Share-Based Compensation

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

9. Share-Based Compensation

2023 Stock Incentive Plan

The Company effectuated an amendment to its 2021 Stock Incentive Plan, now restated as the Company 2023 Stock Incentive Plan (the “2023 SIP” or “Plan”) which includes, among other things, a change in the number of reserved shares under the Plan. Under the 2023 SIP, subject to a change in capital structure or a change in control, the aggregate number of shares which may be issued or transferred pursuant to awards under the Plan will be equal to up to twenty percent (20%) of shares of outstanding common stock of the Company existing as of December 31^st of the previous calendar year (the “Plan Share Reserve”). Upon the effectiveness of the 2023 SIP on February 16, 2023, the aggregate number of shares which may be issued pursuant to awards under the Plan is 871,075 shares of common stock, including shares that remained available for grant under the 2021 Stock Incentive Plan. On July 19, 2024, the Company filed Form S-8 to increase the aggregate number of shares may be issued to 946,432 shares of common stock including shares that remained available for grant under the 2021 Stock Incentive Plan. As of December 31, 2024, 1,816,632 shares have been granted under the 2023 SIP.

2021 Stock Incentive Plan

On June 20, 2022, the Company’s 2021 Stock Incentive Plan (the “2021 SIP”) was effective following an approval by its shareholders. The 2021 SIP seeks to attract and retain key personnel, and to strengthen the commitment of the Company’s directors, officers, employees, consultants and advisors by making available equity interests in the Company or compensation measured by reference to the value of Company’s common stock. The 2021 SIP provides for the issuance of up to 266,666 shares of the Company’s common stock pursuant to equity awards, including options, stock appreciation rights and restricted stock units. No shares were granted or issued under the 2021 SIP.

2021 Employee Stock Purchase Plan

On June 20, 2022, the Company’s 2021 Employee Stock Purchase Plan (the “2021 ESPP”) was effective following an approval by its shareholders. The 2021 ESPP provides eligible employees (as such term is defined in the ESPP) with an opportunity to purchase common stocks of the Company at a discount through voluntary contributions and is intended to qualify as an employee stock purchase plan under Section 423 of the U.S. Internal Revenue Code of 1986, as amended. A total of 10,000 shares of common stock have made available for issuance under the ESPP. As of December 31, 2024, the total remain 10,000 shares were issued under the 2023 SIP.

Based on the aforementioned plans, the Company will issue new shares upon option exercise or shares vested.

Restricted Stock Units (“RSUs”)

RSUs entitle the recipient to be paid out an equal number of common stock shares upon vesting which is generally 3 years. The fair value of RSUs is based on the closing price of the underlying stock on the date of grant. A summary of the Company’s RSUs activity and related information for the years ended December 31, 2024 and 2023 is as follows:

	For the Year Ended December 31,
	2024					2023
	Number of Shares			Weighted-Average Grant Date Fair Value Per Share		Number of Shares			Weighted-Average Grant Date Fair Value Per Share
Unvested balance at January 1		954,306		$	4.39		160,000		$	12.08
RSUs granted		946,432		$	0.53		870,200		$	3.46
RSUs vested		(1,768,443	)	$	2.31		(44,680	)	$	13.11
RSUs forfeited		(42,464	)	$	2.75		(31,214	)	$	5.28
Unvested balance at December 31		89,831		$	5.51		954,306		$	4.39

Stock Options and Warrants

A summary of option activity for the years ended December 31, 2024 and 2023 is presented below.

	Number of Shares		Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2022		7,332	$	28.50		8.3		-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited or expired		-		-		-		-
Outstanding at December 31, 2023		7,332	$	28.50		7.3		-
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited or expired		-		-		-		-
Outstanding at December 31, 2024		7,332	$	28.50		6.3		-
Vested or expected to vest at December 31, 2024		7,332	$	28.50		6.3		-
Exercisable at December 31, 2024		7,332	$	28.50		6.3		-

As of December 31, 2024, 6,034 shares of warrants which were granted to i2China Management Group, LLC in November 2020 were outstanding and remained unexercised. The warrants were fully vested and exercisable as of December 31, 2024. The exercise price of the warrant is $19.88 with remaining contractual term in 0.9 years.

The Company used the Black-Scholes option pricing model to value the above option and warrant awards to determine the grant date fair value. The contractual term of the option and warrant is 10 years and 5 years, respectively.

Share-Based Compensation

The RSUs, options and warrants (the “Awards”) were granted to employees and consultants with service conditions. The share-based compensation expense of the Awards for the years ended December 31, 2024 and 2023 were $3,543,101 and $1,114,767, respectively.

	For the Year Ended December 31,
	2024		2023
Selling, general and administrative expenses	$	2,728,852	$	875,509
Research and development expenses		805,217		220,723
Cost of revenues		9,032		18,535
Total	$	3,543,101	$	1,114,767

The total income tax benefit recognized in the Statements of Operations for the share-based compensation arrangements were nil for the years ended December 31, 2024 and 2023. Compensation cost capitalized as part of inventory has been minimal.

As of December 31, 2024, the total unrecognized compensation cost related to the Awards was $188,741, which is expected to be recognized over a weighted-average period of 1.42 years. The total fair value of shares vested during the years ended December 31, 2024 and 2023 was $4,242,956 and $745,706, respectively.