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STOCK-BASED COMPENSATION
 9 Months Ended 12 Months Ended
Sep. 30, 2024
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]    
STOCK-BASED COMPENSATION

NOTE 10. STOCK-BASED COMPENSATION

 

The Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $(27,789) and $84,586 for the three months ended September 30, 2024 and 2023, and $73,678 and $378,917 for the nine months ended September 30, 2024 and 2023, respectively.

 

 

As of September 30, 2024, the Company had adopted ten separate stock option and restricted stock plans: (i) the 2005 Stock Option and Restricted Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”), (iii) the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”), (vi) the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”), (vii) the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”), (viii) the 2018 Stock Option and Restricted Stock Plan (the “2018 Plan”), (ix) the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”), and (x) the 2022 Stock Option and Restricted Stock Plan (the “2022 Plan”). The 2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015 Plan, 2018 Plan, 2020 Plan and 2022 Plan are referred to as the “Plans.”

  

Stock option grants. The Company believes that such awards better align the interests of our employees with those of its stockholders. Option awards have been granted with an exercise price equal to the market price of its stock at the date of grant with such option awards generally vesting based on the completion of continuous service and having ten-year contractual terms. These option awards typically provide for accelerated vesting if there is a change in control (as defined in the Plans). The Company has registered all shares of common stock that are issuable under its Plans with the SEC. A total of 137,042 shares remained available for awards under the various Plans as of September 30, 2024.

 

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.

 

A summary of all stock option activity under the Plans for the nine months ended September 30, 2024 is as follows: 

 

Options 

Number of

Shares

  

Weighted

Average

Exercise Price

 
Outstanding at December 31, 2023   53,600   $45.55 
Granted   —    — 
Exercised   —    — 
Forfeited/expired   (1,100)   (65.00)
Outstanding at September 30, 2024   52,500   $45.14 
Exercisable at September 30, 2024   52,500   $45.14 

 

The Plans allow for the cashless exercise of stock options. This provision allows the option holder to surrender/cancel options with an intrinsic value equivalent to the purchase/exercise price of other options exercised. There were no shares surrendered pursuant to cashless exercises during the nine months ended September 30, 2024 and 2023.

 

The aggregate intrinsic value of options outstanding was $-0- and $-0-, at September 30, 2024 and December 31, 2023, respectively. The aggregate intrinsic value of options exercisable was $-0- and $-0-, at September 30, 2024 and December 31, 2023, respectively.

 

As of September 30, 2024, the unrecognized portion of stock compensation expense on all existing stock options was $-0-.

 

 

The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of September 30, 2024: 

 

     Outstanding options   Exercisable options 

Exercise price

range

  

Number of

options

  

Weighted average

remaining

contractual life

  

Number of

options

  

Weighted average

remaining

contractual life

 
                       
$0.01 to $49.99    37,000    5.9 years    37,000    5.9 years 
$50.00 to $69.99    14,000    4.0 years    14,000    4.0 years 
$70.00 to $89.99    1,500    1.6 years    1,500    1.6 years 
                       
      52,500    5.2 years    52,500    5.2 years 

 

Restricted stock grants. The Board of Directors has granted restricted stock awards under the Plans. Restricted stock awards are valued on the date of grant and have no purchase price for the recipient. Restricted stock awards typically vest over one to five years corresponding to anniversaries of the grant date. Under the Plans, unvested shares of restricted stock awards may be forfeited upon the termination of service to or employment with the Company, depending upon the circumstances of termination. Except for restrictions placed on the transferability of restricted stock, holders of unvested restricted stock have full stockholder’s rights, including voting rights and the right to receive cash dividends.

 

A summary of all restricted stock activity under the Plans for the nine months ended September 30, 2024 is as follows:

 

  

Number of
Restricted

shares

  

Weighted

average

grant date
fair value

 
Nonvested balance, December 31, 2023   53,875   $11.27 
Granted   80,197    2.12 
Vested   (32,250)   (10.87)
Forfeited   (51,072)   (2.91)
Nonvested balance, September 30, 2024   50,750   $5.48 

 

The Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of grant. As of September 30, 2024, there were $88,399 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next forty-two months in accordance with their respective vesting scale.

 

The nonvested balance of restricted stock vests as follows:

 

Years ended 

Number of

Shares

 
     
2024 (October 1, 2024 through December 31, 2024)   — 
2025   35,250 
2026   6,500 
2027   5,000 
2028   4,000 

 

 

NOTE 16. STOCK-BASED COMPENSATION

 

The Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $452,071 and $1,282,757 for the years ended December 31, 2023 and 2022, respectively.

 

As of December 31, 2023, the Company had adopted ten separate stock option and restricted stock plans: (i) the 2005 Stock Option and Restricted Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”), (iii) the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”), (vi) the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”), (vii) the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”), (viii) the 2018 Stock Option and Restricted Stock Plan (the “2018 Plan”), (ix) the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”), and (x) the 2022 Stock Option and Restricted Stock Plan (the “2022 Plan”). The 2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015 Plan, 2018 Plan, 2020 Plan and 2022 Plan are referred to as the “Plans.”

 

These Plans permit the grant of stock options or restricted stock to its employees, non-employee directors and others for up to a total of 333,750 shares of common stock. The 2005 Plan terminated during 2015 with 1,078 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2005 Plan that remain unexercised and outstanding as of December 31, 2023 total 284. The 2006 Plan terminated during 2016 with 2,739 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2006 Plan that remain unexercised and outstanding as of December 31, 2023 total 531. The 2007 Plan terminated during 2017 with 4,733 shares not awarded or underlying options, which shares are now unavailable for issuance. There are no stock options granted under the 2007 Plan that remain unexercised and outstanding as of December 31, 2023. The 2008 Plan terminated during 2018 with 2,025 shares not awarded or underlying options, which shares are now unavailable for issuance. There are no stock options granted under the 2008 Plan that remain unexercised and outstanding as of December 31, 2023.

 

Our Board of Directors adopted the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”) on June 30, 2020 and the Company’s stockholders approved the 2020 Plan at the Annual Meeting held on September 9, 2020. The Company’s stockholders approved an amendment to the 2020 Plan at the Annual Meeting held on June 22, 2021 which increased the number of shares of Common Stock authorized and reserved for issuance under the 2020 Plan to a total of 125,000. A total of 112,958 options and restricted stock have been granted under the 2020 Plan to date. The 2020 Plan also authorizes us to grant (i) to the key employees’ incentive stock options to purchase shares of Common Stock and non-qualified stock options to purchase shares of Common Stock and restricted stock awards and (ii) to non-employee directors and consultants non-qualified stock options and restricted stock.

 

 

Our Board of Directors adopted the 2022 Stock Option and Restricted Stock Plan (the “2022 Plan”) on October 28, 2022 and the Company’s stockholders approved the 2022 Plan at the Annual Meeting held on December 7, 2022. The number of shares of Common Stock authorized and reserved for issuance under the 2022 Plan totals 125,000. The 2022 Plan also authorizes us to grant (i) to the key employees’ incentive stock options to purchase shares of Common Stock and non-qualified stock options to purchase shares of Common Stock and restricted stock awards and (ii) to non-employee directors and consultants non-qualified stock options and restricted stock.

 

The Company believes that such awards better align the interests of our employees with those of its stockholders. Option awards have been granted with an exercise price equal to the market price of its stock at the date of grant with such option awards generally vesting based on the completion of continuous service and having ten-year contractual terms. These option awards typically provide for accelerated vesting if there is a change in control (as defined in the Plans). The Company has registered all shares of common stock that are issuable under its Plans with the SEC. A total of 137,042 shares remained available for awards under the various Plans as of December 31, 2023.

 

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.

 

Activity in the various Plans during the years ended December 31, 2023 and 2022 is reflected in the following table:

 

Options  Number of
Shares		   Weighted
Average
Exercise Price		 
Outstanding at January 1, 2022   54,303   $47.40 
Granted   1,250    19.60 
Exercised   —    — 
Forfeited   (1,603)   (80.80)
Outstanding at December 31, 2022   53,950   $45.80 
Exercisable at December 31, 2022   53,950   $45.80 

 

Options  Number of
Shares		   Weighted
Average
Exercise Price		 
Outstanding at January 1, 2023   53,950   $45.80 
Granted   —    — 
Exercised   —    — 
Forfeited   (350)   (83.20)
Outstanding at December 31, 2023   53,600   $45.55 
Exercisable at December 31, 2023   53,600   $45.55 

 

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. The total estimated grant date fair value stock options issued during the year ended December 31, 2023 and 2022 was $-0- and $22,768, respectively.

 

The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated grant date fair value of the options during the years ended December 31, 2023 and 2022:

 

   2023   2022 
   Assumptions   Assumptions 
Volatility – range   —    111.67%
Risk-free rate   —    1.81%
Expected term   —    10.0 years 
Exercise price   —   $19.60 

 

 

The Plans allow for the cashless exercise of stock options. This provision allows the option holder to surrender/cancel options with an intrinsic value equivalent to the purchase/exercise price of other options exercised. There were no shares surrendered pursuant to cashless exercises during the years ended December 31, 2023 and 2022.

 

At December 31, 2023 and 2022, the aggregate intrinsic value of options outstanding was approximately $-0- and $-0-, respectively, and the aggregate intrinsic value of options exercisable was approximately $-0- and $-0-, respectively.

 

The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of December 31, 2023:

 

    Outstanding options   Exercisable options 
Exercise price
range		   Number of
options		   Weighted
average
remaining
contractual life		   Number of
options		   Weighted average
remaining
contractual life		 
                  
$ 0.01 to $49.99    37,000    6.6 years    37,000     6.6 years 
$50.00 to $69.99    15,100    4.5 years    15,100     4.5 years 
$70.00 to $89.99    1,500    2.4 years    1,500     2.4 years 
                       
      53,600    5.9 years    53,600     5.9 years 

 

Restricted stock grants. The Board of Directors has granted restricted stock awards under the Plans. Restricted stock awards are valued on the date of grant and have no purchase price for the recipient. Restricted stock awards typically vest over one to four years corresponding to anniversaries of the grant date. Under the Plans, unvested shares of restricted stock awards may be forfeited upon the termination of service to or employment with the Company, depending upon the circumstances of termination. Except for restrictions placed on the transferability of restricted stock, holders of unvested restricted stock have full stockholder’s rights, including voting rights and the right to receive cash dividends.

 

A summary of all restricted stock activity under the equity compensation plans for the years ended December 31, 2023 and 2022 is as follows:

 

   Number of
Restricted
shares		   Weighted
average
grant date
fair value		 
Nonvested balance, January 1, 2022   52,869   $37.40 
Granted   60,750    14.67 
Vested   (31,244)   (34.73)
Forfeited   (3,250)   (21.20)
Nonvested balance, December 31, 2022   79,125   $21.73 

 

   Number of
Restricted
shares		   Weighted
average
grant date
fair value		 
Nonvested balance, January 1, 2023   79,125   $21.73 
Granted   35,000    5.00 
Vested   (56,625)   (21.29)
Forfeited   (3,625)   (22.41)
Nonvested balance, December 31, 2023   53,875   $11.27 

 

 

The Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of the grant. As of December 31, 2023, there was $140,573 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next forty-eight months in accordance with their respective vesting scale.

 

The nonvested balance of restricted stock vests as follows:

 

Years ended  Number of
shares		 
     
2024   27,750 
2025   19,000 
2026   4,125 
2027   2,000 
2028   1,000