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Stockholders’ Equity | 9 Months Ended
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Sep. 30, 2024
Stockholders’ Equity [Abstract] |
STOCKHOLDERS’ EQUITY | 13. 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. The details of each transaction are discussed below: 1) During February of 2016, we sold 1,123,810 shares of common stock at a price to the public of $5.25 per share in an underwritten public offering pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of $5,900,003 and resulting in net proceeds to the Company of $5,313,224 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing). 2) During October of 2016, we sold, in a private placement, 659,880 shares of common stock to nineteen institutional and accredited investors at $5.25 per share, raising gross proceeds of $3,464,370 and resulting in net proceeds to the Company of $3,160,923 (after deducting placement agent fees and other expenses incurred in connection with the equity financing). 3) During July of 2017, we sold 200,000 shares of our common stock at a price of $5.25 per share in a public, registered sale to two related investors pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of $1,050,000 and resulting in net proceeds of $1,034,164 (after deducting expenses incurred in connection with the equity financing). 4) During December of 2017, we sold 417,807 shares of common stock at a price to the public of $7.30 per share in an underwritten public offering pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of $3,049,991 and resulting in net proceeds to the Company of $2,734,173 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing). 5) During March of 2019, we sold 1,636,364 shares of common stock at a price to the public of $5.50 per share in an underwritten public offering pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of $9,000,002 and resulting in net proceeds to the Company of $8,303,436 (after deducting underwriting discounts and offering expenses incurred in connection with the equity financing). 6) During April of 2021, we sold 515,156 shares of our common stock at a price of $8.25 per share in a public, registered sale to seven investors pursuant to our effective shelf registration statement on Form S-3, raising gross proceeds of $4,250,038 and resulting in net proceeds of $4,233,026 (after deducting expenses incurred in connection with the equity financing). At-The-Market Offering On April 9, 2024, our shelf registration on Form S-3 (File No. 333-278438) 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 Agreement (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 September 30, 2024, we had sold 1,082,233 shares under the at the market offering conducted pursuant to the ATM Agreement. Net proceeds through September 30, 2024 from shares sold pursuant to the ATM Agreement (net of the upfront legal, accounting and other fees), less sales commissions of $123,368, were $3,833,090. 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 September 30, 2024 and December 31, 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 September 30, 2024 and December 31, 2023, there were 477,500 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 |  |  | — |  |  |  | 73,000 |  |  | $ | 3.80 |  |  |  |  |
Terminations/forfeitures(2) |  |  | (5,000 | ) |  |  | (25,500 | ) |  | $ | 6.75 |  |  |  |  |
Exercises |  |  | — |  |  |  | — |  |  | $ | — |  |  |  |  |
Outstanding as of September 30, 2024 |  |  | 183,500 |  |  |  | 477,500 |  |  | $ | 6.49 |  |  | $ | (1,891,421 | )
Vested as of September 30, 2024 |  |  | 183,500 |  |  |  | 136,500 |  |  | $ | 6.97 |  |  | $ | (1,068,740 | )
Vested and expected to vest as of September 30, 2024 |  |  | 183,500 |  |  |  | 477,500 |  |  | $ | 6.49 |  |  | $ | (1,891,421 | )
Reserved for future grants |  |  | — |  |  |  | 154,500 |  |  |  |  |  |  |  |  |
| (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 September 30, 2024 |  |  | 341,000 |  |  | $ | 3.14 |  |  | $ | 6.04 |
Stock options granted during the nine-month period ended September 30, 2024 |  |  | 73,000 |  |  | $ | 1.72 |  |  | $ | 3.80 |
Stock options that vested during the nine-month period ended September 30, 2024 |  |  | 54,000 |  |  | $ | 4.31 |  |  | $ | 9.73 |
Stock options that were terminated or forfeited during the nine-month period ended September 30, 2024 |  |  | 30,500 |  |  | $ | 3.36 |  |  | $ | 6.75 |
No stock options were exercised during the three-month or nine-month periods ended September 30, 2024 and 2023. The weighted average remaining life of the options outstanding under the 2010 Plan and the 2017 Plan as of September 30, 2024 was approximately 5 years. The weighted average remaining life of the options exercisable under these plans as of September 30, 2024 was approximately 2 years and 11 months. The exercise price of the options outstanding under these plans as of September 30, 2024, ranged from $3.60 to $10.04 per share. The 73,000 stock options granted during the nine-month period ended September 30, 2024 had an average exercise price of $3.80 per share. The 108,000 stock options granted during the nine-month period ended September 30, 2023 had an average exercise price of $5.19 per share. The weighted-average grant date fair values of options granted during the nine-month periods ended September 30, 2024 and 2023 were $1.72 and $2.80 per share, respectively. As of September 30, 2024, total unrecognized stock-based compensation related to non-vested stock options aggregated $433,317 which will be recognized over a weighted average remaining period of approximately 1 year and 5 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 Three-Month Periods Ended September 30, |  |  | During the Nine-Month Periods Ended September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Risk-free interest rate(1) |  |  | 3.48 | % |  |  | n/a | (4) |  |  | 3.70 | % |  |  | 3.48 | %
Dividend yield(2) |  |  | 0 | % |  |  | 0 | % |  |  | 0 | % |  |  | 0 | %
Expected volatility(2) |  |  | 52 | % |  |  | n/a | (4) |  |  | 51 | % |  |  | 54 | %
Expected life(3) |  |  | 4.1 years |  |  |  | n/a | (4) |  |  | 4.3 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.
| (4) | These values are not applicable because no stock options were granted during this period.
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 entitles 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 are set forth in a Rights Agreement between the Company and Equiniti Trust Company, LLC, as Rights Agent. The Rights (as amended) become exercisable and transferable apart from the common stock upon the earlier of i) 10 days following a public announcement that a person or group (Acquiring Person) has, without the prior consent of the Continuing Directors (as such term is defined in the Rights Agreement), acquired beneficial ownership of 20% or more of the outstanding common stock or ii) 10 days following commencement of a tender offer or exchange offer the consummation of which would result in ownership by a person or group of 20% or more of the outstanding common stock (the earlier of such dates being called the Distribution Date). Upon the Distribution Date, the holder of each Right not owned by the Acquiring Person would be entitled to purchase common stock at a discount to the initial purchase price of $70.00 per share, effectively equal to one half of the market price of a share of common stock on the date the Acquiring Person becomes an Acquiring Person. If, after the Distribution Date, the Company should consolidate or merge with any other entity and the Company were not the surviving company, or, if the Company were the surviving company, all or part of the Company’s common stock were changed or exchanged into the securities of any other entity, or if more than 50% of the Company’s assets or earning power were sold, each Right would entitle its holder to purchase, at the Rights’ then-current purchase price, a number of shares of the acquiring company’s common stock having a market value at that time equal to twice the Right’s exercise price. At any time after a person or group becomes an Acquiring Person and prior to the acquisition by such person or group of 50% or more of the outstanding common stock, the Board of Directors of the Company may exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of common stock per Right (subject to adjustment). At any time prior to 14 days following the date that any person or group becomes an Acquiring Person (subject to extension by the Board of Directors), the Board of Directors of the Company may redeem the then outstanding Rights in whole, but not in part, at a price of $0.005 per Right, subject to adjustment. During the third quarter of 2011, our Board of Directors voted to authorize an amendment to the Rights Plan to increase the ownership threshold for determining “Acquiring Person” status to 20%. During the second quarter of 2015, our Board of Directors also voted to authorize an amendment to remove a provision that prevented a new group of directors elected following the emergence of an Acquiring Person (an owner of more than 20% of our stock) from controlling the Rights Plan by maintaining exclusive authority over the Rights Plan with pre-existing directors. We did this because such provisions have come to be viewed with disfavor by Delaware courts. Each time that we made such amendments we entered into amendments to the Rights Agreement with the Rights Agent reflecting such extensions, threshold increases or provision changes. No other changes have been made to the terms of the Rights or the Rights Plan. At various times over the years, our Board of Directors, which has the authority to amend the Rights Plan, has voted to authorize amendments to the Rights Plan to extend the expiration date of the Rights Plan. Our Board of Directors decided to seek an advisory vote by stockholders at the Annual Meeting of Stockholders held in June of 2022, as to whether to extend the Rights Plan by one year to September 19, 2023. Of the votes actually cast on this proposal, 65% voted in favor, 32% voted against and 3% abstained. On the basis of this vote, our Board of Directors voted to extend the Rights Plan by one year to September 19, 2023. Our Board of Directors decided to seek another advisory vote by stockholders at the Annual Meeting of Stockholders held in June of 2023, as to whether to extend the Rights Plan by another year to September 19, 2024. Of the votes actually cast on this proposal, 65.10% voted in favor, 34.60% voted against and 0.30% abstained. On the basis of this vote, our Board of Directors voted to extend the Rights Plan by one year to September 19, 2024. Recognizing that there might be a substantial number of broker non-votes, our Board of Directors disclosed that it would be guided by the votes actually cast on these proposals in deciding whether to extend the expiration date of such plan by one year. 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. Authorized Common Stock At the June 14, 2018 Annual Meeting of Stockholders, our stockholders voted to approve an amendment to our Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 8,000,000 to 11,000,000. At the June 10, 2020 Annual Meeting of Stockholders, our stockholders voted to approve an amendment to our Certificate of Incorporation to increase the number of shares of common stock authorized for issuance from 11,000,000 to 15,000,000.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 505 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/505/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/718/tableOfContent + Details
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