Stockholders’ Equity

12 Months Ended

Dec. 31, 2024

Stockholders’ Equity [Abstract]

STOCKHOLDERS’ EQUITY

12. STOCKHOLDERS’ EQUITY

Common Stock Issuances

From February of 2016 to April of 2021, we sold the aggregate of 4,553,017 shares of common stock in six different transactions raising gross proceeds of $26,714,403 at the weighted average price of $5.87 per share. These funds have been essential to funding our business growth plans.

On April 9, 2024, our shelf registration on Form S-3 relating to the offer, issuance and sale by the Company of up to $20,000,000 of securities was declared effective by the Securities and Exchange Commission. Also on April 9, 2024, we entered into an At-The-Market (ATM) Agreement with Craig-Hallum Capital Group LLC, pursuant to which we may offer and sell up to $11,000,000 of shares of our common stock. Legal, accounting and other fees in the amount of $152,272 associated with the completion of the shelf registration and the ATM Agreement were initially capitalized and then were offset against the initial proceeds received during the second quarter of 2024. As of December 31, 2024, we have sold 1,228,227 shares under the ATM Offering conducted pursuant to the ATM Agreement. Net proceeds through December 31, 2024 from shares sold pursuant to the ATM Agreement (net of the upfront legal, accounting and other fees), less sales commissions of $139,562, were $4,356,188.

Stock Option Plans

In June of 2010, our stockholders approved the 2010 Stock Option and Incentive Plan (the “2010 Plan”) pursuant to the provisions of the Internal Revenue Code of 1986, under which employees and certain service providers may be granted options to purchase shares of the Company’s common stock at no less than fair market value on the date of grant. At that time, 300,000 shares of common stock were reserved for issuance under the 2010 Plan and subsequently no additional shares have been reserved for the 2010 Plan. Vesting requirements are determined by the Compensation and Stock Option Committee of the Board of Directors on a case-by-case basis. All options granted under the 2010 Plan expire no later than 10 years from the date of grant. The 2010 Plan expired in June of 2020, after which date no further options can be granted under the 2010 Plan. However, options outstanding under the 2010 Plan at that time can be exercised in accordance with their terms. There were 183,500 and 188,500 options outstanding under the 2010 Plan as of December 31, 2024 and 2023, respectively.

In June of 2017, our stockholders approved the 2017 Stock Option and Incentive Plan (the “2017 Plan”) pursuant to the provisions of the Internal Revenue Code of 1986, under which employees and certain service providers may be granted options to purchase shares of the Company’s common stock at no less than fair market value on the date of grant. At that time, 300,000 shares of common stock were reserved for issuance under the 2017 Plan. An amendment to the 2017 Plan increasing the number of shares reserved for issuance under the 2017 Plan from 300,000 shares to 650,000 shares was approved by a vote of stockholders at the Annual Meeting of Stockholders in June of 2022. Vesting requirements are determined by the Compensation and Stock Option Committee of the Board of Directors on a case-by-case basis. All options granted under the 2017 Plan expire no later than 10 years from the date of grant. The 2017 Plan expires in March of 2027, after which date no further options can be granted under the 2017 Plan. However, options outstanding under the 2017 Plan at that time can be exercised in accordance with their terms. As of December 31, 2024 and 2023, there were 480,500 and 430,000 options outstanding under the 2017 Plan, respectively.

Activity under the stock option plans described above was as follows:

	2010 Plan			2017 Plan			Weighted Average Exercise Price		Aggregate Intrinsic Value(1)
Outstanding as of December 31, 2022		202,500			402,500		$	7.19	$	(661,310	)
Grants		—			122,000		$	5.16
Terminations/forfeitures(2)		(10,000	)		(94,500	)	$	7.12
Exercises		(4,000	)		—		$	4.69
Outstanding as of December 31, 2023		188,500			430,000		$	6.82	$	(1,071,121	)
Grants		—			86,000		$	3.91
Terminations/forfeitures(2)		(5,000	)		(35,500	)	$	6.55
Exercises		—			—		$	—
Outstanding as of December 31, 2024		183,500			480,500		$	6.46	$	(870,558	)
Vested as of December 31, 2024		183,500			136,500		$	6.97	$	(582,340	)
Vested and expected to vest as of December 31, 2024		183,500			480,500		$	6.46	$	(870,558	)
Reserved for future grants		—			151,500

⁽¹⁾ Intrinsic value is the difference between the fair market value of the underlying common stock as of the date indicated and as of the date of the option grant (which is equal to the option exercise price).

⁽²⁾ Terminations and forfeitures are recognized when they occur.

The following table displays additional information about the stock option plans described above:

	Number of Shares		Weighted Average Fair Value at Grant Date		Weighted Average Exercise Price
Non-vested stock options as of December 31, 2023		337,500	$	3.66	$	7.14
Non-vested stock options as of December 31, 2024		344,000	$	3.12	$	6.25
Stock options granted during the year ended December 31, 2024		86,000	$	1.84	$	3.91
Stock options that vested during the year ended December 31, 2024		54,000	$	4.31	$	9.73
Stock options that were terminated or forfeited during the year ended December 31, 2024		40,500	$	3.33	$	6.55

No stock options were exercised during the year ended December 31, 2024. During the year ended December 31, 2023, 4,000 stock options were exercised by one employee with $18,760 in cash. The aggregate intrinsic value of options exercised during the year ended December 31, 2023 was $1,040. The weighted average remaining life of the options outstanding under the 2010 Plan and the 2017 Plan as of December 31, 2024 was approximately 4 years and 10 months. The weighted average remaining life of the options exercisable under these plans as of December 31, 2024 was approximately 2 years and 8 months. The exercise price of the options outstanding under these plans as of December 31, 2024, ranged from $3.60 to $10.04 per share. The 86,000 stock options granted during the year ended December 31, 2024 had an average exercise price of $3.91 per share. The 122,000 stock options granted during the year ended December 31, 2023 had an average exercise price of $5.16 per share. The weighted-average grant date fair values of options granted during the years ended December 31, 2024 and 2023 were $1.84 and $2.80 per share, respectively. As of December 31, 2024, total unrecognized stock-based compensation related to non-vested stock options aggregated $365,124 which will be recognized over a weighted average remaining period of approximately 1 year and 3 months. The fair value of each stock option grant has been estimated on the date of grant using the Black-Scholes option pricing model, for the purpose discussed in Note 2(n), with the following weighted-average assumptions:

	During the Years Ended December 31,
	2024			2023
Risk-free interest rate(1)		3.77	%		3.59	%
Dividend yield(2)		0	%		0	%
Expected volatility(2)		52	%		54	%
Expected life(3)		4.6 years			6.2 years

⁽¹⁾ The risk-free interest rate is based on U.S. Treasury yields for a maturity approximating the expected option term.

⁽²⁾ The dividend yield and expected volatility are derived from averages of our historical data.

⁽³⁾ The expected life is calculated utilizing the simplified method, which uses the mid-point between the vesting period and the contractual term as the expected life.

Common Stock Rights Plan

In September of 1995, our Board of Directors adopted a Common Stock Rights Plan (the “Rights Plan”) and declared a dividend of one common share purchase right (a “Right”) for each of the then outstanding shares of the common stock of the Company. Each Right entitled the registered holder to purchase from the Company one share of common stock at an initial purchase price of $70.00 per share, subject to adjustment. The description and terms of the Rights were set forth in a Rights Agreement between the Company and Equiniti Trust Company, LLC, as Rights Agent. At various times over the years, our Board of Directors, which has the authority to amend the Rights Plan, voted to authorize amendments to the Rights Plan to extend the expiration date of the Rights Plan. During 2024, our Board of Directors determined not to further extend the Rights Plan because these plans are generally considered not to be stockholder friendly. With no further extension, the Rights Plan expired as of September 19, 2024. No shares were issued under Rights Plan while it was in effect.