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Stockholders' Equity

3 Months Ended

Mar. 31, 2025

Stockholders’ Equity [Abstract]

Stockholders' Equity

9. Stockholders’ Equity

The Intelligent Protection Management Corp. Amended and Restated 2011 Long-Term Incentive Plan (the “2011 Plan”) was terminated as to future awards on May 16, 2016. A total of 22,480 shares of the Company’s common stock may be issued pursuant to outstanding options awarded under the 2011 Plan; however, no additional awards may be granted under such plan. The Intelligent Protection Management Corp. 2016 Long-Term Incentive Plan (the “2016 Plan”) was adopted by the Company’s stockholders on May 16, 2016 and permits the Company to award stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other stock-based awards and cash-based incentive awards to its employees (including an employee who is also a director or officer under certain circumstances), non-employee directors and consultants. The maximum number of shares of common stock that may be issued pursuant to awards under the 2016 Plan is 1,300,000 shares, 100% of which may be issued pursuant to incentive stock options. In addition, the maximum number of shares of common stock that may be issued under the 2016 Plan may be increased by an indeterminate number of shares of common stock underlying outstanding awards issued under the 2011 Plan that are forfeited, expired, cancelled or settled in cash. As of March 31, 2025, there were 494,429 shares available for future issuance under the 2016 Plan.

Stock Options

The following table summarizes the assumptions used in the Black-Scholes pricing model to estimate the fair value of the options granted during the nine months ended March 31, 2025:

Expected volatility			136.8	%
Expected life of option (in years)			5.1 – 6.2
Risk free interest rate			4.4	%
Expected dividend yield			0.0	%

The expected life of the options is the period of time over which employees and non-employees are expected to hold their options prior to exercise. The expected life of options has been determined using the “simplified” method as prescribed by Staff Accounting Bulletin 110, which uses the midpoint between the vesting date and the end of the contractual term. The volatility of the Company’s common stock is calculated using the Company’s historical volatilities beginning at the grant date and going back for a period of time equal to the expected life of the award. The Company estimates potential forfeitures of stock awards and adjusts recorded stock-based compensation expense accordingly. The Company estimates pre-vesting forfeitures primarily based on the Company’s historical experience and is adjusts to reflect actual forfeitures as the stock-based awards vest.

The following table summarizes stock option activity during the three months ended March 31, 2025:

						Weighted
						Average
		Number of				Exercise
		Options				Price
Stock Options:
Outstanding at January 1, 2025			618,898			$	3.04
Granted during the period			275,000				1.98
Cancelled/Forfeited, during the period			(45,386	)			2.55
Expired, during the period			(3,376	)			2.55
Outstanding at March 31, 2025			845,136			$	2.72
Exercisable at March 31, 2025			631,761			$	2.97

At March 31, 2025, there was $342,315 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 1.4 years.

On March 31, 2025, the aggregate intrinsic value of stock options that were outstanding and exercisable was $16,920 and $16,920, respectively. On March 31, 2024, the aggregate intrinsic value of stock options that were outstanding and exercisable was $423,850 and $259,295, respectively. The intrinsic value of stock options is calculated based on the exercise price of the underlying awards and the fair value of such awards as of the period-end date.

During the three months ended March 31, 2025, the Company granted stock options to members of the Board of Directors (the “Board”) to purchase an aggregate of 100,000 shares of common stock at a weighted average exercise price of $1.94 per share. The stock options vest in four equal quarterly installments on the last day of each calendar quarter in 2025 and have a term of ten years. During the three months ended March 31, 2025, the Company also granted options to employees to purchase an aggregate of 175,000 shares of common stock. These options vest in various tranches, ranging from equally over four years to fifty percent at grant date with the remaining balance vesting during the third quarter of fiscal 2025. The options have a term of ten years and have an exercise price of $2.01. The aggregate fair value for the options granted during the three months ended March 31, 2025 and 2024 was $545,550 and $72,240, respectively.

Stock-based compensation expense for the Company’s stock options for the three months ended March 31, 2025 and 2024, totaled $167,629 and $59,311, respectively and is included in general and administrative expenses in the condensed consolidated statements of operations.

Series A Preferred Stock

On December 30, 2024, the Company filed with the Secretary of State of the State of Delaware the Certificate of Designations designating the Series A Preferred Stock (the “Certificate of Designations”), and establishing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption of the shares of Series A Preferred Stock. The total number of authorized shares of Series A Preferred Stock is 9,000,000 shares. On January 2, 2025, as partial consideration for the Acquisition, the Company issued 4,000,000 shares of Series A Preferred Stock.

Treasury Shares

As of March 31, 2025 and December 31, 2024, the Company had 641,963 shares of its common stock, respectively, classified as treasury shares on the Company’s consolidated balance sheets.