Quarterly report pursuant to Section 13 or 15(d)

Stockholder???s Equity

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Stockholder’s Equity
 3 Months Ended
Mar. 31, 2022
Equity [Abstract]  
Stockholder’s Equity

10. Stockholder’s Equity

 

Common Stock Warrants

 

As of March 31, 2022, 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. The representative’s warrants are exercisable at any time and from time to time, in whole or in part, during the four- and one-half year period commencing 180 days from the effective date of the registration statement, which was July 23, 2021. There was no warrant activity during the quarter ended March 31, 2022.

 

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, 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, 2022. As of March 31, 2022, there were 352,043 shares remaining available for grant under this plan.

  

Accounting for Stock -Based Compensation

 

Stock Compensation Expense - For the three ended March 31, 2022 and 2021, the Company recorded $320,505 and $0, respectively, of 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 of grant. The Company utilized the following assumptions for option grants during the three months ended March 31, 2022:

 

 

       
    Three months Ended
    March 31,
    2022
Expected term     5 years  
Expected average volatility     49 %
Expected dividend yield     —  
Risk-free interest rate     1.50 – 1.94 %

 

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)
             
Outstanding, December 31, 2021     713,612     $ 5.13       9.54  
Granted     252,000       3.86       10.00  
Exercised     —       —          
Forfeited/canceled     (2,655 )     (4.10 )     (9.39 )
Outstanding, March 31, 2022     962,957     $ 4.83       9.42  
                         
Exercisable options, March 31, 2022     194,163     $ 4.34       7.33  

 

At March 31, 2022, 768,794 options are unvested and expected to vest over the next five years.