Stockholders' Equity

9 Months Ended

Sep. 30, 2024

Stockholders’ Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 7 – STOCKHOLDERS’ EQUITY

Stock Options

During the nine months ended September 30, 2024, the Company granted 1,840,637 stock options, of which 1,400,075 were granted to certain employees and officers and 440,562 were granted to non-employee directors, consistent with the terms of the 2023 Plan.

Stock options represent the contingent right of award holders to purchase shares of the Company’s common stock at a stated price for a limited time. The stock options granted in 2024 have an exercise price of $5.99 per share and will expire 7 years from the date of grant. Stock options granted to employees and officers will vest at a rate of 25% on each of the first, second, third and fourth anniversaries of the date of grant, subject to continued service through the vesting dates. Stock options granted to non-employee directors will vest one year from the date of grant, subject to continued service through the vesting date.

The Company estimates the fair value of stock options on the date of grant using the Black-Scholes model and the following underlying assumptions. Expected volatility was based on historical volatility for public company peers that operate in the Company’s industry. The expected term of awards granted represents management’s estimate for the number of years until a liquidity event as of the grant date. The risk-free rate for the period of the expected term was based on the U.S. Treasury yield curve in effect at the time of grant.

The fair value of stock options granted in 2024 were determined using the following assumptions as of the grant date:

Risk-free interest rate	4.6	%
Expected term	3.5 years
Volatility	50	%
Dividend yield	Zero
Discount for lack of marketability – employee and officer awards	19	%
Discount for lack of marketability – non-employee director awards	14	%

The table below presents activity related to stock options during the nine months ended September 30, 2024:

	Number of options		Weighted average exercise price per share		Weighted average remaining contractual life (years)
Outstanding as of December 31, 2023		1,236,016	$	11.00		6.3
Granted		1,840,637		5.99		7.0
Exercised		-		-		-
Forfeited / expired		-		-		-
Outstanding as of September 30, 2024		3,076,653		8.00		6.2
Unvested as of September 30, 2024		2,767,651		7.67		6.3
Exercisable as of September 30, 2024		-		-		-

The grant-date fair value of stock options granted in 2024 was $1.39 per share for options granted to employees and officers and $1.48 per share for options granted to non-employee directors. As of September 30, 2024, there were 2,636,091 options granted to employees and officers outstanding, of which 2,327,089 were unvested, and 440,562 options granted to non-employee directors outstanding, all of which were unvested.

Restricted Stock Units

In April 2024, all 141,656 of RSUs outstanding were vested. Of these vested RSUs, 120,824 were converted into an equal number of shares of the Company’s Class A common stock, and the remaining 20,832 were outstanding as of September 30, 2024, as the director elected to defer receipt.