The Company has authorized 24,984,166 shares of Preferred Stock, par value $0.0001, none of which is issued and outstanding as of December 31, 2024 and 2023. The Company has authorized 75,000,000 shares of Common Stock, par value $0.0001, of which 28,825,333 and 20,420,896 are issued and outstanding as of December 31, 2024 and 2023, respectively.

On December 23, 2024, we entered into a Securities Purchase Agreement (the “SPA”) pursuant to which the Company issued and sold an aggregate of 7,377,912 shares of common stock to certain accredited investors at a purchase price of $0.55 per share. The aggregate purchase price for the shares, before deduction of the Company’s expenses associated with the transaction, was approximately $4.1 million. The SPA further provides the investors with the right, but not the obligation, to purchase an additional 7,220,141 shares of common stock at a purchase price of $1.10 per share at a subsequent closing to be held on April 30, 2025.

The Company analyzed the SPA, specifically with respect to the shares issued and the right to purchase additional shares at a later date within the guidance of ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging, and determined the right to purchase additional shares is a written call option that qualifies as a free standing instrument based on the definition of the second criterion in the GAAP definition of a freestanding financial instrument that the instruments are legally detachable and separately exercisable. The Company determined the written call option does not require liability classification under Topic 480 and does not meet the definition of a derivative, as there is no net settlement provision. Lastly, the Company concluded the written call option should be classified as an equity instrument, as it meets the criteria for equity classification of a non-derivative instrument under ASC 815-40.

On December 23, 2024, the Company recorded the written call option as well as a capital contribution from the investors under the SPA within APIC at a fair value of approximately $1.5 million. The written call option does not require subsequent remeasurement each reporting period. The capital contribution was recorded for the excess of proceeds received compared to the fair value of common stock and written call option.

The following table sets forth a summary of changes in warrants outstanding for the years ending December 31, 2024 and 2023:


				Weighted-Average
	# of Shares			Exercise Price
Balance at December 31, 2022		8,392,466		$	4.10
Issued		5,327,046		$	4.04
Exercised		(90,552	)	$	3.35
Cancellation/Expiration		(831,816	)	$	6.76
Balance at December 31, 2023		12,797,144		$	3.90
Issued		—		$	—
Exercised		—		$	—
Cancellation/Expiration		(2,069,757	)	$	4.85
Balance at December 31, 2024 (1)		10,727,387		$	2.30

(1)

On December 20, 2024, 5,327,046 warrants were remeasured at $1.17 weighted average exercise price in connection with the March 2023 NWPA Amendment and December 2023 NWPA Amendment.

In conjunction with the Purchase Agreement on December 1, 2023, as described above, we issued December 2023 Notes in the aggregate amount of $3.75 million and related warrants on December 1, 2023, and December 2023 Notes in the aggregate amount of $2.25 million and related warrants on December 28, 2023. Under the terms of the first tranche of December 2023 Warrants, the holders had the right for a period of three years after issuance to purchase an aggregate of up to 1,411,765 shares of our common stock at an exercise price of $4.25 per share, which represents 120.0% of the official closing price of our common stock on the Nasdaq Capital Market immediately preceding the signing of the December 2023 Purchase Agreement, upon delivery of a notice of exercise to Odyssey. Under the terms of the second tranche of December 2023 Warrants, the holders had the right for a period of three years after issuance to purchase an aggregate of up to 211,565 shares of our common stock at an exercise price of $7.09 per share, which represents 200.0%

of the official closing price of our common stock on the Nasdaq Capital Market immediately preceding the signing of the Two Seas Purchase Agreement, upon delivery of a notice of exercise to Odyssey.

The December 2023 Warrant Amendments modified the exercise price of one tranche of the December 2023 Warrants from $4.25 to $1.23 and the exercise price of the other tranche of the December 2023 Warrants from $7.09 to $2.05.

In conjunction with the Purchase Agreement on March 6, 2023, as described above, we issued the March 2023 Warrants to purchase up to 3,703,704 shares of our common stock. The March 2023 Warrants had an exercise price of $3.78 per share and are exercisable at any time during the three years after issuance ending on the close of business on March 6, 2026.

The March 2023 Warrant Amendments modified the exercise price of the March 2023 Warrants from $3.78 to $1.10.

On June 10, 2022, we sold an aggregate of 4,939,515 shares of our Common Stock and warrants (the "2022 Warrants") to holders to purchase up to 4,939,515 shares of our common stock. The shares of common stock and warrants were sold in units, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock at an exercise price of $3.35 (the “2022 Warrant Price”) per share and are exercisable at any time beginning on December 10, 2022, and ending on the close of business on June 10, 2027. The Company in its sole discretion may lower the 2022 Warrant Price at any time prior to the expiration date for a period of not less than twenty Business Days, provided that the Company shall provide at least twenty days prior written notice of such reduction to Holders of the 2022 Warrants and provided further that any such reduction shall be identical among all of the 2022 Warrants.

A Warrant may be exercised by the Holder by delivering the aggregate exercise price unless the Holder chooses net settlement via the cashless exercise option if, there is no active registration statement or available prospectus for the issuance of the Warrant Shares by the Holder. In a cashless exercise, the Holder will receive a number of Warrant Shares determined by dividing [(A-B) (X)] by (A), where (A) represents volume-weighted average price of the common stock or the bid price of common stock, depending on the circumstances, (B) represents the Exercise Price of the Warrant, as adjusted, and (X) represents the number of Warrant Shares that would be issued upon exercise of the Warrant, if it were a cash exercise rather than a cashless exercise.

If the Company fails to deliver the Warrant Shares to the Holder within a time frame required by the agreement, and the Holder is forced to purchase shares of Common Stock to fulfill a sale that was based on receiving the Warrant Shares (referred to as a “Buy-In”), then the Company must reimburse the Holder in cash for the difference between the total purchase price of the Common Stock purchased and the product of the number of Warrant Shares that should have been delivered and the sale price at which the obligation to purchase arose. The 2022 Warrants also included customary adjustments to the exercise price and the number of shares of common stock issuable upon exercise in the event of a stock split, recapitalization, reclassification, combination or exchange of shares, separation, reorganization, liquidation, or the like.

The Company determined that the 2022 Warrants meets the definition of a derivative and is not considered indexed to the Company’s own stock due to the input related to the price per share and any non-cash consideration. Management determined that this input would preclude the 2022 Warrants from being indexed to the Company’s stock given that this input could be affected by variables that are extraneous to the pricing of a fixed-for-fixed option or forward contract on equity shares. As such, the 2022 Warrants were recognized as derivative liabilities and will be initially and subsequentially measured at fair value with the gain or loss due to changes in fair value recognized in the current period. The Company noted that when debt is issued with liability-classified stock purchase warrants, the residual method should be used so that the warrants are recognized at fair value at issuance and the residual proceeds are allocated to the debt.

During the three months ended September 30, 2023, holders of warrants issued by Odyssey on June 10, 2022, exercised 90,552 warrants with an exercise price of $3.35 per share.

The Company has three approved stock incentive plans: the 2005 Plan, 2015 Plan and 2019 Plan (each as defined below and, collectively, the "Plans"). The 2005 Stock Incentive Plan ("2005 Plan") expired in August 2015, upon which, equity instruments cannot be granted but this plan will continue in effect until all outstanding awards have been exercised in full or are no longer exercisable and

all equity instruments have vested or been forfeited. As of December 31, 2024 no equity instruments remain outstanding under the 2005 plan.

On June 9, 2015, our stockholders approved our 2015 Stock Incentive Plan (the "2015 Plan") that was adopted by the Board on January 2, 2015, which is the effective date. The Plan expires on the tenth anniversary of the effective date. The Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and stock appreciation rights. This plan was initially capitalized with 450,000 shares that may be granted. The Plan is intended to comply with Section 162(m) of the Internal Revenue Code, which stipulates that the maximum aggregate number of Shares with respect to one or more Awards that may be granted to any one person during any calendar year shall be 83,333, and the maximum aggregate amount of cash that may be paid in cash to any person during any calendar year with respect to one or more Awards payable in cash shall be $2.0 million. The original maximum number of shares that were to be used for Incentive Stock Options ("ISO") under the Plan was 450,000. During our June 2016 stockholders' meeting, the stockholders approved the addition of 200,000 incremental shares to the Plan. As of December 31, 2024, there were no shares available to be issued under the 2015 Plan. With respect to each grant of an ISO to a participant who is not a ten percent stockholder, the exercise price shall not be less than the fair market value of a share on the date the ISO is granted. With respect to each grant of an ISO to a participant who is a ten percent stockholder, the exercise price shall not be less than one hundred ten percent (110%) of the fair market value of a share on the date the ISO is granted. If an award is a non-qualified stock option ("NQSO"), the exercise price for each share shall be no less than (1) the minimum price required by applicable state law, or (2) the fair market value of a share on the date the NQSO is granted, whichever price is greatest. Any award intended to meet the performance-based exception must be granted with an exercise price not less than the fair market value of a share determined as of the date of such grant.

On March 26, 2019, the Board adopted and approved the 2019 Stock Incentive Plan (the "2019 Plan"), which was approved by our stockholders on June 3, 2019. The 2019 Plan expires on June 3, 2029. The 2019 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and stock appreciation rights. The 2019 Plan was initially capitalized with 800,000 shares that may be granted. During the Company's June 2022 stockholders’ meeting, the stockholders approved the addition of 1.6 million incremental shares to the 2019 Plan, which increased the number of shares authorized to 2.4 million shares. During the Company's June 2024 stockholders’ meeting, the stockholders approved the addition of 2.0 million incremental shares to the 2019 Plan, which increased the number of shares authorized to 4.4 million shares. As of December 31, 2024, 1,283,792 shares were available to be issued under the 2019 Plan. The 2019 Plan includes the following features: no "evergreen" share reserve, prohibition on liberal share recycling, no repricing permitted without stockholder approval, no stock option reload features, no transfers of awards for value and dividends and dividends equivalent shall accrue and be paid only if and to the extent the common stock underlying the award becomes vested or payable.

Share-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest. As share-based compensation expense recognized in the statement of operations is based on awards ultimately expected to vest, it can be reduced for estimated forfeitures. The ASC topic Stock Compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The share-based compensation charged against income, related to our options and restricted stock units, for the years ended December 31, 2024 and 2023 was $2.0 million and $0.6 million, respectively.

The value of the stock options granted was determined using the Black-Scholes-Merton option-pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the life of the option. The options granted during the years ended December 31, 2024 and 2023 were valued with the assumptions in the table below. Expected volatilities are based on historical volatility of the Company's stock. The expected term (in years) is determined using historical data to estimate option exercise patterns. The expected dividend yield is based on the annualized dividend rate over the vesting period. The risk-free interest rate is based on the rate for US Treasury bonds commensurate with the expected term of the granted option. The vesting periods for options issued to officers and employees vary. Options issued to directors vest immediately.


	Year Ended December 31,
	2024		2023
Risk free interest rate	3.97% - 4.32%		3.76% - 4.52%
Expected life	5 years		5 years
Expected volatility	62.42% - 111.62%		63.67% - 64.18%
Expected dividend yield		—		—
Grant-date fair value	$0.34 - $2.61		$1.70 - $2.12

The Black-Scholes-Merton option pricing model was developed for estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Our options do not have the characteristics of traded options; therefore, the option valuation models do not necessarily provide a reliable measure of the fair value of our options.

A summary of the stock option activity during the year ended December 31, 2024 is presented below:


	Number of Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)
Outstanding at December 31, 2023		937,624		$	4.90
Granted		1,355,450		$	2.26
Exercised		—		$	—
Cancelled		(141,000	)	$	12.49
Outstanding at December 31, 2024		2,152,074		$	2.74		3.99
Options exercisable at December 31, 2024		1,996,094		$	2.68		4.03

The aggregate intrinsic values of options exercisable for the years ended December 31, 2024 and 2023 were $0.2 million and $0.5 million, respectively. The aggregate intrinsic values of options outstanding for the years ended December 31, 2024 and 2023 were $0.2 million and $0.9 million, respectively. The aggregate intrinsic values of options exercised during the years ended December 31, 2024 and 2023 are zero and $0.1 million, respectively, determined as of the date of the option exercise. Aggregate intrinsic value represents the positive difference between our closing stock price at the end of a respective period and the exercise price multiplied by the number of relative options. The fair value of shares vested during the years ended December 31, 2024 and 2023 was $1.1 million and $0.7 million, respectively. The fair value of shares unvested at December 31, 2024 and 2023 is $0.1 million and $1.5 million, respectively.

As of December 31, 2024, there was $0.2 million of unrecognized compensation cost related to unvested share-based compensation awards granted to employees related to granted stock options, which have an expected remaining life of 1.36 years.

The following table summarizes information about stock options outstanding at December 31, 2024:


Range of Exercise Prices	Number of Shares Outstanding		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (Years)
$0.01 - $1.99		763,250	$	0.41		4.87
$2.00 - $3.63		743,707	$	3.55		3.04
$3.64 - $4.65		645,117	$	4.57		4.04
		2,152,074	$	2.74		3.99

The estimated fair value of each restricted stock unit is calculated using the share price at the date of the grant. A summary of the restricted stock awards activity during the year ended December 31, 2024:


	Number of Shares			Weighted-Average Grant Date Fair Value
Unvested at December 31, 2023		10,087		$	3.41
Granted		39,097		$	1.98
Vested		(49,184	)	$	2.28
Cancelled		—		$	—
Unvested at December 31, 2024		—		$	—

The fair value of shares underlying restricted stock units vested during the years ended December 31, 2024 and 2023 was $35,414 and $0.1 million, respectively. The fair value of unvested restricted stock units remaining at the years ended December 31, 2024 and 2023 is zero and $46,905, respectively. The weighted-average grant date fair value of restricted stock units granted during the years ended December 31, 2024 and 2023 were $1.98 and $4.94, respectively. The weighted-average remaining contractual term of these restricted stock units as of both December 31, 2024 and 2023 was zero and one year, respectively. As of December 31, 2024, there was a total of zero unrecognized compensation cost related to unvested restricted stock awards.