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Stockholders Equity and StockBased Compensation
 12 Months Ended
Dec. 31, 2024
Stockholders Equity and StockBased Compensation  
Stockholders' Equity and Stock-Based Compensation

Note 8. Stockholders’ Equity and Stock-Based Compensation

 

At December 31, 2024, the Company had 18,783,912 common shares outstanding (including outstanding RSAs totaling 781,864 shares). Also outstanding were stock options relating to 464,940 shares of common stock (of which 445,275 stock options were vested), all totaling 19,248,852 shares of common stock and all common stock equivalents, outstanding as of December 31, 2024.

 

At December 31, 2023, the Company had 13,698,274 common shares outstanding (including outstanding RSAs totaling 557,688 shares). Also outstanding were stock options relating to 510,787 shares of common stock (of which 498,177 stock options were vested), all totaling 14,209,061 shares of common stock and all common stock equivalents, outstanding at December 31, 2023.

  

Common Stock Equity Offerings

 

At-the-Market (ATM) Offerings

 

On May 28, 2019, the Company entered into an at-the-market equity offering sales agreement with Stifel, Nicolaus & Company, Incorporated (Stifel), which was amended on April 9, 2021 and May 8, 2024 (the ATM Agreement), pursuant to which the Company may issue and sell shares of its common stock from time to time through Stifel as the Company’s sales agent. Under this amended agreement, the Company pays Stifel a commission equal to 3.0% of the aggregate gross proceeds of any sales of common stock under the agreement. The offering of common stock pursuant to this agreement can be terminated with 10 days written notice by either party. Sales of the Company’s common stock through Stifel, if any, will be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933.

 

The Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (SEC) on March 29, 2024, registering the sale of up to $75.0 million of the Company’s securities that was declared effective on April 19, 2024. On May 10, 2024, the Company filed a prospectus supplement, which was further supplemented on July 19, 2024 and August 9, 2024 (collectively, the “First Prospectus Supplement”), pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to $12.6 million from time to time through the ATM. The Company exhausted all sales under the First Prospectus Supplement. On November 22, 2024, the Company filed a prospectus supplement (the “Second Prospectus Supplement”) to which the Company may offer and sell shares of common stock having an aggregate offering price of up to $45.0 million from time to time through the ATM.

 

The Company records its ATM sales on a settlement date basis. The Company sold 4,547,207 shares under the ATM for the year ended December 31, 2024 resulting in net proceeds of $21.4 million (stock issuance costs were $1.1 million). The Company sold 1,492,148 shares under the ATM for the year ended December 31, 2023 resulting in net proceeds of $6.4 million (stock issuance costs were $0.4 million).

 

Stock-Based Compensation

 

Amendment to 2020 Omnibus Incentive Plan

 

On March 9, 2020, the Board of Directors adopted the Company’s 2020 Omnibus Incentive Plan (2020 Plan). On September 3, 2020, the shareholders approved the 2020 Plan to authorize grants of the following types of awards: (a) Options, (b) Stock Appreciation Rights, (c) Restricted Stock and Restricted Stock Units, and (d) Other Stock-Based and Cash-Based Awards.

 

On February 27, 2024, the Board of Directors approved an increase of 700,000 shares to the authorized number of shares under the 2020 Plan, increasing the total authorized number of shares from 1,800,000 shares to 2,500,000 shares. This increase was approved by the stockholders at the shareholders’ annual meeting on April 19, 2024. The total number of shares of common stock available for issuance under the 2020 Plan was 2,500,000 shares with 1,073,914 shares available for future issuance at December 31, 2024.

Stock Options

 

Stock options issued to the Company’s employees, directors and consultants are summarized as follows for the year ended December 31, 2024:

 

 

 

Number of Options

 

 

Weighted Average Exercise Price

 

 

Weighted-

Average

Remaining

Contractual

Term (Years)

 

 

Aggregate

Intrinsic

Value

 

Outstanding, December 31, 2023

 

 

510,787

 

 

$17.88

 

 

 

3.84

 

 

$—

 

Granted

 

 

71,330

 

 

 

2.91

 

 

 

 

 

 

 

—

 

Exercised

 

 

(10,974 )

 

 

3.82

 

 

 

 

 

 

 

60,102

 

Forfeited

 

 

(71,448 )

 

 

21.89

 

 

 

 

 

 

 

—

 

Expired

 

 

(34,755 )

 

 

5.33

 

 

 

 

 

 

 

—

 

Outstanding, December 31, 2024

 

 

464,940

 

 

$16.24

 

 

 

3.07

 

 

$184,818

 

Vested and expected to vest, December 31, 2024

 

 

464,940

 

 

$16.24

 

 

 

3.07

 

 

$184,818

 

Options exercisable, December 31, 2024

 

 

445,275

 

 

$16.81

 

 

 

2.80

 

 

$153,803

 

  

During the year ended December 31, 2024, the Company received approximately $42,000 of net proceeds from the exercise of 10,974 stock options.

 

During the year ended December 31, 2024, the Company issued 71,330 stock options to two consultants. These options were assigned a fair value of $1.19 per share (total fair value of $85,000). During the year ended December 31, 2023, the Company issued 35,482 stock options to two consultants. These options were assigned a fair value of $1.77 per share (total fair value of $42,800). The weighted-average grant-date fair value per share of the stock options granted for the years ended December 31, 2024 and 2023, was $2.91 and $4.58, respectively.

 

The fair value was determined using the Black-Scholes pricing model. For expected volatility, the Company concluded that the historical volatility over the option’s expected holding term provided the most reasonable basis for this estimate. For the risk-free interest rate, the Company used U.S. Treasury Note rates, which mature at approximately the same time as the option’s expected holding term or option life determined by using the simplified method. The Company recognized forfeitures of equity-based awards as a reduction to compensation costs in the period in which they occur.

 

The following assumptions were used in the Black-Scholes pricing model to determine the fair value of stock options granted during the years ended December 31, 2024 and 2023:

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Expected volatility

 

75.36%-92.89%

 

 

68.13%-95.70%

 

Risk free interest rate

 

3.76%-4.54%

 

 

4.21%-5.12%

 

Dividend yield rate

 

 

—

 

 

 

—

 

Expected life

 

2 - 6 years

 

 

1 - 6 years

 

Closing price per share - common stock

 

$2.49 - $2.62

 

 

$4.31 - $4.35

 

 

The intrinsic value is calculated as the difference between the fair value of the Company's common stock and the exercise price of the stock options. The fair value of the Company's common stock was $4.73 and $3.21 per share at December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, total unrecognized compensation cost related to option awards was $41,600, which is expected to be recognized over a remaining weighted-average vesting period of 2.06 years.

Common Stock

 

Consultants’ Stock Issuances

 

For the year ended December 31, 2024 and 2023, the Company issued 18,201 shares (with stock prices ranging from $3.00 to $4.00 per share with a weighted average stock price of $3.30 per share) and 13,325 shares (with stock prices ranging from $4.00 to $5.82 per share) of common stock, respectively, to its investor relations firm for services provided during the period, recorded to general and administrative expenses. These shares vested immediately upon issuance. The expense recorded for these share issuances was $15,000 for each quarter with a weighted average grant date fair value of $3.30 per share in 2024 and $4.50 per share in 2023, respectively. The shares were valued based on the closing market price of the Company’s common stock on the date of grant.

 

On August 19, 2024, the Board of Directors approved an equity grant valued at $180,000 to a consulting and investment research firm, for corporate advisory services to be provided over a twelve-month period, and preparation and dissemination of a report regarding the Company, which resulted in issuing the consultant 71,713 shares of common stock on the grant date, valued at $2.51 per share. These shares vested immediately upon issuance and are not forfeitable. The compensation cost of $180,000 is recognized on a straight-line basis over the requisite service period. Approximately $66,000 was recorded as consulting expense for the year ended December 31, 2024.

 

As of December 31, 2024, the unrecognized compensation cost of approximately $114,000 was recorded under Prepaid expenses and other current assets on the accompanying consolidated balance sheet, which is expected to be recognized over a remaining service period of 0.6 years.

 

Director Compensation – Equity-Settled Awards 

 

On December 4, 2024, the Board of Directors approved an equity grant valued at $500,000 in total to its five directors for the service period and year ended December 31, 2024, which resulted in granting a total of 85,915 shares of common stock, valued on the grant date at $5.82 per share, with a scheduled share release date on January 2, 2025. On November 20, 2023, the Board of Directors approved an equity grant valued at $240,000 in total to its six directors for the service period and year ended December 31, 2023, which resulted in granting a total of 60,456 shares of common stock, valued on the grant date at $3.97 per share, with the shares issued in January 2024.

 

As a result, the fair value of the stock awards was measured on the grant date and recorded as an increase to stock-based compensation expense and additional paid-in capital in 2024. The fair value of the shares granted was determined based on the closing market price of the Company's common stock on the grant date.

 

Restricted Stock Awards

 

The following summarizes the Company’s restricted stock award activity and the RSA outstanding:

 

 

 

Number of

Shares

 

 

Weighted-

Average

Grant Date

Fair Value

 

 

Aggregate

Intrinsic

Value

 

Outstanding, December 31, 2023

 

 

557,688

 

 

$4.95

 

 

$1,790,178

 

Awards granted

 

 

484,269

 

 

 

5.82

 

 

 

2,818,446

 

Awards vested

 

 

(253,425 )

 

 

5.72

 

 

 

1,430,838

 

Awards forfeited

 

 

(6,668 )

 

 

10.69

 

 

 

82,083

 

Outstanding, December 31, 2024

 

 

781,864

 

 

 

5.19

 

 

 

3,698,217

 

The intrinsic value was calculated as the fair value of the Company's common stock. The fair value of the Company's common stock was $4.73 and $3.21 per share at December 31, 2024 and 2023, respectively. The fair value of the RSAs vested in 2024 and 2023 was $1.4 million and $0.6 million, respectively.

 

As of December 31, 2024, all the outstanding restricted stock awards are unvested. As of December 31, 2024, total unrecognized compensation cost related to restricted stock awards was $3.9 million, which is expected to be recognized over a remaining weighted-average vesting period of 2.50 years.

 

2024 Transactions

 

In 2024, a total of 253,425 RSAs vested. These RSAs vest annually with a three-year straight line vesting period. The Company withheld 100,514 shares to make payments for withholding taxes of $0.4 million on these vested shares, resulting in the issuance of 152,911 net shares to its employees and consultants. The common shares withheld became available for reissuance under the 2020 Plan.

 

On December 4, 2024, the Board of Directors approved an RSA equity grant of approximately $2.8 million, which equated to 484,269 RSAs granted to all of its employees and two consultants, valued at the closing market price of the Company’s stock on the grant date of $5.82 per share. These RSAs awards vest annually in three equal installments on the grant date anniversary.

 

2023 Transactions

 

On May 3, 2023, the Board of Directors approved a RSA equity grant valued at $120,000 to one new officer of the Company, which resulted in the issuance of a total of 35,088 shares of common stock to the new officer, valued on the grant date at $3.42 per share and issued on May 3, 2023. These RSAs vest annually in equal installments over three years. These 35,088 shares were included in the total outstanding common shares at December 31, 2023 and compensation expense will be recognized straight line over the three-year vesting period.

 

On November 20, 2023, the Board of Directors approved a RSA equity grant of approximately $1.1 million, which equated to 266,011 RSAs granted to all of its employees and two consultants, valued at the closing market price of the Company’s stock on the grant date of $3.97 per share. These RSAs awards vest annually in three equal installments on the grant date anniversary.

 

In 2023, a total of 159,727 RSAs vested. These RSAs vest annually with a three-year straight line vesting period. The Company withheld 60,600 shares to make payments for withholding taxes of $0.2 million on these vested shares, resulting in the issuance of 99,127 net shares to its employees and consultants. The common shares withheld became available for reissuance under the 2020 Plan.

 

RSA Summary – 2024 and 2023

 

As of December 31, 2024 and 2023, there were 781,864 shares and 557,688 shares of RSAs included in the total issued and outstanding common stock, respectively. The weighted-average grant-date fair value per share of RSAs granted for the years ended December 31, 2024 and 2023, was $5.82 and $3.91, respectively. Compensation expense is recognized in a straight line over the three-year vesting period. A total of $1.4 million and $1.2 million of compensation expense was recorded for the years ended December 31, 2024 and 2023, respectively, for the RSAs.

 

Stock-Based Compensation Expense

 

Total non-cash stock-based compensation expense recorded related to options granted and restricted stock awards included in the Company’s consolidated statements of operations for the years ended December 31, 2024 and 2023 are as follows (rounded in millions):

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Research and development expenses

 

$0.3

 

 

$0.2

 

General and administrative expenses

 

 

1.7

 

 

 

1.1

 

Total stock-based compensation expense

 

$2.0

 

 

$1.3