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Stock Options and Restricted Stock Units

12 Months Ended

Dec. 31, 2024

Stock Options and Restricted Stock Units [Abstract]

Stock Options and Restricted Stock Units

Note 14. STOCK OPTIONS AND RESTRICTED STOCK UNITS

Stock-Based Compensation

Stock Options

In September 2024, the shareholders of the Company approved the amendment to the 2022 Equity Incentive Plan (“2022 Plan”) to increase the number of shares authorized to be used under the plan by 300,000 shares, from 350,000 shares to 650,000 shares.

In September 2023, the shareholders of the Company approved the amendment to the 2022 Equity Incentive Plan (“2022 Plan”) to increase the number of shares authorized to be issued under the plan by 250,000 shares, from 100,000 shares to 350,000 shares. Additionally, this amendment to the 2022 Plan specified that the Company may grant Restricted Stock Units under the 2022 Plan.

During the years ended December 31, 2024 and 2023, the Company granted options to purchase 80,000 and 189,620 shares of common stock, respectively, to certain of its employees and directors.

The Company recorded stock-based compensation expense for certain employees and members of the Company’s Board of Directors of $317,000 and $482,000 in its consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively, and such amounts were included as a component of operating expenses on the consolidated statement of operations.

The fair values of stock options granted were estimated using the Black-Sholes option-pricing model with the following assumptions for the years ended December 31:

		2024				2023
Risk-free interest rates			3.8				3.70% - 3.97	%
Expected life (in years)			2.7				2.50 - 3.5
Expected volatility			64	%			61	%
Dividend yield			0.00	%			0.00	%

Weighted-average grant date fair value per share		$	3.75			$	3.46

The expected life is the number of years that the Company estimates, based upon history, that the options will be outstanding prior to exercise or forfeiture. Expected life is determined using the “simplified method” permitted by Staff Accounting Bulletin No. 107. In addition to the inputs referenced above regarding the option pricing model, the Company adjusts the stock-based compensation expense for estimated forfeiture rates that are revised prospectively according to forfeiture experience. The stock volatility factor is based on the Company’s experience.

A summary of the status of the Company’s stock options as of December 31, 2024 and 2023, and changes during the two years then ended are presented below.

						Wtd. Avg.
						Exercise
		Options				Price
Balance, January 1, 2023			303,050			$	11.70
Granted during the period			189,620				3.46
Exercised during the period			-				-
Terminated/Expired during the period			(30,800	)			13.60
Balance, December 31, 2023			461,870			$	8.34
Granted during the period			80,000				3.75
Exercised during the period			(15,229	)			3.45
Terminated/Expired during the period			(109,638	)			9.86
Balance, December 31, 2024			417,003			$	7.00

Exercisable at December 31, 2024			372,005			$	7.41

Issuance of Stock Options

Issued in 2024

On August 13, 2024, the Company granted to its directors’ stock options to purchase an aggregate of 80,000 shares of the Company’s common stock at a price of $3.75 per share. The options expire on August 31, 2029 and vest over a term of one year.

Issued in 2023

On May 23, 2023, the Company granted to its directors and certain members of management and employees, stock options to purchase an aggregate of 108,620 shares of the Company’s common stock at a price of $3.43 per share. The options expire on the June 30, 2028 and vested immediately.

On June 2, 2023, the Company granted to its directors, stock options to purchase an aggregate of 6,000 shares of the Company’s common stock at a price of $3.50 per share. The options expire on the fifth anniversary of the grant date and vest over a term of one year.

On June 2, 2023, the Company granted to certain members of management and employees, stock options to purchase an aggregate of 75,000 shares of the Company’s common stock at a price of $3.50 per share. The options expire on the fifth anniversary of the grant date and vest over a term of three years.

The following table summarizes information about outstanding stock options at December 31, 2024:

									Wtd. Avg.
Range of Exercise Price			Number Outstanding				Wtd. Avg. Life		Exercise Price
$3.43 - $23.80				417,003			2.8 years		$	7.00

As of December 31, 2024, there was $21,000 of unrecognized compensation cost related to non-vested stock option awards, which is to be recognized over the remaining weighted average vesting period of .5 years.

The aggregate intrinsic value at December 31, 2024, based on the Company’s closing stock price of $4.07 was $121,000. The aggregate intrinsic value at December 31, 2023 was based on the Company’s closing stock price of $3.25 was approximately $0. The aggregate intrinsic value was calculated based on the positive difference between the closing market price of the Company’s Common Stock and the exercise prices of the underlying options.

The weighted average fair value of options granted during the years ended December 31, 2024 and 2023 was $3.75 and $3.46 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $20,000 and $0. The total fair value of shares vested during the years ended December 31, 2024 and 2023 was $100,000 and $417,000, respectively.

Restricted Stock Units (“RSUs”)

During the years ended December 31, 2024, the Company granted 282,628 RSUs to certain employees with a grant date fair value of $1,713,000. These Restricted Stock Units vest solely on the basis of continued service through the vesting dates.

A summary of the status of the Company’s RSUs as of December 31, 2024 is presented below:

		Number of Units				Weighted Average Grant Date Fair Value per Unit
Unvested Units at January 1, 2024			-			$	-
Granted during the period			282,628				6.06
Vested during the period			-				-
Terminated/Forfeited during the period			-				-
Unvested Units at December 31, 2024			282,628			$	6.06

Vested Units at December 31, 2024			-			$	-

The Company recorded stock-based compensation expense of $480,000 for the year ended December 31, 2024 and such amounts were included as a component of operating expenses on the consolidated statements of operations.

As of December 31, 2024, there was $1,233,000 of unrecognized compensation cost related to non-vested RSUs, which is to be recognized over the remaining weighted average vesting period of 2.25 years.