Officially speaking there are 50 States. But there are additional sub-federal districts that are not represented on the official flag. The most popular sub-federal non-state of the USA is the District of Columbia, Washington. However there are more, 15 more to be exact. Thus this flag gives total representation to all official 66 sub-federal districts.
The badge is a shield of arms that has sixteen stars, to represent the sixteen sub-federal non-state districts. The stars only have four points since they do not represent fully fledged states. The official sixteen sub-federal districts are:
51 - Washington, DC
52 - Puerto Rico
53 - Guam
54 - American Samoa
55 - US Virgin Islands
56 - N. Mariana Is.
57 - Wake Island
58 - Palmyra Atoll
59 - Midway Atoll
60 - Navassa
61 - Johnston Island
62 - Baker Island
63 - Howland Island
64 - Swains Island
65 - Jarvis Island
66 - Kingman Reef
Additionally there is a white diagonal that has eight smaller red four pointed stars that represent the undecided parts of the world with an unresolved US Claim or are in a Compact of Free Association with the United States. The C.F.A is up for congressional renewal, if it is not renewed then this flag will have to be altered minus a few red stars on the bend.
67 - Serranilla Bank
68 - Bajo Nuevo Bank
69 - Ducie Island
70 - Antarctica
71 - Alto Velo Island
C.F.A. - Regions
72 - Palau73 - Micronesia
74 - Marshall Islands
Thus this US flag has noted symbolism that represents all 74 sub-federal areas of the USA: the 13 original colonies, via the 13 red and white stripes; 50 official states, via the 50 five pointed stars in the canton; 16 sub-federal non-states, via the four pointed white stars; and finally 8 four pointed red stars in the white bend of the badge that represent the five undecided land claims and three nations that are under the C.F.A.