v3.26.1
Common Stock
 12 Months Ended
Dec. 31, 2025
Common Stock  
Common Stock

Note 10:  Common Stock

 

As of December 31, 2025, there were outstanding $575,000 principal amount of Notes of which $425,000 are convertible into Common Stock at $0.50 per share and warrants to purchase 625,000 shares with an exercise price of $0.10 per share.  During 2022, the maturity of all of those Notes were extended except for two Notes in the principal amount of $150,000 to May 31, 2025 and $425,000 in principal amount of Notes which was extended to May 31, 2025 or the repayment of the Corbel Note, whichever is later.  The Notes that were not extended matured, and accompanying Warrants expired, but cannot be repaid until the Senior Note is repaid.  The Company issued to Corbel the Original Corbel Warrant to purchase up to 2,250,000 shares of Common Stock, as described in Note 5 of these notes to the Company’s consolidated financial statements.

 

The Company has an incentive stock option plan for key employees, officers and directors.  The options are generally exercisable three years after the date of grant and expire ten years after the date of grant.  The exercise prices equaled the fair market value of the stock at the date of grant. As of December 31, 2025, options for 3,973,834 shares were outstanding.

The Company adopted the modified prospective method to account for stock option grants, which does not require restatement of prior periods. Under the modified prospective method, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption, net of an estimate of expected forfeitures. Compensation expense is based on the estimated fair values of stock options determined on the date of grant and is recognized over the related vesting period, net of an estimate of expected forfeitures which is based on historical experience.   

 

The Company estimates the fair value of its option awards on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based on external data while all other assumptions are determined based on the Company’s historical experience with stock options.  The following assumptions were used for grants in 2025:

 

Expected volatility

 

 

20%
Expected dividend yield

 

 None

 

Expected term (in years)

 

 

3

 

Risk-free interest rate

 

 

3.82%

 

The following table sets forth the number of shares subject to options outstanding as of December 31, 2023, 2024 and 2025  and the number of shares subject to options granted, exercised or forfeited and/or expired during the years ended December 31, 2024 and 2025:

 

Balance of employee stock options outstanding as of 12/31/23

 

 

3,397,500

 

Stock options granted during the year ended 12/31/24

 

 

919,334

 

Stock options exercised during the year ended 12/31/24

 

 

0

 

Stock options forfeited/expired during the year ended 12/31/24

 

 

(245,500)

Balance of employee stock options outstanding as of 12/31/24

 

 

4,071,334

 

Stock options granted during the year ended 12/31/25

 

 

555,000

 

Stock options exercised during the year ended 12/31/25

 

 

0

 

Stock options forfeited/expired during the year ended 12/31/25

 

 

(652,500)

Balance of employee stock options outstanding as of 12/31/25

 

 

3,973,834

 

 

The following table sets forth the number of shares subject to non-vested options outstanding as of December 31, 2023, 2024 and 2025, and the number of shares subject to stock options granted, vested and forfeited and/or expired during the years ended December 31, 2024 and 2025.

 

Balance of employee non-vested stock options outstanding as of 12/31/23

 

 

560,999

 

Stock options granted during the year ended 12/31/24

 

 

919,334

 

Stock options vested during the year ended 12/31/24

 

 

(315,166)

Stock options forfeited/expired during the year ended 12/31/24

 

 

(245,500)

Balance of employee non-vested stock options outstanding as of 12/31/24

 

 

919,667

 

Stock options granted during the year ended 12/31/25

 

 

555,000

 

Stock options vested during the year ended 12/31/25

 

 

(464,567)

Stock options forfeited/expired during the year ended 12/31/25

 

 

(652,500)

Balance of employee non-vested stock options outstanding as of 12/31/25

 

 

357,600

 

 

The weighted average grant date exercise price of employee stock options granted during 2025 was $0.18.  Total compensation cost recognized for share-based payment arrangements was $27,652 in 2024 with a tax benefit of $6,636 and was $43,363 in 2025 with a tax benefit of $10,407.  As of December 31, 2025, total unamortized compensation cost related to options was $78,007, which will be recognized as compensation cost over the next six to 36 months.  No cash was used to settle equity instruments under share-based payment arrangements.