Annual report [Section 13 and 15(d), not S-K Item 405]

Stock-Based Compensation

v3.25.0.1
Stock-Based Compensation
 12 Months Ended
Dec. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
The Company grants stock-based awards under its 2024 Incentive Stock Plan (the “2024 Plan”). The shares issued as a result of stock-based compensation transactions generally have been funded with the issuance of new shares of the Company’s common stock.

The Company may grant the following types of incentive awards under the 2024 Plan: (i) non-qualified stock options; (ii) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; and (v) restricted stock units. Each award granted under the 2024 Plan is subject to an award agreement that incorporates, as applicable, the exercise price, the term of the award, the periods of restriction, the number of shares to which the award pertains, and such other terms and conditions as the plan committee determines. Awards granted under the 2024 Plan are classified as equity awards, which are recorded in stockholders’ equity in the Company’s consolidated balance sheets. Through December 31, 2024, the Company has granted under the 2024 Plan (i) non-qualified stock options; (ii) incentive stock options; and (iii) restricted stock. There were no stock appreciation rights and restricted stock units granted under the 2024 Plan as of December 31, 2024.
Stock Options
The Company’s closing price on the date of grant is the basis of fair value of its common stock used in determining the value of share-based awards. To the extent the value of the Company’s share-based awards involves a measure of volatility, the Company uses available historical volatility of the Company’s common stock over a period of time corresponding to the expected stock option term. The Company uses the simplified method to calculate the expected term of stock option grants to employees as the Company does not have sufficient comparable historical exercise data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees. Accordingly, the expected life of the options granted is based on the average of the vesting term, which is generally four years and the contractual term, which is generally ten years. The Company will continue to evaluate the appropriateness of utilizing such method. The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected stock option term. Forfeitures are estimated based on historical and forecasted turnover, which is approximately 5%.
The Company did not grant options during the year ended December 31, 2023. The Company has computed the fair value of all options granted using the Black-Scholes-Merton model during the year ended December 31, 2024, using the following assumptions:
Year Ended December 31,
2024
Expected volatility 64%
Expected dividends None
Expected term (years) 6.25
Risk-free rate 3.86%
The information below summarizes the stock options activity:
Number of
Shares		 Weighted
Average
Exercise
Price		 Weighted
Average
Remaining
Contractual Life		 Aggregate Intrinsic Value
Outstanding at December 31, 2022
 531,923  $ 9.2  4.7 $ 3,797,904 
Granted at market price — 
Exercised (25,623) 7.90  $ 205,191 
Expired (12,591) 13.07 
Cancelled (7,375) 28.58 
Outstanding at December 31, 2023
 486,334  $ 8.88  3.7 $ 1,903,699 
Granted at market price 38,059  10.51 
Exercised (227,952) 4.08  $ 1,435,074 
Expired (9,201) 26.52 
Cancelled (5,263) 41.18 
Outstanding at December 31, 2024
 281,977  $ 11.80  3.26 $ 777,566 
Exercisable at December 31, 2024
 239,901  $ 11.39  2.18 $ 777,566 
Vested and expected to vest at December 31, 2024
 277,773  $ 11.81  3.16 $ 777,566 

The weighted-average grant-date fair value of the Company’s stock options granted during the year ended December 31, 2024 was $6.21. The Company did not grant any options during the year ended December 31, 2023.

The aggregate fair value of the Company’s stock options vested during 2024 and 2023 was $318,633 and $407,166, respectively.
The Company recognizes compensation costs ratably over the period of service using the straight-line method. Forfeitures are estimated based on historical and forecasted turnover, which is approximately 5%. For the years ended December 31, 2024 and 2023, stock-based compensation expense for stock options was $141,094 and $322,574, respectively.
Unrecognized stock-based compensation expense for stock options as of December 31, 2024 was $249,983, which is expected to be recognized ratably over the next 3.45 years.
Restricted Stock
Restricted stock awards granted to employees generally vest in four equal annual installments, although on May 25, 2023, the Company granted 51,401 shares of restricted stock as part of a special award to certain high performing employees that vest in one installment on the first anniversary of the grant. Restricted stock awards granted to non-employee directors vest on the earlier of (i) one year from the grant date and (ii) the date of the next annual meeting of the shareholders of the Company occurring after the date of grant.
The information below summaries the restricted stock activity:
Restricted Stock Awards Shares Weighted Average Grant-Date Fair Value per Award
Non-vested at December 31, 2022
 70,312  $ 29.05 
Granted 204,122  14.54 
Vested (33,869) 22.06 
Cancelled (8,664) 28.46 
Non-vested at December 31, 2023
 231,901  17.32 
Granted 285,656  9.95 
Vested (107,103) 16.17 
Cancelled (104,472) 14.05 
Non-vested at December 31, 2024
 305,982  $ 11.97 
For the years ended December 31, 2024 and 2023, stock-based compensation expense for restricted stock was $1,537,911 and $1,415,108, respectively. Unrecognized stock-based compensation expense for restricted stock awards as of December 31, 2024 was $2,637,153 to be recognized ratably over 2.73 years.
Tax Benefits
Net (loss) income for 2024 and 2023 included pre-tax expense related to stock-based compensation of $1.7 million and $1.7 million, respectively. The Company recognized federal income tax benefits of $0.1 million and zero from the exercises of stock options and restricted stock awards for 2024 and 2023, respectively.