Stockholders’ Equity | NOTE 6 – Stockholders’ Equity Common Stock During 2022, the Company did not issue any common stock. In January 2021, the Company closed a public offering of its securities in which it issued 1,711,783 3.00 4,532,445 136,943 five years 3.75 In February 2021, the Company issued 263,200 In March 2021, the Company issued 119,000 250 19,000 191,204 21,591 In March 2021, the Company closed a public offering of its securities in which it issued 2,190,000 4.445 8,736,488 2,190,000 4.32 May 24, 2021 two years 175,200 8 125 5.55625 8.0 In March 2021, Company issued 1,500 4.99 In September 2021, the Company granted 5,204 Deferred Compensation During 2022, the Company did not issue any shares of common stock to employees. In 2021, the Company issued to various employees shares of the Company’s common stock, subject to restrictions, pursuant to the 2013 Equity Incentive Plan (the “2013 Plan”). Such shares were valued at the fair value at the date of issue. The fair value was expensed as compensation over the vesting period and recorded as a reduction of stockholders’ equity. The shares were fully vested as of December 31, 2021, and $ 19,255 Preferred Stock The Company is authorized to issue 10,000,000 0.001 465 In January 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain institutional investors (the “Institutional Private Placement”). Pursuant to the SPA, the Company issued and sold 1,640 1,000 9 2.50 In addition, a holder may at any time, alternatively, convert all, or any part, of its Series D Preferred Shares at an alternative conversion price, which equals the lower of the applicable conversion price then in effect, and the greater of (x) $1.80 and (y) 85% of the average volume weighted average price (“VWAP”) of the Common Stock for a five (5) trading day period prior to such conversion. Upon the occurrence of certain triggering events, described in the Certificate of Designations, including, but not limited to payment defaults, breaches of transaction documents, failure to maintain listing on the Nasdaq Capital Market, and other defaults set forth therein, the Series D Preferred Shares would become subject to redemption, at the option of a holder, at a 125% premium to the underlying value of the Series D Preferred Shares being redeemed At December 31, 2022, there were 132 87,267 Concurrent with the Institutional Private Placement, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain of its directors and the Company’s formerly largest shareholder (the “Other Private Placement”). Pursuant to the SPA, the Company issued and sold 333 9 48,544 At December 31, 2022, all of the issued Series E Convertible Preferred Stock were outstanding, which if converted as of December 31, 2022, including the make-whole dividends, would have resulted in the issuance of 61,651 Stock Options On August 9, 2022, at the Annual Meeting of Stockholders of the Company, the Company’s stockholders approved an amendment to the 2013 Plan to increase the number of shares of the Company’s common stock reserved for issuance under the 2013 Plan by 500,000 2,265,000 436,506 During 2022, the Company granted a total of 487,473 three years 406,879 907,373 1,799,053 1,749,053 1,294,021 No During 2021, the Company granted a total of 698,831 three years 598,789 1,741,366 1,395,882 1,345,882 941,934 5,204 The Company generally grants stock options to employees, consultants and directors at exercise prices equal to the fair market value of the Company’s stock on the dates of grant. Stock options are typically granted throughout the year and generally vest over three years of service and expire five years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award. Total employee share-based compensation expense for the year ended December 31, 2022, was $ 793,251 1,066,455 1,047,200 To estimate the value of an award, the Company uses the Black-Scholes option-pricing model. This model requires inputs such as expected life, expected volatility and risk-free interest rate. The forfeiture rate also impacts the amount of aggregate compensation. These inputs are subjective and generally require significant analysis and judgment to develop. While estimates of expected life, volatility and forfeiture rate are derived primarily from the Company’s historical data, the risk-free rate is based on the yield available on U.S. Treasury constant maturity rates with similar terms to the expected term of the stock option awards. The fair value of share-based awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the years ended December 31, 2022 and 2021: Schedule of Share Based Payment Award Stock Option Valuations Assumptions Assumptions: 2022 2021 Dividend yield 0.00 % 0.00 % Risk-free interest rate 0.95 3.88 % 0.19 0.67 % Expected volatility 106.0 110.0 % 117.0 124.0 % Expected life (in years) 5 5 Option activity for the year ended December 31, 2022 and 2021 was as follows: Schedule of Share Based Compensation Stock Option Activity Weighted Average Weighted Average Exercise Remaining Aggregate Price Contractual Intrinsic Options ($) Life (Yrs.) Value ($) Options outstanding at December 31, 2020 713,010 5.15 4.40 477,802 Granted 698,831 3.29 4.39 46,800 Exercised (5,204 ) 2.50 - - Forfeited or cancelled (10,755 ) 3.49 - - Options outstanding at December 31, 2021 1,395,882 4.24 3.89 - Options expected to vest in the future as of December 31, 2021 453,948 3.64 4.07 - Options exercisable at December 31, 2021 941,934 4.53 3.81 - Options vested, exercisable, and options expected to vest at December 31, 2021 1,395,882 4.24 3.89 - Options outstanding at December 31, 2021 1,395,882 4.24 3.89 - Granted 487,473 2.50 4.43 - Exercised - - - - Forfeited or cancelled (84,302 ) 4.39 - - Options outstanding at December 31, 2022 1,799,053 3.76 3.30 - Options expected to vest in the future as of December 31, 2022 505,032 2.83 3.98 - Options exercisable at December 31, 2022 1,294,021 4.13 3.03 - Options vested, exercisable, and options expected to vest at December 31, 2022 1,799,053 3.76 3.30 - The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock for those awards that have an exercise price below the $ 0.40 0.40 At December 31, 2022, there was $ 741,728 1.81 Stock Appreciation Rights On June 23, 2020, the Board of Directors (the “Board”) of the Company adopted the Sigma Labs, Inc. 2020 Stock Appreciation Rights Plan (the “Plan”). The purposes of the Plan are to: (i) enable the Company to attract and retain the types of employees, consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s long-range success; (ii) provide incentives that align the interests of Service Providers with those of the shareholders of the Company; and (iii) promote the success of the Company’s business. The Plan provides for incentive awards that are only made in the form of stock appreciation rights payable in cash (“SARs”). No shares of common stock were reserved in connection with the adoption of the Plan since no shares will be issued pursuant to the Plan. SARs may be granted to any Service Provider. A SAR is the right to receive an amount equal to the Spread with respect to a share of the Company’s common stock (“Share”) upon the exercise of the SAR. The “Spread” is the difference between the exercise price per share specified in a SAR agreement on the date of grant and the fair market value per share on the date of exercise of the SAR. The exercise price per share will not be less than 100% of the fair market value of a Share on the date of grant of the SAR. The administrator of the Plan will have the authority to, among other things, prescribe the terms and conditions of each SAR, including, without limitation, the exercise price and medium of payment and vesting provisions, and to specify the provisions of the SAR Agreement relating to such grant. On January 3, 2022, the Company granted, pursuant to the Plan, 12,033 1.87 On February 16, 2022, the company issued, pursuant to the Plan, 30,000 2.50 On July 1, 2022, the Company granted, pursuant to the Plan, (i) 194,940 25,117 16,944 69,470 2.50 Also on July 1, 2022, the Company granted, pursuant to the Plan, and employee retention agreements (i) 181,947 87,335 97,038 97,038 1.30 On March 31, 2022, we granted 3,000 On August 11, 2021, the Company granted, pursuant to the Plan, (i) 77,748 30,313 76,304 48,580 3.42 In the event of a Change in Control (as defined in the Plan), all SARs will become immediately vested and exercisable as long as the holder is in the Company’s employ immediately prior to the Change in Control, and will otherwise be on such terms set forth in our standard form Stock Appreciation Rights Agreement. On July 29, 2021, we granted 10,000 13,500 The Company recognizes compensation expense and a corresponding liability for the fair value of the SARs over the requisite service period for each SAR award. The SAR’s are revalued at each reporting date in accordance with ASC 718 “Compensation-Stock Compensation”, and any changes in fair value are reflected in income as of the applicable reporting date. The fair value of SAR awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the twelve months ended December 31, 2022: Schedule of Share Based Payments Award Stock Options Valuation Assumptions Assumptions: 2022 2021 Dividend yield 0.00 % 0.00 % Risk-free interest rate 0.82 2.79 % 0.39 0.40 % Expected volatility 108.0 119.0 % 123.0 % Expected life (in years) 5 5 SARs activity for the years ended December 31, 2022 and 2021 was as follows: Schedule of Stock Option Activity Weighted Average Weighted Average Exercise Remaining Aggregate Price Contractual Intrinsic SARs ($) Life (Yrs.) Value ($) SARs outstanding at December 31, 2020 127,679 2.61 4.52 97,919 Granted 242,945 3.43 4.61 - Exercised - - - - Forfeited or cancelled - - - - SARs outstanding December 31, 2021 370,624 3.15 4.24 - SARs expected to vest in the future as of December 31, 2021 309,065 3.23 4.33 - SARs exercisable at December 31, 2021 61,559 2.78 3.75 - SARs vested, exercisable, and options expected to vest at December 31, 2021 370,624 3.15 4.24 - SARs outstanding at December 31, 2021 370,624 3.15 4.24 - Granted 814,862 1.81 4.48 - Exercised - - - - Forfeited or cancelled (27,699 ) 2.91 - - SARs outstanding December 31, 2022 1,157,787 2.21 4.11 - SARs expected to vest in the future as of December 31, 2022 876,319 2.03 4.25 - SARs exercisable at December 31, 2022 281,468 2.76 3.68 - SARs vested, exercisable, and options expected to vest at December 31, 2022 1,157,787 2.21 4.11 - The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock for those awards that have an exercise price below the $ 0.40 0.40 At December 31, 2022, there was $ 982,519 2.14 Warrants At December 31, 2022, the Company had outstanding warrants to purchase a total of 3,823,279 2.50 17.50 expire between May 24, 2023 and January 8, 2026 Warrant activity for the years ended December 31, 2022 and 2021 was as follows: Schedule of Warranty Activity Weighted Average Weighted Average Exercise Remaining Price Contractual Warrants ($) Life (Yrs.) Warrants outstanding at December 31, 2020 1,881,429 7.57 4.16 Granted 2,602,143 4.36 1.63 Exercised (495,641 ) - - Forfeited or cancelled - - - Warrants outstanding at December 31, 2021 3,987,931 6.10 2.10 Granted - - - Exercised - - - Forfeited or cancelled (164,652 ) - - Warrants outstanding at December 31, 2022 3,823,279 4.66 1.19 |