6.00 per Share, generating gross proceeds of $18,000,000, which netted to the Company $15,849,037 after offering expenses. The Company had granted the underwriters a 45-day option to purchase up to 450,500 additional Shares to cover over-allotment., which option expired unexercised.

 

Common Stock Warrants

 

As of December 31, 2021, the Company has outstanding warrants to purchase 3,000,000 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 in connection with the IPO. There was no warrant activity during the year ended December 31, 2021 other than the warrant issuance.

 

Equity Compensation Plans

 

The Company 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 plans. As of December 31, 2021, there were 286,388 shares remaining available for grant under these plans.

 

Accounting for Stock-Based Compensation

 

Stock Compensation Expense - For the year ended December 31, 2021, the Company recorded $309,832 of stock-based compensation expense in the accompanying consolidated statement of operations. For the year ended December 31, 2020, the Company did not issue any stock-based compensation expense.

 

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 pf grant. The Company utilized the following assumptions for option grants during the year ended December 31, 2021:

 

       
      Year Ended  
      December 31,  
      2021  
Expected term     4.94 - 5 years  
Expected average volatility     49-55 %
Expected dividend yieldy     —  
Risk-free interest rate      0.72 – 1 %

 

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   Weighted Average   Remaining life    
    Options   Exercise Price   (years)   Fair value of option
Outstanding, December 31, 2020       —     $ —       —     $ —  
Granted       754,000       5.15       10.00       1,573,297  
Exercised       —       —       —       —  
Forfeited/canceled       (40,388 )     (5.53 )     (9.73 )     (95,003 )
Outstanding, December 31, 2021       713,612     $ 5.13       9.54     $ 1,478,294  
                                   
Exercisable options, December 31, 2021       102,865     $ 5.70       9.46          

 

 

At December 31, 2021, the Company had 713,612 options outstanding, 610,747 shares are unvested and expected to vest over the next five years.