The Company’s amended and restated certificate of incorporation, filed with the Delaware Secretary of State on December 14, 2017, authorizes the Company to issue 10,000,000 shares of preferred stock and 50,000,000 shares of common stock.

The voting, dividend, and liquidation rights of the holders of the common stock are subject to rights of preferred stockholders, if any, as designated by the board of directors. Common stockholders have voting rights at all meetings of stockholders and are entitled to one vote for each share held subject to certain limitations otherwise required by law. Dividends may be declared and paid on the common stock as and when determined by the board of directors subject to any preferential dividend or other rights of preferred stockholders. The Company does not anticipate declaring any dividends in the foreseeable future. Upon the dissolution or liquidation of the Company, common stockholders are entitled to receive all assets of the Company, subject to any preferential or other rights of preferred stockholders.

Preferred Stock may be issued from time to time in one or more series, each of these series to have such terms as stated or expressed in resolutions providing for the issue of such series adopted by the board of directors. There is no outstanding preferred stock.

Regarding unissued preferred stock, the board of directors is authorized to determine or alter any or all of the rights, preferences, privileges and restrictions granted to or imposed upon wholly unissued series of preferred stock, and to fix or alter the number of shares comprising any such series and the designation thereof, or any of them, and to provide for rights and terms of redemption or conversion of the shares of any such series.

On August 18, 2023, the Company filed with the Securities and Exchange Commission a Registration Statement on Form S-3 in which the Company may offer up to $100,000,000 in aggregate dollar amount of shares of our common stock; preferred stock; debt securities; warrants to purchase our common stock, preferred stock or debt securities; subscription rights to purchase our common stock, preferred stock or debt securities; and/or units consisting of some or all of these securities, in any combination, together or separately, in one or more offerings, in amounts, at prices and on the terms that we will determine at the time of the offering and which will be set forth in a prospectus supplement and any related free writing prospectus.

Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities pursuant to this registration statement with a value more than one-third of the aggregate market value of our common stock held by non-affiliates in any 12-month period, so long as the aggregate market value of our common stock held by non-affiliates is less than $75.0 million. In the event that subsequent to the effective date of this registration statement, the aggregate market value of our outstanding common stock held by non-affiliates equals or exceeds $75.0 million, then the one-third limitation on sales shall not apply to additional sales made pursuant to this registration statement. We have not sold any securities pursuant to General Instruction I.B.6 of Form S-3 during the 12 calendar months prior to, and including, the date of filing this Annual Report.

On August 18, 2023, the Company filed a Registration Statement on Form S-8 for the purpose of registering an aggregate of 835,715 shares of its common stock, consisting of (i) 400,000 shares of common stock issuable upon the exercise of non-qualified stock options granted to Michael Knowles, the Company’s President and Chief Executive Officer, on June 5, 2023; (ii) 400,000 shares issuable upon vesting and settlement of RSUs granted to Mr. Knowles on June 5, 2023; and (iii) 35,715 shares issuable upon vesting and settlement of RSUs granted to Robert Kalebaugh, the Company’s recently-appointed Vice President of Sales, on July 17, 2023.

The Inducement Grants were granted outside of the Company’s 2017 Equity Incentive Plan, as amended, as an inducement material to Messrs. Knowles and Kalebaugh entering into employment with the Company, were unanimously

approved by the Company’s Board of Directors, and were issued pursuant to the “inducement” grant exception under Nasdaq Listing Rule 5635(c)(4).

In December 2011, the Company adopted a stock option plan (“2011 Plan”) under which the Company may issue up to 1,500,000 shares of the Company’s common stock and, as of December 31, 2022, the Company had 240,000 shares of common stock remaining unissued under the 2011 Plan. The 2011 Plan was terminated by the board of directors on October 10, 2017, and accordingly, no shares are available for issuance under the 2011 Plan. The 2011 Plan will continue to govern outstanding awards granted thereunder.

In December 2015, the Company adopted a stock option plan (“2015 Plan”) under which the Company may issue up to 1,500,000 shares of the Company’s common stock and, as of December 31, 2022, the Company had 840,084 shares of common stock remaining unissued under the 2015 Plan. The 2015 Plan was terminated by the board of directors on October 10, 2017, and accordingly, no shares are available for issuance under the 2015 Plan. The 2015 Plan will continue to govern outstanding awards granted thereunder.

The terms of the 2011 Plan and 2015 Plan provided for the grant of incentive options to employees and non-statutory options to employees, directors and consultants of the Company.

The board of directors adopted the 2017 Equity Incentive Plan on October 10, 2017 (the “2017 Plan”). The 2017 Plan allows for the grant of a variety of equity vehicles to provide flexibility in implementing equity awards, including incentive stock options, non-qualified stock options, restricted stock grants, unrestricted stock grants and restricted stock units and stock bonuses and performance-based awards. On December 18, 2017, the Company stockholders approved the 2017 Plan, under which the Company was initially permitted to issue up to 1,500,000 shares of the Company’s common stock.

On June 24, 2020, the Company amended the 2017 Plan to increase the maximum number of shares of common stock with respect to one or more Stock Awards (as defined in the 2017 Plan) that may be granted to any one participant under the 2017 Plan during any calendar year from 500,000 shares to 1,000,000 shares. The amendment did not increase the total number of shares of common stock authorized for issuance under the 2017 Plan, and did not require stockholder approval.

On May 19, 2021, the Company’s stockholders approved the Company’s proposal to increase the number of shares authorized for issuance under the 2017 Plan from 1,500,000 shares to 3,000,000 shares of common stock of the Company pursuant to the terms and conditions of the 2017 Plan.

On May 15, 2024, the Company’s stockholders approved the Company’s proposal to increase the number of shares authorized for issuance under the 2017 Plan from 3,000,000 shares to 5,000,000 shares of common stock of the Company pursuant to the terms and conditions of the 2017 Plan. As of December 31, 2024, the Company had 1,518,288 shares of common stock remaining for issuance under the 2017 Plan.

The exercise price per share for options under the 2011 Plan, 2015 Plan and 2017 Plan is determined by the Company’s board of directors, provided that for incentive stock options the exercise price shall not be less than the fair market value of the Company's common stock on the date of grant, except that for incentive options granted to an owner/employee with a greater than 10% ownership interest in the Company, the exercise price shall not be less than 110% of the fair market value of the Company's common stock on the date of grant.

Options under the plans expire no more than ten years after the date of grant, or within five years after the date of the grant for incentive options granted to an owner/employee with a greater than 10% ownership interest in the Company.

A summary of stock option activity under the plans during the years ended December 31, 2024 and 2023, are as follows:


	Stock Options Outstanding
	Number of Underlying Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding on January 1, 2023		970,680		$	2.07		5.61	$	988,197
Granted		400,000		$	2.95		-	$	-
Forfeited / Canceled		(8,250	)	$	2.49		-	$	-
Exercised		(38,670	)	$	0.63		-	$	-
Outstanding on December 31, 2023		1,323,760		$	2.37		4.06	$	169,802
Granted		-		$	-		-	$	-
Forfeited / Canceled		(99,784	)	$	1.56		-	$	181,779
Exercised		(83,426	)	$	1.76		-	$	132,627
Outstanding on December 31, 2024		1,140,550		$	2.49		3.85	$	1,019,680
Exercisable on December 31, 2024		890,550		$	2.36		2.56	$	919,680
Vested and expected to vest on December 31, 2024		890,550		$	2.36		2.56	$	919,680

The following table summarizes information about common stock options outstanding as of December 31, 2024:


		Stock Options Outstanding						Stock Options Exercisable
Plan	Exercise Price Range	Number of Shares Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number of Shares Exercisable		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
2015	$1.08-$1.95		197,059		2.04	$	1.75		197,059		2.04	$	1.75
2017	$2.14-$4.09		543,491		1.13	$	2.42		543,491		1.13	$	2.42
Incentive options issued outside of Plans	2.95		400,000		8.43	$	2.95		150,000		8.43	$	2.95
			1,140,550						890,550

The following table presents details of the assumptions used to calculate the weighted-average grant date fair value of common stock options granted by the Company. There were no options granted during the year ended December 31, 2024.


	For the Year Ended December 31,
	2024			2023
Expected term (in years)		-			6.16
Expected volatility		0.00	%		72.73	%
Risk-free interest rate		0.00	%		3.79	%
Weighted average grant date fair value per share	$	-		$	2.95
Grant date fair value of options vested	$	1,107,251		$	927,447
Intrinsic value of options exercised	$	132,627		$	48,361

As of December 31, 2024, the amount of unearned stock-based compensation estimated to be expensed through 2027 related to unvested common stock options is $483,062, net of estimated forfeitures. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is 1.34 years.

If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense or calculate and record additional

expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional common stock options or other stock-based awards.

During the year ended December 31, 2024, the Company issued 83,426 shares of common stock upon exercise of outstanding stock options for proceeds of 146,850 in cash.

During the year ended December 31, 2023, the Company issued 38,670 shares of common stock upon exercise of outstanding stock options for proceeds of $24,224 in cash.

Restricted stock units may be granted at the discretion of the compensation committee of the board of directors under the 2017 Plan in connection with the hiring and retention of personnel and are subject to certain conditions. Restricted stock units generally vest quarterly over a period of three years and are typically forfeited if employment is terminated before the restricted stock unit vest. The compensation expense related to the restricted stock units is calculated as the fair value of the common stock on the grant date and is amortized to expense over the vesting period and is adjusted for estimated forfeitures.

The Company’s restricted stock unit activity for the years ended December 31, 2024 and 2023, was as follows:


	Restricted Stock Units
	Number of Shares			Weighted Average Grant Date Fair Value
Unvested on January 1, 2023		907,507		$	4.05
Granted		925,243		$	2.80
Vested		(647,943	)	$	3.94
Canceled		(91,318	)	$	4.30
Unvested on December 31, 2023		1,093,489		$	3.04
Granted		654,700		$	1.81
Vested		(495,510	)	$	3.16
Canceled		(124,252	)	$	1.99
Unvested on December 31, 2024		1,128,427		$	3.04

As of December 31, 2024, there was $1,976,882 of unrecognized compensation cost related to unvested restricted stock units which is expected to be recognized over a weighted average period of 1.10 years.

Stock-based compensation expense for the years ended December 31, 2024 and 2023, was comprised of the following:


	For the Year Ended December 31,
Stock-based compensation classified as:	2024		2023
General and administrative	$	1,296,977	$	1,452,774
Production		141,040		305,763
Marketing and selling		334,795		322,854
Research and development		215,314		263,967
	$	1,988,125	$	2,345,358

The following table summarizes the Company’s warrant activity during the years ended December 31, 2024 and 2023:


	Number of Warrants			Weighted Average Exercise Price
Warrants outstanding on December 31, 2022		451,112		$	5.37
Warrants granted		-		$	-
Warrants expired		(380,000	)	$	6.00
Warrants exercised		(28,090	)	$	1.78
Warrants outstanding on December 31, 2023		43,022		$	2.15
Warrants expired		(9,302	)	$	2.15
Warrants exercised		(33,720	)	$	2.15
Warrants outstanding on December 31, 2024		-		$	-