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Stockholder Equity | 6 Months Ended
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Jun. 30, 2025
Stockholder Equity |
Stockholder' Equity | Note 7 – Stockholders’ Equity Authorized Shares On June 11, 2025, the Company filed a certificate of amendment to its amended and restated certificate of incorporation with the Secretary of State of the State of Delaware to increase the authorized shares of common stock from 200,000,000 to 1,000,000,000. This amendment was approved by the Company’s stockholders at the Annual Meeting. There were no changes to the authorized preferred stock which remains at 50,000,000 shares. Common Stock Sales On June 6, 2025, the Company entered into a sales agreement (the "2025 Sales Agreement") with Lake Street Capital Markets, LLC (“Lake Street”) as sales agent, pursuant to which the Company may offer and sell, from time to time, shares of the Company's common stock, having an aggregate offering price of up to $15.1 million (the “2025 ATM Shares”). The 2025 Sales Agreement replaces the prior sales agreement entered into between the Company and Jefferies LLC dated as of December 21, 2022 (the “2022 Sales Agreement”). Sales of common stock, if any, will be made at market prices by any method permitted by law deemed to be an “at-the-market” (ATM) offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company has no obligation to sell any shares of common stock under the open market sale agreement and may at any time suspend offers under the 2025 Sales Agreement, in whole or in part, or terminate the 2025 Sales Agreement. During the six months ended June 30, 2025, a total of 1,270,706 shares of common stock were sold pursuant to the 2025 Sales Agreement offering resulting in gross proceeds of approximately $477,100, and issuance costs of approximately $144,700 consisting of approximately $49,300 in commissions and sale agent fees, and approximately $95,400 of accounting and legal fees for net proceeds of approximately $332,400. As of June 30, 2025, approximately $334,000 of the gross proceeds remained unpaid and were received in July 2025 which have been presented as stock subscription receivables on the accompanying consolidated balance sheet. As of June 30, 2025, a total of 1,270,706 shares of common stock have been sold pursuant to the open market sale agreement and approximately $14.6 million remains available on the 2025 Sales Agreement. During the six months ended June 30, 2024, a total of 18,474 shares of common stock were sold pursuant to the 2022 Sales Agreement resulting in gross proceeds of approximately $24,000, and issuance costs consisting of approximately $600 in commission fees and approximately $49,100 of accounting and legal fees for net equity issuance costs of approximately $25,700. Issuance of Stock for Services During the six months ended June 30, 2025, we issued 293,092 fully vested shares of common stock to service providers with a fair value of $105,900 based on the market price of our common stock on date of grant. During the six months ended June 30, 2024, we issued 6,754 fully vested shares of common stock to a service provider with a fair value of $9,000 based on the market price of our common stock on date of grant. During the six months ended June 30, 2024, we issued an aggregate of 240,000 fully vested shares of restricted common stock to our board of directors with a fair value of $333,600 based on the market price of our common stock on the date of grant. Common Stock for Stock Option Exercises During the six months ended June 30, 2025, we issued an aggregate of 200,000 shares of common stock for a stock option exercise that resulted in cash proceeds of $24,000. Fully Vested Restricted Stock During the six months ended June 30, 2025, certain executives and key employees vested in time-based restricted stock resulting in the Company issuing 416,333 shares of common stock. Stock-based compensation 2021 Plan The Company has reserved 36,150,000 (increased from 24,000,000 at the Company’s Annual Shareholder Meeting on June 11, 2025) 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 June 30, 2025, the Company has issued a total of 19,725,118 stock options and restricted stock units under the 2021 Plan with 16,424,882 reserved shares remaining for issuance. Stock-based compensation expense related to stock options and restricted stock units expected to vest is presented as follows in the condensed unaudited consolidated financial statements:
|  | Three Months |  |  | Six Months Ended |
|  | June 30, 2025 |  |  | June 30, 2024 |  |  | June 30, 2025 |  |  | June 30, 2024 |
Research and development |  | $ | 64,837 |  |  | $ | 45,704 |  |  | $ | 128,640 |  |  | $ | 90,318 |
Compensation and related expenses |  |  | 484,241 |  |  |  | 229,680 |  |  |  | 1,129,902 |  |  |  | 368,266 |
Total expense |  | $ | 549,078 |  |  | $ | 275,384 |  |  | $ | 1,258,542 |  |  | $ | 458,584 |
Stock Options Stock option activity for the six months ended June 30, 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 |
Granted |  |  | 1,715,152 |  |  |  | 0.29 |  |  |  | - |  |  |  | - |
Exercised |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Expired/forfeit |  |  | (608,712 | ) |  | $ | 0.84 |  |  |  | - |  |  |  | - |
Options outstanding at June 30, 2025 |  |  | 17,515,502 | * |  | $ | 0.86 |  |  | $ | 1,210,855 |  |  |  | 5.99 |
Options Exercisable at June 30, 2025 |  |  | 8,960,030 | * |  | $ | 0.66 |  |  | $ | 1,160,000 |  |  |  | 3.08 |
*At June 30, 2025 and December 31, 2024, the options outstanding and exercisable include 5,700,000 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 six months ended June 30, 2025, the options granted were primarily to our Chief Financial Officer (“CFO”), Chief Technology Officer (“CTO”) and other non-executive key employees. The weighted average grant-date fair value of the granted options was $0.24. Of the total options outstanding at June 30, 2025, 4,465,864 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. The remaining outstanding options vest over time generally over a four-year vesting period. At June 30, 2025, total unrecognized compensation expense for service based and performance-based options was $3,387,173 and $2,898,790, respectively. The unrecognized service-based expense will be recognized over the option vesting period of four years through April 2029. The unrecognized expense associated with the performance-based options will be expensed when it becomes probable that the performance obligations will be met. At June 30, 2025, intrinsic value is computed based on the difference between exercise price of the option and the market price of our common stock at June 30, 2025 of $0.32 per share multiplied by the total common stock options outstanding or exercisable whose exercise price is less than the market price. During the three months ended June 30, 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:
|  |  | June 30, |  |  |  | June 30, |
|  |  | 2025 |  |  |  | 2024 |
Expected volatility |  |  | 67.81 – 71.56% |  |  |  | 26.21 – 26.38% |
Expected term (years) |  |  | 6.25 |  |  |  | 6.25 |
Risk-free rate |  |  | 4.00 - 4.51% |  |  |  | 4.09 – 4.65% |
Dividend rate |  |  | 0.00% |  |  |  | 0.00% |
Restricted Stock Units During the six months ended June 30, 2025, the Company granted an aggregate of 3,139,860 unvested restricted stock units under the 2021 Plan to the CFO, CTO and other non-executive key employees of the Company. The unvested restricted stock units granted to our CFO and CTO consist of an aggregate of 687,430 units with time-based vesting provisions over four years and 687,430 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 $0.33 to $0.63. A summary of our outstanding nonvested restricted stock units as of June 30, 2025 is as follows:
|  |  |  |  | Weighted- Average |
|  |  |  |  | Grant Date |
|  | Amount |  |  | Fair Value |
Nonvested, beginning of the year |  |  | 3,549,292 |  |  | $ | 1.23 |
Granted |  |  | 3,139,860 |  |  |  | 0.55 |
Vested |  |  | (416,333 | ) |  |  | 1.26 |
Forfeited |  |  | (60,000 | ) |  |  | 0.62 |
Nonvested, end of the year |  |  | 6,212,819 |  |  | $ | 0.89 |
At June 30, 2025, we have $2,649,952 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 June 30, 2025, the Company had $2,546,161 of unrecognized stock-based compensation associated with the time-based vesting restricted stock units which will be recognized over a weighted-average period of approximately 3.19 years. Stock-based compensation expense related to time-based restricted stock units expected to vest is presented as follows in the condensed unaudited consolidated financial statements:
|  | Three Months |  |  | Six Months Ended |
|  | June 30, 2025 |  |  | June 30, 2024 |  |  | June 30, 2025 |  |  | June 30, 2024 |
Research and development |  | $ | 38,363 |  |  | $ | - |  |  | $ | 70,332 |  |  | $ | - |
Compensation and related expenses |  |  | 233,386 |  |  |  | 73,340 |  |  |  | 450,368 |  |  |  | 73,340 |
Total expense |  | $ | 271,749 |  |  | $ | 73,340 |  |  | $ | 520,700 |  |  | $ | 73,340 |
Stock Warrants At June 30, 2025, there were 14,675,244 warrants outstanding which relate to an 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 six months ended June 30, 2025 and 2024, no warrants were issued or exercised. A summary of warrant activity for the six months ended June 30, 2025, is as follows:
|  |  |  |  |  |  |  |  |  |  | Weighted |
|  |  |  |  | Weighted |  |  |  |  |  | Average |
|  |  |  |  | Average |  |  | Aggregate |  |  | Remaining |
|  |  |  |  | Exercise |  |  | Intrinsic |  |  | Contractual |
|  | Shares |  |  | Price |  |  | Value |  |  | Life (Years) |
Warrants outstanding at December 31, 2024 |  |  | 14,675,244 |  |  | $ | 1.13 |  |  | $ | - |  |  |  | 4.88 |
Granted |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Expired/forfeit |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Warrants outstanding at March 31, 2025 |  |  | 14,675,244 |  |  | $ | 1.13 |  |  |  |  |  |  |  | 4.63 |
Granted |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Expired/forfeit |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Warrants outstanding at June 30, 2025 |  |  | 14,675,244 |  |  | $ | 1.13 |  |  |  |  |  |  |  |  |
Warrants exercisable at June 30, 2025 |  |  | 14,675,244 |  |  | $ | 1.13 |  |  | $ | - |  |  |  | 4.39 |

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