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Note 7 - Stockholders' Equity and Stock-based Compensation

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Shareholders' Equity and Share-Based Payments [Text Block]

7. Stockholders' Equity and Stock-Based Compensation

Preferred Stock

The Company’s Board of Directors (the “Board”) has the authority to issue preferred stock in one or more series and to fix the rights, preferences, privileges, restrictions and the number of shares constituting any series or the designation of the series.

Common Stock Warrant Distribution

See Notes 2 and 13 regarding the distribution of common stock warrants on January 3, 2024.

At the Market (ATM) Common Stock Issuance

On November 12, 2025, we entered into an at-the-market offering program (ATM) to sell, from time to time, shares of our common stock having an aggregate offering price of up to $50 million in common stock in transactions pursuant to a shelf registration statement that was declared effective by the U.S. Securities and Exchange Commission (the SEC) on December 5, 2025. We are obligated to pay a commission of up to 3.0% of the gross proceeds from the sale of shares of common stock in the offering. We are not obligated to sell any shares in the offering.

There were no common stock sales under the ATM during the year ended December 31, 2025.

2008 Equity Incentive Plan

Under the Company’s 2008 Equity Incentive Plan, or 2008 Equity Plan, its employees, directors and consultants received share-based awards, including grants of stock options and performance awards. The 2008 Equity Plan expired in December 2017. Share-based awards generally expire ten years from the date of grant.

2018 Equity Incentive Plan

The Company’s Board or a designated committee of the Board is responsible for administration of the Company’s 2018 Omnibus Incentive Plan, as amended May 2022 (the “2018 Plan”) and determines the terms and conditions of each option granted, consistent with the terms of the 2018 Plan. The Company’s employees, directors, and consultants are eligible to receive awards under the 2018 Plan, including grants of stock options and performance awards. Share-based awards generally expire 10 years from the date of grant. The 2018 Plan, as amended in May 2022, provides for issuance of up to 5,000,000 shares of common stock, par value $0.001 per share, subject to adjustment as provided in the 2018 Plan.

When stock options or performance awards are exercised net of the exercise price and taxes, the number of shares of stock issued is reduced by the number of shares equal to the amount of taxes owed by the award recipient and that number of shares are cancelled. The Company then uses its cash to pay tax authorities the amount of statutory taxes owed by and on behalf of the award recipient.

Stock Options

The following summarizes information about stock option activity during 2025:

						*Weighted Average*				*Weighted Average*
		*Number of*				*Weighted Average*				*Remaining Contractual*				*Aggregate Intrinsic Value*
		*Options*				*Exercise Price*				*Term in Years*

Outstanding as of December 31, 2024			4,463,028			$	20.15				7.61			$	288,000
Options granted			1,655,000				1.68
Options exercised			(225,209	)			1.51
Options forfeited/canceled			(1,735,725	)			17.27
Outstanding as of December 31, 2025			4,157,094				15.01				8.19			$	696,000
Vested and expected to vest at December 31, 2025			4,157,094				15.01				8.19			$	696,000
Exercisable at December 31, 2025			1,557,052			$	20.18				6.82			$	45,000

During the year ended December 31, 2025, there were 225,209 stock options exercised. Of the stock options exercised, 120,492 stock options were net settled in satisfaction of the exercise price, with no cash proceeds received. Cash proceeds to the Company for options not net settled totaled $90,000 during the year ended December 31, 2025.

The following summarizes information about stock options at December 31, 2025 by a range of exercise prices:

								Options outstanding												Options exercisable
												Weighted
												average				Weighted								Weighted
								*Number of*				*remaining*				*average*				*Number of*				*average*
*Range of exercise prices*								*outstanding*				*contractual*				*exercise*				*vested*				*exercise*
*From*				To				*options*				*life (in years)*				*price*				*options*				*price*
$	0.95			$	0.95				34,000				2.7			$	0.95				34,000			$	0.95
$	1.44			$	1.44				1,067,000				9.3			$	1.44				—			$	—
$	1.59			$	5.46				844,520				7.0			$	2.62				393,212			$	3.14
$	8.12			$	26.91				1,360,782				8.1			$	23.50				824,903			$	22.70
$	27.42			$	77.00				850,792				8.3			$	31.30				304,937			$	37.48
									4,157,094				8.2			$	15.01				1,557,052			$	20.18

The Company uses Black-Scholes to estimate the fair value of options granted. Black-Scholes considers a number of factors, including the market price of the Company’s common stock. Factors utilized in Black-Scholes to value each stock option granted, and the weighted average fair value of options granted during the years ended December 31, 2025, 2024 and 2023 were as follows:

2025

2024

2023

Volatility

149% to 162%

151% to 170%

152% to 155%

Risk-free interest rates

3.78% to 4.21%

3.53% to 4.47%

3.82% to 4.37%

Expected life of option (in years)

7

7

7

Dividend yield

zero

zero

zero

Forfeiture rate

zero

4.37

%

zero

Weighted average fair value of stock options granted

$

1.63

$

25.85

$

18.21

Volatility is based on reviews of the historical volatility of the Company’s common stock. Risk-free interest rates are based on yields of U.S. treasury notes in effect at the date of grant. Expected life of option is based on actual historical option exercises. Dividend yield is zero because the Company does not anticipate paying cash dividends in the foreseeable future.

As of December 31, 2025, the Company expects to recognize compensation expense of $24.5 million related to non-vested options held by equity plan participants over the weighted average remaining recognition period of 2.4 years.

Performance Awards

The following summarizes information about performance award activity during 2025:

		*Number of Performance Awards*
Outstanding as of December 31, 2024			7,142
Granted			—
Vested			—
Forfeited/canceled			—
Outstanding as of December 31, 2025			7,142

If and when outstanding Performance Awards vest, the Company would recognize $101,000 in stock-based compensation expense. These performance awards expire in 2026.

Stock-Based Compensation Expense

The following summarizes information about stock-based compensation expense, in thousands:

		*Years ended December 31,*
		*2025*				*2024*				*2023*

Research and development		$	7,159			$	6,492			$	2,050

General and administrative			12,423				9,799				2,536

Total stock-based compensation expense		$	19,582			$	16,291			$	4,586

On September 13, 2024, the Company entered into a Consulting Agreement with our former President and Chief Executive Officer for a period of one year, which was subsequently terminated on January 23, 2025. The services to be provided under the Consulting Agreement were not deemed substantive for continuous service requirements of stock option vesting, resulting in a stock option modification under ASC 718. The Company's stock-based compensation expense for the year ended December 31, 2024 included approximately $0.6 million from the stock option modification accounting. See further discussion in Note 2 under “Related Party Transactions”. There were no such costs during the years ended December 31, 2025 and 2023.