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Other Shareholders’ Equity
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
Other Shareholders’ Equity

13. Other Shareholders’ Equity

 

Common Stock

 

During 2020, 400,000 shares of our common stock were issued to LF related to the acceleration of closings in our Series A Offering, and an additional 200,000 shares were issued to Garden State Securities in its representation of the Company in the Series A Offering.

 

 

Restricted Stock

 

In 2020, 15,000 shares of restricted stock vested to Mr. Hyland, former Chief Executive Officer, pursuant to the terms of the grant related to his employment with the Company. There were no other shares of restricted stock outstanding during 2020 or 2021. During 2022, 250,000 shares of restricted stock were granted to the incoming Chief Executive Officer pursuant to an employment agreement. 25,000 of those shares are to vest immediately and the remaining shares are schedule to vest upon the achievement of certain performance conditions. Each of three independent directors received grants of 5,000 shares that were fully vested as of December 31, 2022. Additionally, the Chief Operating Officer was granted 100,000 shares, 20,000 of which vested over 12 months while the remaining 80,000 had the same performance conditions as the Chief Executive Officer. During each of 2023 and 2022, the performance condition related to 56,250 shares for the Chief Executive Officer and 20,000 shares for the Chief Operating Officer was met, and these shares vested. As of December 31, 2023, performance conditions related to 112,500 shares for the Chief Executive Officer and 40,000 shares for the Chief Operating Officer remain unvested.

 

Stock Options

 

The Compensation Committee (“Committee”) administers the Company’s stock-based plans. The exercise price of the stock options shall be fixed by the Committee at whatever price the Committee may determine in good faith. Unless the Committee determines otherwise, options generally had a 4-year term with a 3-year vesting schedule. Unless the Committee provides otherwise, options terminate upon the termination of a participant’s employment, except that the participant may exercise an option to the extent it was exercisable on the date of termination and for a period of time after termination.

 

In 2009, the shareholders of the Corporation approved, a 2009 Stock Incentive Plan (“2009 Plan”). The 2009 Plan and subsequent awards categorized as inducement of employment authorized the issuance of up to 510,000 shares of stock or options to purchase stock of the Company (including cancelled shares reissued under the plan.)

 

On June 8, 2018, our shareholders approved the 2018 Stock Incentive Plan (“2018 Plan”). The 2018 Plan authorized the issuance of up to 300,000 shares of our common stock in the form of equity-based awards. Because no registration on Form S-8 was filed for these additional shares within 12 months of approval by our shareholders, those additional shares are not available for issuance in the normal course. On June 17, 2022, our shareholders approved of the issuance of 500,000 shares to this plan.

 

The Company, at the discretion of the board, may issue options in excess of the total available, if options related to that stock plan are cancelled. In some cases, not all shares that are available to a stock plan are issued, as the Company is unable to issue options to a previous plan when a new plan is in place.

 

The Company recognized share based compensation expense of approximately $20,000 and $160,000 in 2023 and 2022, respectively. As of December 31, 2023 and 2022, respectively, there was no unrecognized compensation expense related to non-vested stock option grants. There were approximately 132,000 performance-based grants for which the underlying performance threshold had not been met as of December 31, 2023.

 

Warrants

 

In connection with the Series A Offering, in 2020 the Company issued 792,660 warrants to purchase 792,660 shares of the Company’s common stock for $1 per share. During 2020, 597,500 warrants were exercised in cash-less exchange for 391,308 shares of the Company’s common stock. In January and February 2021, the remaining 195,160 warrants were exercised in a cash-less exchange for 103,104 shares of the Company’s common stock.

 

The Series D Offering also included warrants to purchase up to 128,572 shares of the Company’s common stock at an exercise price of the lower of $1.75 per share or 85% of the lowest daily volume-weighted average price of the Common Stock during the 10 trading days prior to the date of exercise. If unexercised, these warrants would have expired December 1, 2024. As noted above, the warrants were exercised and converted into common shares during 2023, leaving no outstanding warrants as of December 31, 2023.

 

The Company has applied the Black-Scholes model to value stock-based awards. That model incorporates various assumptions in the valuation of stock-based awards relating to the risk-free rate of interest to be applied, the estimated dividend yield and expected volatility of the Company’s Common Stock. The risk-free rate of interest is the U.S. Treasury yield curve for periods within the expected term of the option at the time of grant. The expected volatility is based on historical volatility of the Company’s Common Stock.

 

The valuation assumptions we have applied to determine the value of warrants granted in 2021 and 2020 were as follows:

 

Historical stock price volatility: The Company used the weekly closing price to calculate historical annual volatility.

 

Risk-free interest rate: The Company bases the risk-free interest rate on the rate payable on US treasury securities with a similar maturity in effect at the time of the grant, which was 4.50% and 3.80%, during 2023 and 2022, respectively.

 

Expected life: The expected life of the warrants represents the period of time warrants were expected to be outstanding. The Company used an expected life of 5 years for all warrants granted during 2023 and 2022.

 

Dividend yield: The estimate for dividend yield is 0%, as the Company did not issue dividends during 2023 or 2022 and does not expect to do so in the foreseeable future.

 

Estimated forfeitures: When estimating forfeitures, the Company considers historical terminations as well as anticipated retirements.

 

 

A summary of the Company’s stock options, warrants and related information, is as follows:

 

   Options   Weighted
Average
Exercise
Price		   Warrants   Weighted
Average
Exercise
Price		 
Balance at January 1, 2022        -   $         -    128,572   $1.75 
Granted   -                
Cancelled/Expired   -                
Exercised/Issued   -                
Balance at December 31, 2022   -    -    128,572   $1.75 
Granted   -         -      
Cancelled/Expired   -                
Exercised/Issued   -         128,572   $1.75 
Balance at December 31, 2023   -    -    -   $- 
                     
Exercisable at December 31, 2023             -   $- 

 

As there are no active stock options, there is no aggregate intrinsic value (the difference between the closing price of the Company’s common stock as of December 31, 2023 and 2022, respectively, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all the holders exercised their options on December 31, 2023 and 2022, respectively. The warrants have an intrinsic value of none and $230,000 as of December 31, 2023 and 2022, respectively.

 

 

As of December 31, 2023, the Company reserved no shares of its common stock for the exercise of warrants, and preferred stock.