STOCKHOLDERS EQUITY

3 Months Ended

Mar. 31, 2025

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 11 – STOCKHOLDERS’ EQUITY

Issuance of Common Stock

During the three months ended March 31, 2025 and 2024, the Company issued 1,101,231 shares and 791,667 shares, respectively, of its common stock in conjunction with the vesting of RSUs and exercising of stock options. See the “Share-Based Compensation” section below for further details.

Sale of Common Stock

During the three months ended March 31, 2025, the Company sold 1,107,923 shares of its common stock in an “at the market offering” and received gross proceeds of $2,437,375 based on a weighted average price of $2.20 per share. A total of $45,058 of direct issuance costs were incurred related to this sale. The Company did not sell any of its common stock during the three months ended March 31, 2024.

The Company also issued 948,750 shares of its common stock in the first quarter of 2025 related to the exercise of warrants. See the “Common Stock Warrants” section below for further details.

Share-based compensation

In December 2023, the shareholders of the Company approved our 2023 Equity Incentive Plan (“the Plan”), which provides for the grant of incentive stock options and non-qualified stock options to purchase shares of our common stock and other types of awards. The general purpose of the Plan is to provide a means whereby eligible employees, officers, directors and other service providers develop a sense of proprietorship and personal involvement in our development and financial success, and to encourage them to devote their best efforts to our business, thereby advancing our interests and the interests of our shareholders. During the three months ended March 31, 2025, the Company granted stock options and RSUs totaling 470,000 and 250,000, respectively, pursuant to the Plan. Once vested, each stock option and RSU represent the right to receive one share of the Company’s common stock. The maximum number of shares of common stock available for issuance in connection with stock options, RSUs, and other awards granted under the Plan is 8,700,000.

Share-based compensation expense for the periods noted was as follows:

	Three Months Ended March 31,
	2025		2024
Stock options	$	152,512	$	15,911
RSUs		92,872		190,014
Total share-based compensation expense	$	245,384	$	205,925

For the three months ended March 31, 2025, share-based compensation expense of $67,708, $173,776 and $3,900 was included in “General and administrative,” “Salaries and benefits” and “Professional fees,” respectively, in the Company’s Condensed Consolidated Statement of Operations. For the three months ended March 31, 2024, share-based compensation expense of $160,069 and $45,856 was included in “General and administrative” and “Salaries and benefits,” respectively, in the Company’s Condensed Consolidated Statement of Operations.

Stock options

Stock options granted have either a 3-year or 10-year contractual term and are subject to either service or performance-based vesting conditions. The following table shows the weighted-average assumptions used to value options granted during the three months ended March 31, 2025:

	Three Months Ended
Grant-Date Weighted-Average Assumptions	March 31, 2025
Expected term (in years)		8.1
Risk-free interest rate		4.4	%
Expected dividend yield		0.0	%
Expected volatility		96.4	%
Fair value per share of options granted	$	1.54

Expected term – The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it uses the contractual term of the option or the simplified method as defined in Staff Accounting Bulletin Topic 14 for the expected term assumption.

Risk-free interest rate – The risk-free interest rate is based on the U.S. Treasury rate in effect at the time of the grant with an equivalent term approximating the expected term of the options.

Expected dividend yield—The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.

Expected volatility – The expected volatility is based on the historical volatility of our stock price over the expected term of the stock option.

Activity with respect to stock options is summarized as follows:

						Weighted-Average
				Weighted-Average		Remaining		Aggregate
				Exercise Price		Contractual		Intrinsic
	Shares			Per Share		Term (in years)		Value
Options outstanding, December 31, 2024		4,330,000		$	0.23		3.7	$	6,652,700
Granted		470,000		$	1.81		-		-
Exercised		(322,500	)	$	0.23		-		-
Forfeited		(166,667	)	$	0.22		-		-
Expired		-			-		-		-
Options outstanding, March 31, 2025		4,310,833		$	0.41		4.3	$	7,731,574
Nonvested options, March 31, 2025		3,594,166		$	0.44		4.7	$	6,317,574
Vested and exercisable options, March 31, 2025		716,667		$	0.23		2.4	$	1,414,000

At March 31, 2025, total unrecognized share-based compensation expense related to stock options was $1,121,058, which is expected to be recognized over a weighted-average remaining period of 2 years. During the three months ended March 31, 2025, 322,500 stock options were exercised to purchase shares of common stock in a cashless exercise pursuant to which 46,269 shares of common stock were surrendered to the Company to pay for the aggregate exercise price of the stock options and 276,231 shares of common stock were issued. The total intrinsic value of the 322,500 stock options exercised during the three months ended March 31, 2025 was $475,533.

Restricted stock units

Activity with respect to RSUs is summarized as follows:

				Weighted-Average
				Grant-Date
				Fair Value
	Shares			Per Share
Nonvested shares at December 31, 2024		2,090,000		$	0.24
Granted		250,000		$	1.78
Vested and issued		(825,000	)	$	0.22
Forfeited		-			-
Nonvested shares at March 31, 2025		1,515,000		$	0.51

At March 31, 2025, total unrecognized share-based compensation expense related to RSUs was $683,758, which is expected to be recognized over a weighted-average remaining period of 2 years. The weighted-average remaining contractual term of the nonvested RSU shares was 1.5 years at March 31, 2025.

Common stock warrants

During the first quarter of 2025, the Company issued 948,750 shares of common stock related to the exercise of warrants and received gross proceeds of $806,438, based on their exercise price of $0.85 per share. No warrants were issued or expired during the three months ended March 31, 2025 and 2024 nor were any warrants exercised during the three months ended March 31, 2024.

Following is a summary of the Company’s warrant activity during the three months ended March 31, 2025:

	Number of			Weighted Average
	warrants			Exercise Price
Balance outstanding at December 31, 2024		10,142,215		$	0.77
Exercised		(948,750	)		0.85
Balance outstanding at March 31, 2025		9,193,465		$	0.76

Each warrant represents the right to receive one share of the Company’s common stock. The composition of the Company’s warrants outstanding at March 31, 2025 was as follows:

Number of warrants	Exercise Price	Expiration Date	Remaining life (years)
2,085,715	$0.46	1/27/2026	0.83
6,301,250	$0.85	8/3/2026	1.34
806,500	$0.85	2/1/2026	0.84
9,193,465