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Note 12 - Stockholders' Equity
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Shareholders' Equity and Share-Based Payments [Text Block]

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.

 

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 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. Net proceeds through December 31, 2024 from 1,228,227 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. Net proceeds during the year ended December 31, 2025 from 63,230 shares sold pursuant to the ATM Agreement (net of legal, accounting and other fees), less sales commissions of $10,489, were $281,446.

 

Stock Option Plans

 

Under the terms of the Company's 2010 Stock Option and Incentive Plan and the 2017 Stock Option and Incentive Plan, ("the Plans"), last amended and restated in June of 2022, the Company routinely grants service-based stock options to its employees and certain service providers as share-based compensation. While vesting requirements may be determined by the Compensation and Stock Option Committee of the Board of Directors on a case-by-case basis, the majority become exercisable after three years as long as the employee remains employed by the Company. Stock options expire no later than 10 years from the date of grant. There were 101,000 shares available for grant under the 2017 Plan as of December 31, 2025.

 

In September of 2025, the Board of Directors authorized the award of stock options, in two separate installments, to Mr. te Boekhorst as a material inducement to accept employment by the Company as President and Chief Executive Officer. The first installment was granted to him by the Compensation and Stock Option Committee on September 16, 2025 (concurrent with his signing an offer letter setting out preliminary terms of employment). That award was in the form of non-qualified stock options for 75,983 shares of the Company's common stock, with an exercise price of $5.90 per share. The second award is a mix of incentive stock options and non-qualified options granted by the Compensation and Stock Option Committee on November 7, 2025 under the 2025 Stock Option Plan, and was for 74,277 shares of common stock at an exercise price of $6.10 per share. Neither grant of stock options is immediately exercisable, but instead will vest on the basis of continued employment, in three equal annual increments starting on the first anniversary of their respective grant dates (except that upon change in control, as defined, all then outstanding unvested equity awards, will immediately vest in full). These two awards met the conditions of an inducement award under Nasdaq Listing Rule 5635(c) and thus are exempt from the stockholder approval requirements under that Rule. 

 

The Board of Directors, on November 7, 2025, adopted a new 2025 Stock Option and Incentive Plan (the "2025 Plan"), under which employees, directors and other 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 the time, 500,000 shares of common stock were reserved for issuance under the 2025 Plan. The Board intends to submit the 2025 Plan to stockholders for approval at the 2026 Annual Meeting of Stockholders. If for any reason the 2025 Plan is not approved by vote of the Company's stockholders within 12 months after the date of the 2025 Plan's adoption by the Board, then with limited expectations all stock options previously granted under the 2025 Plan would, by their terms and consistent with Nasdaq Listing Rules, lapse and become non-exercisable.

 

We recorded compensation expense pertaining to share-based awards of $295,871 and $325,551 during the years ended December 31, 2025 and 2024, respectively.

 

Stock option activity during the year ended December 31, 2025, was as follows:

 

      

 

  

Weighted

     
      

Weighted

  

Average

  

 

 
      

Average

  

Remaining

  

Aggregate

 
  

 

  

Exercise

  

Contractual Term

  

Intrinsic

 
  Shares  Price  (in years)  Value(1) 

Outstanding as of December 31, 2024

  664,000  $6.46         

Granted

  288,260  $5.79         

Terminated/forfeited(2)

  (135,500) $6.77         

Exercised

  (15,000) $4.81         

Outstanding as of December 31, 2025

  801,760  $6.20   5.61  $(38,234)

Exercisable as of December 31, 2025

  350,500  $7.27   3.10  $(393,527)

Expected to vest as of December 31, 2025

  451,260  $5.36   7.56  $355,293 

 

(1)

Intrinsic value is the difference between the fair market value of the underlying common stock as of December 31, 2025 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.

 

As of December 31, 2025, total unrecognized share-based compensation expense related to stock options was $875,883, which will be recognize over a weighted-average remaining term of 1.94 years. The aggregate intrinsic value of options exercised during the year ended  December 31, 2025 was insignificant. There were no stock options exercised during the year ended December 31, 2024.

 

The fair value of each stock option grant has been estimated on the date of grant using the Black-Scholes option pricing model. We may use different assumptions for options granted throughout the year since the assumptions may vary based on the grant date. 

 

The following table presents the weighted-averages of the assumptions used for grants within each year:

 

  

During the Years

 
  

Ended December 31,

 
  

2025

  

2024

 

Risk-free interest rate(1)

  3.81%  3.77%

Dividend yield(2)

  0%  0%

Expected volatility(2)

  54%  52%

Expected life in years(3)

  5.8   4.6 

 

(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 for the Company's "plain vanilla" stock options utilizing the simplified method, which uses the mid-point between the vesting period and the contractual term as the expected life.

 

The weighted-average grant date fair value per share for December 31, 2025 and 2024 was $3.13 and $1.84, respectively.