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STOCKHOLDERS’ EQUITY (DEFICIT) | 3 Months Ended
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Mar. 31, 2025
Equity [Abstract] |
STOCKHOLDERS’ EQUITY (DEFICIT) | NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT) The Company has authorized the issuance of up to 100,000,000 shares of common stock, $0.01 par value, and 5,000,000 shares of preferred stock, $0.0001 par value, of which 5,000 shares are designated as Series B Convertible Preferred Stock, 1,610,000 are designated as Series A Preferred Stock and 3,385,000 shares of preferred stock remain undesignated. The Company entered into the ATM Sales Agreement whereby the Company may offer and sell, from time to time, shares of common stock. On June 7, 2024, the Company filed the 2024 Shelf. Under the 2024 Shelf at the time of effectiveness, the Company had the ability to raise up to $150.0 million by selling common stock, preferred stock, debt securities, warrants, and units including $53.3 million of its common stock under the ATM Sales Agreement. As of March 31, 2025, the Company had $53.3 million available under the ATM Sales Agreement, which is part of the $150.0 million available under the 2024 Shelf. Options and Warrants During the three months ended March 31, 2025, the Company issued an aggregate of 56,139 shares of common stock related to the cashless exercise of options. Common Stock Common Stock Transactions During the Three Months Ended March 31, 2025 During the three months ended March 31, 2025, the Company issued an aggregate of 1,282,654 shares of common stock for service, including vested restricted stock. Non-controlling Interest Net income attributed to non-controlling interest amounted to approximately $532 thousand and $119 thousand for the three months ended March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025 and 2024, the Company paid distributions to non-controlling interest holders of $36 thousand and $36 thousand, respectively. Dividends The Company pays cumulative dividends on its Series A Preferred Stock, in the amount of $2.21875 per share each year, which is equivalent to 8.875% of the $25.00 liquidation preference per share. Dividends on the Series A Preferred Stock are payable quarterly in arrears, on or about the 15th day of January, April, July, and October of each year. During the three months ended March 31, 2025, the Company declared the dividend on March 25, 2025 to holders of record as of April 4, 2025 which was paid on April 15, 2025. During the three months ended March 31, 2024, the Company declared the dividend on March 26, 2024 to holders of record as of April 5, 2024 which was paid on April 15, 2024. The dividends are included in the Company’s results of operations for the three months ended March 31, 2025 and 2024. Stock Options On January 8, 2021, the Company approved the Company’s 2020 Equity and Incentive Plan (the “2020 Plan”). Approval of the 2020 Plan was included as Proposal 1 in the Company’s definitive proxy statement for its Special Meeting of Stockholders filed with the Securities and Exchange Commission on December 7, 2020. The 2020 Plan is administered by the Compensation Committee of the Board of Directors (the “Board”) and initially provided for the issuance of up to 1,500,000 shares of Common Stock. The number of shares of Common Stock available for issuance under the 2020 Plan automatically increases by 150,000 shares of Common Stock on January 1st of each year, for a period of not more than ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030. Awards under the 2020 Plan can be granted in the form of stock options, non-qualified and incentive options, stock appreciation rights, restricted stock, and restricted stock units. On June 24, 2021, at the Annual Meeting of Stockholders, the stockholders of the Company approved the amendment and restatement to the 2020 Plan, which amended the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares. On June 16, 2022, at the Annual Meeting of Stockholders, the stockholders of the Company approved the second amendment and restatement of the 2020 Plan, which amended the 2020 Plan to increase the maximum number of shares of the Company’s common stock available for issuance under the 2020 Plan by 1,500,000 shares. On June 14, 2024, at the Annual Meeting of Stockholders, the stockholders of the Company approved the third amendment and restatement to the 2020 Plan (the “Amended 2020 Plan”), which further amended the 2020 Plan by increasing the maximum number of shares of the Company’s common stock available for issuance under the Amended 2020 Plan by 3,000,000 shares. As of March 31, 2025, the Amended 2020 Plan provided for the issuance of up to 8,250,000 shares of Common Stock. Remaining authorization under the Amended 2020 Plan was 1,585,844 shares as of March 31, 2025. The forms of award agreements to be used in connection with awards made under the Amended 2020 Plan to the Company’s executive officers and non-employee directors are:
● | Form of Non-Qualified Option Agreement (Non-Employee Director Awards)
● | Form of Non-Qualified Option Agreement (Employee Awards); and
● | Form of Restricted Stock Award Agreement.
Previously, the Company had granted service-based stock options and performance-based stock options separate from the Amended 2020 Plan. The following is a summary of outstanding options activity under our Amended 2020 Plan for the three months ended March 31, 2025: SCHEDULE OF OPTION ACTIVITY
|  | Options Outstanding Number of Shares |  |  | Exercise Price per Share |  |  | Weighted Average Remaining Contractual Life |  |  | Weighted Average Exercise Price per Share |
Balance, December 31, 2024 |  |  | 515,667 |  |  | $ | 1.84 – 13.74 |  |  |  | 4.81 years |  |  | $ | 8.28 |
Granted |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Exercised |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Cancelled/Forfeited/Expired |  |  | (220,000 | ) |  |  | 7.07 – 10.93 |  |  |  | 6.34 years |  |  |  | 9.18 |
Balance at March 31, 2025 |  |  | 295,667 |  |  | $ | 1.84 – 13.74 |  |  |  | 3.24 years |  |  | $ | 7.61 |
Exercisable at December 31, 2024 |  |  | 504,787 |  |  | $ | 1.84 – 13.74 |  |  |  | 4.84 years |  |  | $ | 8.39 |
Exercisable at March 31, 2025 |  |  | 291,235 |  |  | $ | 1.84 – 13.74 |  |  |  | 3.24 years |  |  | $ | 7.67 |
Total compensation expense under the Amended 2020 Plan options above was approximately $7 thousand and $669 thousand for the three months ended March 31, 2025 and 2024, respectively, with unamortized expense remaining of $22 thousand as of March 31, 2025. As of March 31, 2025, aggregate intrinsic value of vested service-based options outstanding was $265 thousand. The following is a summary of outstanding service-based options activity (prior to the establishment of our Amended 2020 Plan above) for the three months ended March 31, 2025: SCHEDULE OF OPTION ACTIVITY
|  | Options Outstanding Number of Shares |  |  | Exercise Price per Share |  |  | Weighted Average Remaining Contractual Life |  |  | Weighted Average Exercise Price per Share |
Balance, December 31, 2024 |  |  | 682,333 |  |  | $ | 1.00 – 11.98 |  |  |  | 4.24 years |  |  | $ | 4.06 |
Granted |  |  | 30,000 |  |  |  | 7.50 |  |  |  | 1.87 years |  |  |  | 7.50 |
Exercised |  |  | (95,000 | ) |  |  | 1.15 – 5.00 |  |  |  | 4.85 years |  |  |  | 2.82 |
Cancelled/Forfeited/Expired |  |  | (30,000 | ) |  |  | 7.50 |  |  |  | 5.12 years |  |  |  | 7.50 |
Balance at March 31, 2025 |  |  | 587,333 |  |  | $ | 1.00 – 11.98 |  |  |  | 3.68 years |  |  | $ | 4.26 |
Exercisable December 31, 2024 |  |  | 682,333 |  |  | $ | 1.00 – 11.98 |  |  |  | 4.24 years |  |  | $ | 4.06 |
Exercisable at March 31, 2025 |  |  | 587,333 |  |  | $ | 1.00 – 11.98 |  |  |  | 3.68 years |  |  | $ | 4.26 |
The total fair value of the options granted during the three months ended March 31, 2025 was $163 thousand, which was determined using the Black-Scholes Pricing Model with the following assumptions: dividend yield of 0%, expected term of 5 years, volatility of 108.5%, and risk-free rate of 4.34%.Total compensation expense under the above service-based option plan was approximately $145 thousand and $192 thousand for the three months ended March 31, 2025 and 2024, respectively, with $0 unamortized expense remaining as of March 31, 2025. During the three months ended March 31, 2025, 95,000 options were exercised on a cashless basis, which resulted in 56,139 shares issued. As of March 31, 2025, aggregate intrinsic value of vested service-based options outstanding was $1.1 million. The following is a summary of outstanding performance-based options activity for the three months ended March 31, 2025: SCHEDULE OF OPTION ACTIVITY
|  | Options Outstanding Number of Shares |  |  | Exercise Price per Share |  |  | Weighted Average Remaining Contractual Life |  |  | Weighted Average Exercise Price per Share |
Balance at December 31, 2024 |  |  | 90,000 |  |  | $ | 1.25 – 2.50 |  |  |  | 2.30 years |  |  | $ | 1.69 |
Granted |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Cancelled/Forfeited/Expired |  |  | (10,000 | ) |  |  | 2.50 |  |  |  |  |  |  |  | 2.50 |
Balance at March 31, 2025 |  |  | 80,000 |  |  | $ | 1.25 – 1.75 |  |  |  | 2.38 years |  |  | $ | 1.59 |
Exercisable December 31, 2024 |  |  | 25,000 |  |  | $ | 1.75 – 2.50 |  |  |  | 1.40 years |  |  | $ | 2.05 |
Exercisable at March 31, 2025 |  |  | 15,000 |  |  | $ | 1.75 |  |  |  | 2.25 years |  |  | $ | 1.75 |
No compensation expense was recognized on the performance-based options above for the three months ended March 31, 2025 and 2024, as the performance terms have not been met or are not probable. As of March 31, 2025, aggregate intrinsic value of vested performance options outstanding was $55 thousand. RSUs and RSAs (under our Amended 2020 Plan) The following is a summary of outstanding RSUs and RSAs activity under our Amended 2020 Plan for the three months ended March 31, 2025: SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY
|  | RSU Outstanding Number of Shares |
Balance at December 31, 2024 |  |  | 3,049,944 |
Granted |  |  | 725,000 |
Vested |  |  | (1,213,166 | )
Cancelled/Forfeited |  |  | - |
Balance at March 31, 2025 |  |  | 2,561,778 |
The total fair value of the 725,000 RSUs and RSAs granted was $3.8 million which was determined using the fair value of the quoted market price on the date of grant. Total compensation expense under the Amended 2020 Plan RSUs and RSAs above was approximately $2.4 million and $1.4 million for the three months ended March 31, 2025 and 2024, respectively, with unamortized expense remaining of approximately $7.8 million as of March 31, 2025. During the three months ended March 31, 2025, 1,213,166 RSUs and RSAs vested, of which 1,120,154 RSUs and RSAs were issued. RSUs and RSAs (outside of our Amended 2020 Plan) The following is a summary of outstanding RSUs and RSAs activity (outside of our Amended 2020 Plan) for the three months ended March 31, 2025: SCHEDULE OF RESTRICTED STOCK UNIT ACTIVITY
|  | RSU Outstanding Number of Shares |
Balance at December 31, 2024 |  |  | 300,000 |
Granted |  |  | - |
Vested |  |  | (100,000 | )
Balance at March 31, 2025 |  |  | 200,000 |
No compensation expense for RSUs and RSAs outside of the Amended 2020 Plan was recognized for the three months ended March 31, 2025 compared to $255 thousand for the three months ended March 31, 2024, with no unamortized expense remaining as of March 31, 2025. During the three months ended March 31, 2025, 162,500 RSUs and RSAs were issued, which included 100,000 RSUs and RSAs that vested during the three months ended March 31, 2025 and 62,500 RSUs and RSAs that vested previously. Warrants The following is a summary of outstanding and exercisable warrants activity during the three months ended March 31, 2025: SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE
|  | Warrants Outstanding Number of Shares |  |  | Exercise Price per Share |  |  | Weighted Average Remaining Contractual Life |  |  | Weighted Average Exercise Price per Share |
Balance at December 31, 2024 |  |  | 1,743,730 |  |  | $ | 1.24 – 12.00 |  |  |  | 2.66 years |  |  | $ | 4.65 |
Exercised |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Cancelled/Forfeited/Expired |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Balance at March 31, 2025 |  |  | 1,743,730 |  |  | $ | 1.24 – 12.00 |  |  |  | 2.41 years |  |  | $ | 4.65 |
Exercisable December 31, 2024 |  |  | 1,743,730 |  |  | $ | 1.24 – 12.00 |  |  |  | 2.66 years |  |  | $ | 4.63 |
Exercisable March 31, 2025 |  |  | 1,743,730 |  |  | $ | 1.24 – 12.00 |  |  |  | 2.41 years |  |  | $ | 4.63 |
Total compensation expense on the above warrants for services was approximately $0 for both the three months ended March 31, 2025 and 2024, with no unamortized expense remaining as of March 31, 2025. Stock-based Compensation The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants, RSUs and RSAs amounted to approximately $2.5 million for both the three months ended March 31, 2025 and 2024. Such amounts are included in general and administrative expenses in the unaudited condensed consolidated statement of operations. Unamortized expense remaining related to service-based stock options, performance-based stock options, warrants, RSUs and RSAs was approximately $7.8 million as of March 31, 2025, which is expected to be recognized through 2028.

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