Note 13 - Equity Incentive Plans

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(13) EQUITY INCENTIVE PLANS:

On August 29, 2019, the Company’s stockholders approved the Company’s  2019 Omnibus Equity Incentive Plan at a special meeting of stockholders (the “2019 Plan”). The 2019 Plan provides for the issuance of up to 68,437 shares of common stock pursuant to the grant of shares of common stock, stock options or other awards, to employees, officers or directors of, and consultants to, the Company and its subsidiary. Options granted under the Incentive Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. As of December 31, 2022, we had awarded 68,437 shares of common stock as awards under the 2019 Plan, with no shares of common stock remaining available for future awards under the 2019 Plan.

On June 24, 2021, the Company’s stockholders approved the Company’s 2021 Equity Incentive Plan at its annual meeting of stockholders (the “2021 Plan”). The 2021 Plan provides for the issuance of up to 3,000,000 shares of common stock pursuant to the grant of shares of common stock, stock options or other awards, to employees, officers or directors of, and consultants to, the Company and its subsidiary. Options granted under the Incentive Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. During the year ended December 31, 2021 we awarded 17,053 shares of common stock and granted 222,700 stock options under the 2021 plan. During the year ended December 31, 2022, we had awarded 77,979 shares of common stock and granted 226,746 stock options under the 2021 Plan, and 23,800 options were forfeited, with 2,479,322 shares of common stock remaining available for future awards.

The Company uses the Black-Scholes valuation model to estimate the fair value of stock options at grant date. This valuation model uses the option exercise price as well as estimates and assumptions related to the expected price volatility of the Company’s stock, the rate of return on risk-free investments, the expected period during which the options will be outstanding, and the expected dividend yield for the Company’s common stock to estimate the fair value of a stock option at the date of grant. The valuation assumptions were determined as follows:

● Expected stock price volatility: There is a limited market for the Company’s common stock providing a basis to estimate the expected volatility of the Company’s stock prices for the purpose of valuing stock options granted. Alternatively, the Company uses the historical volatility of certain publicly traded companies that represents the primary industry sector within which the Company operates.

● Risk-free interest rate: The Company bases the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term.

● Expected term of options: The expected term of options represents the period of time options are expected to be outstanding.

● Expected annual dividends: The estimate for annual dividends is $0 because the Company has not historically paid and does not intend to pay dividends in the foreseeable future.

Share-based compensation expense is recorded on a straight-line basis over the requisite service period, which is generally the vesting period.

(13) EQUITY INCENTIVE PLANS: (CONTINUED)

The following table summarizes weighted-average assumptions used in our calculations of fair value for the years ended  December 31, 2022 and 2021:

	2022					​2021
Dividend yield				-	%				-	%
Expected volatility		90.5	–	92.3	%		91.5	–	92.7	%
Risk-free interest rate		1.83	–	2.76	%				0.43	%
Expected lives (years)		5	-	6.25			5	-	6.25

The weighted-average fair value of options granted during the year ended December 31, 2022, as determined under the Black-Scholes valuation model, was $1.60 - $2.47 per share. The weighted-average fair value of options granted during the year ended December 31, 2021, as determined under the Black-Scholes valuation model, was $5.28 and $5.64 per share.

The following is a summary of the stock option activity for the years ended December 31, 2022 and 2021:

				Weighted				Weighted
				Average		Aggregate		Average
				Exercise		Intrinsic		Remaining
	Shares			Price		Value		Contractual Life
Stock options outstanding at December 31, 2020		-		$	-	$	-
Granted		222,700			7.45		3,094
Exercised		-			-	$	-
Forfeited/Expired		-			-		-
Stock options outstanding at December 31, 2021		222,700			7.45	$	3,094		9.7
Granted		226,746			3.18
Exercised		(-	)		-	$	-
Expired		(-	)
Forfeited		(23,800	)		7.45		-
Stock options outstanding at December 31, 2022		425,646		$	5.17	$	-		8.9
Stock options exercisable at December 31, 2022		150,495		$	5.81	$	-		8.9

Unrecognized compensation expense related to unvested stock options was $1,000,914 as of December 31, 2022, which is expected to be recognized over a weighted-average period of 8.9 years and will be adjusted for forfeitures as they occur.