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STOCKHOLDERS’ EQUITY (DEFICIT)
 6 Months Ended
Jun. 30, 2025
Equity [Abstract]  
STOCKHOLDERS’ EQUITY (DEFICIT)

NOTE 7 – 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 June 30, 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. Refer to Note 13-Subsequent Events for sales of common stock under the ATM Sales Agreement subsequent to June 30, 2025.

 

Options and Warrants

 

During the six months ended June 30, 2025, the Company issued an aggregate of 106,258 shares of common stock related to the cashless exercise of options.

 

During the six months ended June 30, 2025, the Company issued an aggregate of 390,115 shares of common stock related to the cashless exercise of warrants.

 

Common Stock

 

Common Stock Transactions During the Six Months Ended June 30, 2025

 

During the six months ended June 30, 2025, the Company issued an aggregate of 1,628,904 shares of common stock for service, including vested restricted stock.

 

On May 29, 2025, Avenue converted $1 million of the principal amount of the outstanding term loans into shares of the Company’s common stock. This resulted in 672,042 shares of common stock issued to Avenue.

 

During the six months ended June 30, 2025, the Company issued an aggregate of 50,000 shares of common stock related to the OHHMD APA.

 

Non-controlling Interest

 

Net income attributed to non-controlling interest amounted to approximately $505 thousand and $39 thousand for the three months ended June 30, 2025 and 2024, respectively. During the three months ended June 30, 2025 and 2024, the Company paid distributions to non-controlling interest holders of $276 thousand and $36 thousand, respectively. Net income attributed to the non-controlling interest amounted to $1 million and $158 thousand for the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025 and 2024, the Company paid distributions to non-controlling shareholders of $312 thousand and $72 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. Dividends declared and paid on the Series A Preferred Stock during the six months ended June 30, 2025 are as follows: (1) quarterly dividend declared on March 25, 2025 to holders of record as of April 4, 2025, which was paid on April 15, 2025, and (2) quarterly dividend declared on June 23, 2025 to holders of record as of July 3, 2025 which was paid on July 15, 2025. Dividends declared and paid on the Series A Preferred Stock during the six months ended June 30, 2024 are as follows: (1) quarterly dividend declared on March 26, 2024 to holders of record as of April 5, 2024, which was paid on April 15, 2024, and (2) quarterly dividend declared on June 25, 2024 to holders of record as of July 5, 2024 which was paid on July 15, 2024. The dividends are included in the Company’s results of operations for the three and six months ended June 30, 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 June 30, 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 1,075,844 shares as of June 30, 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 six months ended June 30, 2025:

 

   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   (10,500)    4.97    1.33 years    4.97 
Cancelled/Forfeited/Expired   (220,000)    7.07 – 10.93    6.09 years    9.18 
Balance at June 30, 2025   285,167   $ 1.84 – 13.74    3.05 years   $7.70 
                      
Exercisable at December 31, 2024   504,787   $ 1.84 – 13.74    4.84 years   $8.39 
Exercisable at June 30, 2025   284,634   $ 1.84 – 13.74    3.06 years   $7.71 

 

 

Total compensation expense under the Amended 2020 Plan options above was approximately $21 thousand and $397 thousand for the three months ended June 30, 2025 and 2024, respectively, with unamortized expense remaining of $1 thousand as of June 30, 2025. Total compensation expense under the Amended 2020 Plan options above was approximately $29 thousand and $1.1 million for the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025, 10,500 options were exercised on a cashless basis, which resulted in 6,726 shares issued. As of June 30, 2025, aggregate intrinsic value of vested service-based options outstanding was $1.7 million.

 

The following is a summary of outstanding service-based options activity (prior to the establishment of our Amended 2020 Plan above) for the six months ended June 30, 2025:

 

   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    1.62 years    7.50 
Exercised   (170,000)    1.15 – 6.75    4.84 years    3.43 
Cancelled/Forfeited/Expired   (30,000)    7.50    4.87 years    7.50 
Balance at June 30, 2025   512,333   $ 1.00 – 11.98    3.18 years   $4.27 
                      
Exercisable December 31, 2024   682,333   $ 1.00 – 11.98    4.24 years   $4.06 
Exercisable at June 30, 2025   512,333   $ 1.00 – 11.98    3.18 years   $4.27 

 

The total fair value of the options granted during the three months ended June 30, 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 $0 and $49 thousand for the three months ended June 30, 2025 and 2024, respectively, with no unamortized expense remaining as of June 30, 2025. Total compensation expense under the above service-based option plan was $145 thousand and $241 thousand for the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025, 170,000 options were exercised on a cashless basis, which resulted in 99,532 shares issued. As of June 30, 2025, aggregate intrinsic value of vested service-based options outstanding was $4.8 million.

 

The following is a summary of outstanding performance-based options activity for the six months ended June 30, 2025:

 

    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 June 30, 2025     80,000     $ 1.25 – 1.75       2.13 years     $ 1.59  
                                 
Exercisable December 31, 2024     25,000     $ 1.75 – 2.50       1.40 years     $ 2.05  
Exercisable at June 30, 2025     15,000     $ 1.75       2.0 years     $ 1.75  

 

No compensation expense was recognized on the performance-based options above for the three and six months ended June 30, 2025 and 2024, as the performance terms have not been met or are not probable. As of June 30, 2025, aggregate intrinsic value of vested performance options outstanding was $178 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 six months ended June 30, 2025:

 

 

  

RSU Outstanding

Number of Shares

 
Balance at December 31, 2024   3,049,944 
Granted   1,240,000 
Vested   (1,468,610)
Cancelled/Forfeited   (5,000)
Balance at June 30, 2025   2,816,334 

 

The total fair value of the 1,240,000 RSUs and RSAs granted was $8.2 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 $2.1 million and $3.5 million for the three months ended June 30, 2025 and 2024, respectively, with unamortized expense remaining of approximately $10.0 million as of June 30, 2025. Total compensation expense under the Amended 2020 Plan RSUs and RSAs above was $4.4 million and $4.9 million for the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025, 1,468,610 RSUs and RSAs vested, of which 1,466,404 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 six months ended June 30, 2025:

 

 

  

RSU Outstanding

Number of Shares

 
Balance at December 31, 2024   300,000 
Granted   - 
Vested   (100,000)
Balance at June 30, 2025   200,000 

 

Total compensation expense for RSUs and RSAs outside of the Amended 2020 Plan was $0 and $255 thousand for the three months ended June 30, 2024, respectively, with no unamortized expense remaining as of June 30, 2025. Total compensation expense for RSUs and RSAs outside of the Amended 2020 Plan was $0 and $510 thousand for the six months ended June 30, 2025 and 2024, respectively. During the six months ended June 30, 2025, 162,500 RSUs and RSAs were issued, which included 100,000 RSUs and RSAs that vested during the six months ended June 30, 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 June 30, 2025:

 

   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   (437,984)    1.24 – 4.75    2.71 years    1.26 
Cancelled/Forfeited/Expired   -     -    -    - 
Balance at June 30, 2025   1,305,745   $ 1.24 – 12.00    1.98 years   $5.76 
                      
Exercisable December 31, 2024   1,743,730   $ 1.24 – 12.00    2.66 years   $4.63 
Exercisable June 30, 2025   1,305,745   $ 1.24 – 12.00    1.98 years   $5.76 

 

Total compensation expense on the above warrants for services was $0 for both the three and six months ended June 30, 2025 and 2024, with no unamortized expense remaining as of June 30, 2025. During the six months ended June 30, 2025, 437,984 warrants were exercised on a cashless basis, which resulted in 390,115 shares issued.

 

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 $2.1 million and $4.2 million for the three months ended June 30, 2025 and 2024, respectively. The total stock-based compensation expense related to common stock issued for services, service-based stock options, performance-based stock options, warrants and RSUs, and RSAs amounted to $4.6 million and $6.7 million for the six months ended June 30, 2025 and 2024, respectively. 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 $10.0 million as of June 30, 2025, which is expected to be recognized through 2028.