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STOCKHOLDERS EQUITY
 9 Months Ended
Sep. 30, 2024
STOCKHOLDERS' EQUITY  
STOCKHOLDERS' EQUITY

NOTE 10 – STOCKHOLDERS’ EQUITY

 

On January 25, 2023, the holders of 1,692,672 shares of Series D Preferred stock converted the preferred shares and the Company issued 1,692,672 shares of common stock.  The Company also paid the holders $787,730 for cumulative dividends payable as declared on November 28, 2022. 1,590,672 shares of the 1,692,672 shares of Series D Preferred stock that were converted and $740,261 of the $787,730 of dividends paid related to the estate of John Lawrence, who was the prior President and Chairman of the Company.

 

On January 26, 2023, in conjunction with its share repurchase plan, the Company returned to treasury and cancelled 418,696 of its common shares which were repurchased prior to December 31, 2022 for $202,980.

 

Share-based compensation

 

The Company had no equity awards outstanding during fiscal year 2023. During the nine months ended September 30, 2024, stock option and RSU awards were granted in accordance with our 2023 Equity Incentive Plan, which was approved by the Company’s shareholders. The Company recognized $152,719 and $nil during the three months ended September 30, 2024 and 2023, respectively, and $453,566 and $nil during the nine months ended September 30, 2024 and 2023, respectively, of share-based compensation expense arising from stock option and RSU grants as follows:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Share-based compensation expense:

 

 

 

 

 

 

 

 

 

 

 

 

Stock options

 

$97,655

 

 

$-

 

 

$161,124

 

 

$-

 

RSUs

 

$55,064

 

 

$-

 

 

$292,442

 

 

$-

 

Total share-based compensation expense

 

$152,719

 

 

$-

 

 

$453,566

 

 

$-

 

 

Stock options:

 

Stock options granted have either a 3-year or 10-year contractual term and are subject to either service or performance-based vesting conditions. The following table shows the annual weighted-average assumptions used to value options granted during the nine months ended September 30, 2024:

 

 

 

Nine Months Ended

 

Grant-Date Weighted-Average Assumptions

 

September 30, 2024

 

Expected term (in years)

 

 

4.5

 

Risk-free interest rate

 

 

4.3%

Expected dividend yield

 

 

0.0%

Expected volatility

 

 

136.0%

Fair value per share of options granted

 

$0.18

 

 

Expected term – The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it uses the contractual term of the option for the expected term assumption.

Risk-free interest rate – The risk-free interest rate is based on the U.S. Treasury rate in effect at the time of the grant with an equivalent term approximating the expected term of the options.

 

Expected dividend yield—The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.

 

Expected volatility – The expected volatility is based on the historical volatility of our stock price over the expected term of the stock option.

 

Activity with respect to stock options is summarized as follows:

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

 

Weighted-Average

 

 

Remaining

 

 

Aggregate

 

 

 

 

 

 

Exercise Price

 

 

Contractual

 

 

Intrinsic

 

 

 

Shares

 

 

Per Share

 

 

Term (in years)

 

 

Value

 

Options outstanding, December 31, 2023

 

 

-

 

 

 

n/a

 

 

 

n/a

 

 

 

n/a

 

Granted

 

 

4,330,000

 

 

$0.23

 

 

 

n/a

 

 

 

n/a

 

Exercised

 

 

-

 

 

 

n/a

 

 

 

n/a

 

 

 

n/a

 

Forfeited

 

 

-

 

 

 

n/a

 

 

 

n/a

 

 

 

n/a

 

Expired

 

 

-

 

 

 

n/a

 

 

 

n/a

 

 

 

n/a

 

Options outstanding, September 30, 2024

 

 

4,330,000

 

 

$0.23

 

 

 

4.0

 

 

$2,279,400

 

Nonvested options, September 30, 2024

 

 

4,272,500

 

 

$0.23

 

 

 

3.9

 

 

$2,254,175

 

Vested and exercisable options, September 30, 2024

 

 

57,500

 

 

$0.32

 

 

 

9.8

 

 

$25,225

 

 

At September 30, 2024, total unrecognized share-based compensation expense related to stock options was $634,781, which is expected to be recognized over a weighted-average remaining period of 2.3 years.

Restricted stock units:

 

Activity with respect to RSUs is summarized as follows:

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

Grant-Date

 

 

 

 

 

 

Fair Value

 

 

 

Shares

 

 

Per Share

 

Nonvested shares at December 31, 2023

 

 

-

 

 

 

n/a

 

Granted

 

 

2,870,000

 

 

$0.23

 

Vested

 

 

(791,667)

 

$0.22

 

Forfeited

 

 

-

 

 

 

n/a

 

Nonvested shares at September 30, 2024

 

 

2,078,333

 

 

$0.24

 

 

At September 30, 2024, total unrecognized share-based compensation expense related to RSUs was $373,108, which is expected to be recognized over a weighted-average remaining period of 1.8 years.

 

Common stock warrants

 

No warrants were issued, expired, or exercised during the nine months ended September 30, 2024 and 2023.

 

The composition of the Company’s warrants outstanding at September 30, 2024 and 2023 was as follows:

 

Number of warrants

 

 

Exercise Price

 

 

Expiration Date

 

Remaining life (years)

 

 

2,285,715

 

 

$0.46

 

 

1/27/2026

 

 

1.33

 

 

804,000

 

 

$0.46

 

 

1/27/2026

 

 

1.33

 

 

7,650,000

 

 

$0.85

 

 

8/3/2026

 

 

1.84

 

 

1,606,500

 

 

$0.85

 

 

2/1/2026

 

 

1.34

 

 

12,346,215