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Stockholder Equity
 9 Months Ended
Sep. 30, 2025
Stockholder Equity  
Stockholder' Equity

Note 7 – Stockholders’ Equity

 

Authorized Shares

 

On June 11, 2025, the Company filed a certificate of amendment to its amended and restated certificate of incorporation with the Secretary of State of the State of Delaware to increase the authorized shares of common stock from 200,000,000 to 1,000,000,000. This amendment was approved by the Company’s stockholders at the Annual Meeting. There were no changes to the authorized preferred stock which remains at 50,000,000 shares.

 

Common Stock Sales

 

On June 6, 2025, the Company entered into a sales agreement (the "2025 Sales Agreement") with Lake Street Capital Markets, LLC (“Lake Street”) as sales agent, pursuant to which the Company may offer and sell, from time to time, shares of the Company's common stock, having an aggregate offering price of up to $15.1 million (the “2025 ATM Shares”). The 2025 Sales Agreement replaces the prior sales agreement entered into between the Company and Jefferies LLC dated as of December 21, 2022 (the “2022 Sales Agreement”).

 

Sales of common stock, if any, will be made at market prices by any method permitted by law deemed to be an “at-the-market” (ATM) offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company has no obligation to sell any shares of common stock under the open market sale agreement and may at any time suspend offers under the 2025 Sales Agreement, in whole or in part, or terminate the 2025 Sales Agreement.

 

During the nine months ended September 30, 2025, a total of 7,804,130 shares of common stock were sold pursuant to the 2025 Sales Agreement offering resulting in gross proceeds of approximately $2,103,000 and net proceeds of approximately $1,916,000 after equity issuance costs of approximately $188,000 for accounting, legal, commissions and sale agent fees. As of September 30, 2025, approximately $5,000 of the gross proceeds remained unpaid and were received in October 2025 which have been presented as stock subscription receivables on the accompanying consolidated balance sheet. As of September 30, 2025, approximately $13.1 million remains available on the 2025 Sales Agreement.

 

During the nine months ended September 30, 2024, a total of 50,510 shares of common stock were sold pursuant to the 2022 Sales Agreement resulting in gross proceeds of approximately $62,000, and net proceeds of $12,000 after equity issuance costs of $50,000 for accounting, legal, commissions and fees.

 

Issuance of Stock for Services

 

During the nine months ended September 30, 2025, we issued 427,633 fully vested shares of common stock to service providers with a fair value of $143,150 based on the market price of our common stock on date of grant.

 

During the nine months ended September 30, 2025, we issued an aggregate of 390,000 fully vested shares of restricted common stock to certain members of our of board of directors with a fair value of $144,300 based on the market price of our common stock on the date of grant.

 

During the nine months ended September 30, 2024, we issued 31,672 fully vested shares of common stock to service providers with a fair value of $39,631 based on the market price of our common stock on the date of grant.

 

During the nine months ended September 30, 2024, we issued an aggregate of 240,000 fully vested shares of common stock to certain members of our board of directors with a fair value of $333,600 based on the market price of our common stock on the date of grant.

 

Common Stock for Stock Option Exercises

 

During the nine months ended September 30, 2025, we issued an aggregate of 200,000 shares of common stock for a stock option exercise that resulted in cash proceeds of $24,000.

 

Fully Vested Restricted Stock

 

During the nine months ended September 30, 2025, certain executives and key employees vested in time-based restricted stock resulting in the Company issuing 1,137,391 shares of common stock.

Stock-based compensation

 

2021 Plan

 

The Company has reserved 36,150,000 (increased from 24,000,000 at the Company’s Annual Shareholder Meeting on June 11, 2025) shares of common stock or common stock equivalents to be issued under our 2021 Equity Incentive Plan (the “2021 Plan”) to the Company’s employees and non-employee services providers.  At September 30, 2025, the Company has 7,543,694 shares remaining for issuance under the 2021 Plan. 

 

Stock-based compensation expense related to stock options and restricted stock units expected to vest is presented as follows in the condensed unaudited consolidated financial statements:

 

 

 

Three Months

 

 

Nine Months Ended

 

 

 

September 30,

2025

 

 

September 30,

2024

 

 

September 30,

2025

 

 

September 30,

2024

 

Research and development

 

$51,682

 

 

$42,760

 

 

$180,322

 

 

$133,078

 

Compensation and related expenses

 

 

762,335

 

 

 

377,649

 

 

 

1,892,237

 

 

 

745,915

 

Total expense

 

$814,017

 

 

$420,409

 

 

$2,072,559

 

 

$878,993

 

 

Stock Options

 

Stock option activity for the nine months ended September 30, 2025 is summarized as follows: 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

Average

 

 

 

 

 

 

Average

 

 

Aggregate

 

 

Remaining

 

 

 

 

 

Exercise

 

 

Intrinsic

 

 

Contractual

 

 

 

Shares

 

 

Price

 

 

Value

 

 

Life (Years)

 

Options outstanding at December 31, 2024

 

 

15,843,116

 

 

$0.94

 

 

$3,324,000

 

 

 

5.95

 

Granted

 

 

908,659

 

 

 

0.66

 

 

 

-

 

 

 

-

 

Exercised

 

 

(200,000)

 

 

0.12

 

 

 

-

 

 

 

-

 

Expired/forfeit

 

 

(142,713)

 

 

2.96

 

 

 

-

 

 

 

-

 

Options outstanding at March 31, 2025

 

 

16,409,062*

 

$0.92

 

 

$1,274,000

 

 

 

5.98

 

Granted

 

 

1,715,152

 

 

 

0.24

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired/forfeit

 

 

(608,712)

 

 

0.84

 

 

 

-

 

 

 

-

 

Options outstanding at June 30, 2025

 

 

17,515,502*

 

$0.86

 

 

$1,210,855

 

 

 

5.99

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired/forfeit

 

 

(66,250)

 

 

1.16

 

 

 

-

 

 

 

-

 

Options outstanding at September 30, 2025

 

 

17,449,252*

 

$0.86

 

 

$971,330

 

 

 

5.73

 

Options exercisable at September 30, 2025

 

 

9,296,654*

 

$0.69

 

 

$971,330

 

 

 

3.03

 

 

*At September 30, 2025 and December 31, 2024, the options outstanding and exercisable include 5,700,000 and 5,900,000 granted in connection with a merger that occurred in 2021, respectively, which were not granted under the 2021 Plan and include 275,000 options granted in 2024 pursuant to a legal settlement and were not granted under the 2021 Plan.

 

During the nine months ended September 30, 2025, the options granted were primarily to our Chief Financial Officer (“CFO”), Chief Technology Officer (“CTO”) and other non-executive key employees. The weighted average grant-date fair value of the granted options was $0.42.

 

Of the total options outstanding at September 30, 2025, 4,465,864 of the options include performance conditions. The performance-based options vest as follows: 50% vest upon the achievement of operating profit, as defined in the employment agreements, and 50% upon the achievement of a revenue target of $100 million by the end of fiscal year 2028. The performance-based options with the revenue target begin vesting once the Company achieves $15 million in revenue for a fiscal year. Vesting will occur on January 31 of each year through January 31, 2029. The number of options that vest is based on the proportionate percentage of each fiscal year’s revenue to the $100 million target. For example, if our annual revenue for fiscal year 2026 is $20 million, 20% of the restricted stock units with the revenue performance condition will vest on January 31, 2027. The remaining outstanding options vest over time generally over a four-year vesting period.

 

During the three and nine months ended September 30, 2025 and 2024, stock-based compensation recognized for options expected to vest was $244,820 and $315,950, respectively, and $982,662 and $701,196, respectively.

 

At September 30, 2025, total unrecognized compensation expense for service based and performance-based options was $2,411,081 and $2,898,790, respectively. The unrecognized service-based expense will be recognized over the option vesting period of four years through April 2029. The unrecognized expense associated with the performance-based options will be expensed when it becomes probable that the performance obligations will be met.

 

At September 30, 2025, intrinsic value is computed based on the difference between exercise price of the option and the market price of our common stock at September 30, 2025 of $0.29 per share multiplied by the total common stock options outstanding or exercisable whose exercise price is less than the market price.

 

The fair value of these options granted were estimated on the date of grant, using the Black-Scholes option-pricing model with the following assumptions:

 

 

 

September 30,

 

 

September 30,

 

 

 

2025

 

 

2024

 

Expected volatility

 

67.81-71.56%

 

 

26.20-27.39%

 

Expected term (years)

 

6.25 Years

 

 

6.25 Years

 

Risk-free rate

 

4.00 - 4.51%

 

 

3.77-4.65%

 

Dividend rate

 

 

0.00%

 

 

0.00%

 

Restricted Stock Units (RSUs)

 

During the nine months ended September 30, 2025, the Company granted an aggregate of 11,930,760 unvested restricted stock units under the 2021 Plan pursuant to employment agreements, other executives, our board of directors and other non-executive key employees of the Company.

 

On January 15, 2025, 1,765,000 unvested RSUs were granted to non-executive key employees.  The RSUs vest as follows: 50% on the one-year grant-date anniversary with the remaining vesting ratably over a period of thirty-six months.

The unvested restricted stock units granted to our CFO and CTO on January 15, 2025 and April 30, 2025, pursuant to employment agreements, consist of an aggregate of 1,066,218 units with time-based vesting provisions over four years and 1,066,218 units with performance-based vesting provisions. The performance-based units vest as follows: 50% vest upon the achievement of Operating Profit, as defined in the employment agreements, and 50% upon the achievement of revenue targets between $15 and $100 million by the end of fiscal year 2028. The restricted stock units with the revenue target begin vesting once the Company achieves $15.0 million in revenue for a fiscal year. Vesting will occur on January 31 of each year through January 31, 2029. The number of restricted stock units that vest is based on the proportionate percentage of each fiscal year’s revenue to the $100 million target. For example, if our annual revenue for fiscal year 2026 is $20 million, 20% of the restricted stock units with the revenue performance condition will vest on January 31, 2027.

 

On August 28, 2025, an aggregate of 2,875,000 time-based RSUs and 2,875,000 performance-based RSUs were granted to our executive team. The time-based RSUs vest over a service period of thirty-six months with a commencement date of March 31, 2025. As of September 30, 2025, 559,028 of these RSUs had vested.

 

The performance-based RSUs have a three-year vesting period contingent on the achievement of milestones tied to the commissioning and operation of five different AirSCWO units to promote the development of the Company’s waste destruction services strategy. The 2,875,000 RSUs represent the vesting target amount; however, each vesting tranche includes a target delivery date. More RSUs can be earned by the executive team for delivery dates met prior to the target date. Conversely, fewer or no RSUs will vest if delays occur and units are commissioned and operating after the tranche target date. The range of RSUs that can vest is 1,437,500 to 5,462,500. Each tranche earned requires the approval and certification of the compensation committee. The total RSUs earned will be aggregated and issued after the three-year vesting period. As of September 30, 2025, the probability of the performance-based RSUs vesting on the date of grant was not deemed probable.

 

On August 28, 2025, an aggregate of 2,283,324 time-based restricted stock units were granted to our non-employee directors. The RSUs will vest on the one-year grant date anniversary, August 28, 2026.

 

The grant-date fair value of the restricted stock units was determined using the market price of our common stock on the date of grant which ranged from $0.33 to $0.63.

 

A summary of our outstanding nonvested restricted stock units as of September 30, 2025 is as follows:

 

 

 

 

 

 

Weighted-

Average

 

 

 

 

 

 

Grant Date

 

 

 

Amount

 

 

Fair Value

 

Nonvested, beginning of the year

 

 

3,549,292

 

 

$1.23

 

Granted

 

 

11,930,760

 

 

 

0.42

 

Vested

 

 

(1,137,391 )

 

 

0.81

 

Forfeited

 

 

(60,000 )

 

 

0.62

 

Nonvested, end of the year

 

 

14,282,661

 

 

$0.58

 

During the three and nine months ended September 30, 2025 and 2024, $569,263 and $104,434 of our stock-based compensation was from time-based RSUs, respectively, and $1,089,964 and $177,797, respectively.

 

At September 30, 2025, the total unvested RSUs are comprised of 8,441,797 and 5,840,864 with time-based vesting and performance-based vesting, respectively. At September 30, 2025, we have a total of $7,861,972 of unrecognized compensation, comprised of $4,023,270 of unrecognized time-based stock-based compensation which will be recognized over a weighted-average period of approximately 2.50 years and $3,838,702 of unrecognized performance-based stock-based compensation which will be expensed when the performance conditions are probable of being met.

 

Stock Warrants

 

At September 30, 2025, there were 8,775,244 warrants outstanding which primarily relate to an offering completed in November 2024, where investors were offered one and a half warrants for every one common share purchased in the offering at an exercise price of $1.125 per share.

 

A summary of warrant activity for the nine months ended September 30, 2025, is as follows:

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

Weighted

 

 

 

 

Average

 

 

 

 

 

Average

 

 

Aggregate

 

 

Remaining

 

 

 

 

 

Exercise

 

 

Intrinsic

 

 

Contractual

 

 

 

Shares

 

 

Price

 

 

Value

 

 

Life (Years)

 

Warrants outstanding at December 31, 2024

 

 

14,675,244

 

 

$1.13

 

 

$-

 

 

 

4.88

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired/forfeit

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Warrants outstanding at March 31, 2025

 

 

14,675,244

 

 

$1.13

 

 

 

 

 

 

 

4.63

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired/forfeit

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Warrants outstanding at June 30, 2025

 

 

14,675,244

 

 

$1.13

 

 

 

 

 

 

 

4.39

 

Granted

 

 

100,000

 

 

 

1.25

 

 

 

-

 

 

 

-

 

Repurchased

 

 

(6,000,000)

 

 

1.13

 

 

 

 

 

 

 

 

 

Expired/forfeit

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Warrants outstanding at September 30, 2025

 

 

8,775,244

 

 

$1.13

 

 

 

 

 

 

 

 

 

Warrants exercisable at  September 30, 2025

 

 

8,775,244

 

 

$1.13

 

 

$-

 

 

 

4.14

 

 

The 100,000 warrants were granted in connection with a short-term secured promissory note executed during the three months ended September 30, 2025 (see Note 6).

 

On July 18, 2025, the Company executed a warrant purchase agreement with the largest investor in the November 2024 offering of common stock and warrants.  The 6,000,000 warrants held by the investor were repurchased by the Company at a price of $0.10833 for total cash consideration of $649,980. The repurchase amount has been reflected as a reduction of additional-paid in capital on the consolidated statements of stockholders’ equity.