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Stockholder Equity
 3 Months Ended
Mar. 31, 2025
Stockholder Equity  
Stockholder' Equity

Note 6 – Stockholder’ Equity

  

Issuance of Stock for Services

 

During the three months ended March 31, 2025, we issued 180,986 fully vested shares of common stock to service providers with a fair value of $66,900 based on the market price of our common stock on date of grant.

 

During the three months ended March 31, 2024, we issued 3,339 fully vested shares of common stock to a service provider with a fair value of $4,500 based on the market price of our common stock on date of grant.

 

Common Stock for Stock Option Exercises

 

During the three months ended March 31, 2025, we issued an aggregate of 200,000 shares of common stock for stock option exercises that resulted in cash proceeds of $24,000.

Stock-based compensation

 

2021 Plan

 

The Company has reserved 24,000,000 shares of common stock or common stock equivalents to be issued under our 2021 Equity Incentive Plan (the “2021 Plan”) to the Company’s employees and non-employee services providers.  At March 31, 2025, the Company has issued a total of  18,114,133 stock options and restricted stock units under the 2021 Plan with 5,885,867 reserved shares remaining for issuance. 

 

During the three months ended March 31, 2025, and 2024, the Company recorded stock-based compensation of $460,512 and $183,200, respectively, related to granted options to employees and various consultants expected to vest. During the three months ended March 31, 2025, $428,678 was charged as compensation and related expenses and $31,834 as research and development expenses in the accompanying unaudited condensed consolidated statements of operations. During the three months ended March 31, 2024, $138,586 was charged as compensation and related expenses and $44,614 as research and development expenses in the accompanying unaudited condensed consolidated statements of operations.

 

Stock Options

 

Stock option activity for the three months ended March 31, 2025 is summarized as follows: 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

Average

 

 

 

 

 

Average

 

 

Aggregate

 

 

Remaining

 

 

 

Shares

 

 

Exercise

Price

 

 

Intrinsic

Value

 

 

Contractual

Life (Years)

 

Options outstanding at December 31, 2024

 

 

15,843,116*

 

$0.94

 

 

$3,324,000

 

 

 

5.95

 

Granted

 

 

908,659

 

 

 

0.66

 

 

 

-

 

 

 

-

 

Exercised

 

 

(200,000)

 

 

0.12

 

 

 

-

 

 

 

-

 

Expired/forfeit

 

 

(142,713)

 

 

2.96

 

 

 

-

 

 

 

-

 

Options outstanding at March 31, 2025

 

 

16,409,062*

 

$0.92

 

 

$1,274,000

 

 

 

5.98

 

Options Exercisable at March 31, 2025

 

 

8,150,185*

 

$0.60

 

 

$1,274,000

 

 

 

2.74

 

 

*At March 31, 2025 and December 31, 2024, the options outstanding and exercisable include 5,700,00 and 5,900,000 granted in connection with a merger that occurred in 2021, respectively, which were not granted under the 2021 Plan  and include 275,000 of options granted in 2024 pursuant to a legal settlement and were not granted under the 2021 Plan.

 

During the three months ended March 31, 2025, the options granted were primarily to our Chief Financial Officer and key employees. The weighted average grant-date fair value of the granted options was $0.33.

 

Of the total options outstanding at March 31, 2025, 3,708,288 of the options include performance conditions. The performance-based options vest as follows: 50% vest upon the achievement of operating profit, as defined in the employment agreements, and 50% upon the achievement of a revenue target of $100 million by the end of fiscal year 2028. The performance-based options with the revenue target begin vesting once the Company achieves $15 million in revenue for a fiscal year. Vesting will occur on January 31 of each year through January 31, 2029. The number of options that vest is based on the proportionate percentage of each fiscal year’s revenue to the $100 million target. For example, if our annual revenue for fiscal year 2026 is $20 million, 20% of the restricted stock units with the revenue performance condition will vest on January 31, 2027.

 

At March 31, 2025, total unrecognized compensation expense for service based and performance-based options was $3,315,257 and $2,821,770, respectively. The unrecognized service-based expense will be recognized over a weighted-average period of 2.89 years. The unrecognized expense associated with the performance-based options will be expensed when it becomes probable that the performance obligations will be met.

 

At March 31, 2025, intrinsic value is computed based on the difference between options exercise price and the market price of our common stock at March 31, 2025 of $0.34 per share multiplied by the total common stock options outstanding or exercisable whose market price exceeds the exercise price.

 

During the three months ended March 31, 2025, 200,000 stock options issued outside of the 2021 Plan were exercised with an exercise price of $0.12 for total proceeds to the Company of $24,000.

The fair value of these options granted were estimated on the date of grant, using the Black-Scholes option-pricing model with the following assumptions:

 

 

 

March 31,

 

 

March 31,

 

 

 

2025

 

 

2024

 

Expected volatility

 

67.81 – 69.25%

 

 

26.36 – 26.38%

 

Expected term (years)

 

6.25 Years

 

 

6.25 Years

 

Risk-free rate

 

4.14 - 4.51%

 

 

4.09 – 4.31%

 

Dividend rate

 

 

0.00%

 

0.00%

 

Restricted Stock Units

 

During the three months ended March 31, 2025, the Company granted an aggregate of 2,382,284 unvested restricted stock units under the 2021 Plan as follows: 617,284 to our Chief Financial Officer (“CFO”) pursuant to an employment agreement and 1,765,000 to non-executive key employees of the Company.

 

The unvested restricted stock units granted to our CFO consist of 308,642 units with time-based vesting provisions and 308,642 units with performance-based vesting provisions. The performance-based units vest as follows: 50% vest upon the achievement of Operating Profit, as defined in the employment agreements, and 50% upon the achievement of revenue targets between $15 and $100 million by the end of fiscal year 2028. The restricted stock units with the revenue target begin vesting once the Company achieves $15.0 million in revenue for a fiscal year. Vesting will occur on January 31 of each year through January 31, 2029. The number of restricted stock units that vest is based on the proportionate percentage of each fiscal year’s revenue to the $100 million target. For example, if our annual revenue for fiscal year 2026 is $20 million, 20% of the restricted stock units with the revenue performance condition will vest on January 31, 2027. The 1,765,000 restricted stock units granted to non-executive key employees are all time-based vesting and vest as follows: 50% on the one-year grant-date anniversary with the remaining vesting ratably over a period of thirty-six months.

 

The grant-date fair value of the restricted stock units was determined using the market price of our common stock on the date of grant which ranged from $0.62 to $0.63. 

 

A summary of our outstanding nonvested restricted stock units is as follows:

 

 

 

 

 

 

Weighted-

Average

 

 

 

 

 

 

Grant Date

 

 

 

Amount

 

 

Fair Value

 

Nonvested, beginning of the year

 

 

3,549,292

 

 

$1.23

 

Granted

 

 

2,382,284

 

 

 

0.62

 

Vested

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

Nonvested, end of the year

 

 

5,931,576

 

 

$0.98

 

At March 31, 2025, we have $2,524,952 of unrecognized stock-based compensation associated with the restricted stock units with a performance condition which will be recognized when the performance conditions are probable of being met. At March 31, 2025, the Company had $2,749,402 of unrecognized stock-based compensation associated with the time vesting restricted stock units which will be recognized over a weighted-average period of approximately 3.43 years. During the three months ended March 31, 2025, our stock based compensation associated with the time-based restricted stock units totaled $248,951, of which $216,982 was charged as compensation and related expenses, and $31,969 as research and development expenses in the accompanying unaudited condensed consolidated statements of operations.

 

Stock Warrants

 

At March 31, 2025, there were 14,675,244 warrants outstanding which relate to and offering completed in November 2024, where investors were offered one and a half warrants for every one common share purchased in the offering at an exercise price of $1.125 per share.

 

During the three months ended March 31, 2025 and 2024, no warrants were issued or exercised.  

 

A summary of warrant activity for the three months  ended  March 31, 2025, is as follows:

 

 

 

Shares

 

 

Weighted

Average

Exercise

Price

 

 

Aggregate

Intrinsic

Value

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

Outstanding and exercisable at December 31, 2024

 

 

14,675,244

 

 

 

1.13

 

 

$-

 

 

 

4.88

 

Issued

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding and exercisable at March 31, 2025

 

 

14,675,244

 

 

 

1.13

 

 

$-

 

 

 

4.63