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Subsequent Events
 12 Months Ended
Dec. 31, 2024
Subsequent Events [Abstract]  
Subsequent Events

Note 13 - Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date but before the consolidated financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements other than disclosed.

 

ATM Sales

 

During the period from January 1, 2025 to March 17, 2025, the Company sold a total of 33,352 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $69,000 at an average selling price of $2.08 per share, resulting in net proceeds of approximately $67,000 after deducting commissions and other transaction costs.

 

Payment of 2024 Performance Bonuses

 

On January 1, 2025, the Company issued 329,110 shares of common stock to officers and employees as part of the payment of accrued bonus compensation for the year ended December 31, 2024. The total fair value of the shares issued was approximately $813,000 based on the Company’s closing stock price on the issuance date. Of the shares issued, 33,731 shares were returned to net settle the issuance and pay related taxes, resulting in a net share issuance of 295,379 shares of common stock.

 

In addition to the stock issuance, the Company paid approximately $221,000 in cash bonuses to officers and employees, consistent with the terms of the 2024 Annual Incentive Plan.

 

As part of the payment of accrued bonus compensation for the year ended December 31, 2024, the Company also issued 1,312,068 options to employees and officers. The options were granted under the Company’s 2021 Equity Incentive Plan with an expiration term of 7 years.

 

The fair value of the options was estimated at approximately $2,872,000 using the Black-Scholes valuation model with the following assumptions:

Assumption  Value 
Exercise Price  $2.47 
Expected Stock Price Volatility   113.88%
Risk-Free Interest Rate   4.16%
Expiration Term (Years)   7.00 
Dividend Yield   0.00%

 

The total compensation expense associated with the 2024 performance bonuses was accrued as of December 31, 2024, in accordance with ASC 718 – Share-Based Compensation and ASC 710 – Compensation. The settlement of the bonuses in 2025 via a combination of cash, shares, and options aligns with the terms of the 2024 Annual Incentive Plan. There is no additional financial impact in 2025 related to the settlement, as the full expense was recognized in 2024.

 

 

LTI RSU Issuance

 

On January 1, 2025, the Board approved the grant of 150,000 RSUs under the Company’s Long-Term Incentive Plan (“LTI”) to a non-officer employee. These RSUs are subject to both market capitalization and time-based vesting conditions.

 

The RSUs vest in three equal tranches of 50,000 RSUs each, based on the Company achieving and sustaining specific market capitalization thresholds for 30 consecutive days on or before December 31, 2026, as follows:

Market Cap Vesting Thresholds  

$ 100

million

    

$ 150

million

    

$ 300

million

  
  50,000       50,000       50,000  

 

Any RSUs for which the market capitalization condition is not met by December 31, 2026, will expire.

 

For any tranche in which the market capitalization condition is achieved, the RSUs remain subject to a time-based vesting schedule, with 20% of eligible RSUs vesting annually over five years, beginning on each December 31, 2025 through 2029, provided the grantee remains in continuous service through each vesting date.

 

The fair value of these market-based RSUs was determined using a Monte Carlo simulation. The following assumptions were used to determine fair value as of the grant date, January 1, 2025:

    January 1, 2025  
Vesting Hurdle Price   $ 5.26 - $15.79  
Term (years)     2.00  
Expected stock price volatility     92.70 %
Risk-free rate of interest     4.25 %

 

The Company will recognize compensation expense for these RSUs over the requisite service period, subject to acceleration upon meeting the market capitalization criteria.

 

Accelerated Vesting of RSUs and Conversion to Restricted Common Stock

 

On January 13, 2025, the vesting of 1,170,834 RSUs was accelerated and converted into restricted shares of Common Stock issued to executive officers and employees. As a portion of these RSUs was eligible for the Series V share dividend, an additional 1,020,834 restricted shares of Series V preferred stock were issued.

 

The newly issued restricted shares of Common Stock and Series V preferred stock retain their original market capitalization-based vesting conditions, as well as their time-based vesting schedules, which range from one to five years.