XML 32 R19.htm IDEA: XBRL DOCUMENT v3.25.1
STOCKHOLDERS’ EQUITY
 3 Months Ended
Mar. 31, 2025
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

 

12. STOCKHOLDERS’ EQUITY

 

At Market Issuance Sales Agreement

 

On April 11, 2025, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”), pursuant to which the Company has the right, but not the obligation, to sell shares of their common stock having an aggregate offering price of up to $8 million, subject to certain terms and conditions.

 

Stock Options

 

Stock options may be granted to new and existing employees and other eligible participants under the Company’s equity incentive plan. New employee option grants generally have a term of ten years and vest ratably over four years.

 

Option activity for the three months ended March 31, 2025 is as follows:

          
       Weighted 
       Average 
   Number of   Exercise 
   Options   Price 
Outstanding at December 31, 2024   663,004   $6.69 
Granted   –    – 
Forfeited   (12,100)   10.03 
Outstanding at March 31, 2025   650,904   $6.63 

 

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in the market value of the underlying common stock based on our historical volatility. The Company uses the simplified method to estimate the expected term. The expected term of stock options granted to employees is equal to the contractual term of the option award. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate.

 

There were no option grants in the three months ended March 31, 2025.

 

The Company’s stock option compensation expense was $0.1 million and $0.2 million for the three months ended March 31, 2025 and 2024, respectively, and there was $1.3 million of total unrecognized compensation costs related to outstanding stock options at March 31, 2025 which will be recognized over 3.5 years. There were no options issued or exercised in the three months ended March 31, 2025. The number of stock options vested and unvested as of March 31, 2025 were 395,531 and 255,373, respectively. Stock-based compensation expense is generally included in selling, general and administrative expenses in the consolidated statement of operations.

 

Restricted Stock Units

 

In November 2022, the Board approved a stock grant under the Company’s 2021 Equity Incentive Plan, consisting of (i) a one-time grant of 142,500 restricted stock units (“RSUs”) and (ii) a target number of 142,500 performance restricted stock units (“PRSUs”) to further incentivize and align the CEO’s interest with the Company. For the RSUs, 50% vested upon the grant date, 25% vested on February 1, 2024 and 25% vested on February 1, 2025. The number of shares issuable under the PSUs were determined based on the achievement of performance metrics specific to the Company that were measured at the end of fiscal year 2024. The fair value of both the RSUs and PSUs were based on the stock price of $13.05 per share on the date of grant. The PSUs were reviewed to determine estimated performance over the term and then a factor was applied ranging from 0% to 150% of the grant date fair value. As of December 31, 2024, based on the specific performance metrics set by the Company, the target number of shares underlying the PSUs was increased by 44,531 shares of common stock for a total of 187,031 shares granted under the PSU. There have been no further grants as of the three months ended March 31, 2025.

 

A summary of activity of the RSUs for the three months ended March 31, 2025 is as follows:

          
   Shares   Weighted Average Grant Date Fair Value 
Unvested at beginning of 2025   35,625   $13.05 
Granted   –    – 
Vested   (35,625)   2.59 
Forfeited   –    – 
Unvested at end of 2025   –   $0.00 

 

Stock compensation expense related to restricted stock units was $35 thousand during the three months ended March 31, 2025. Stock compensation expense related to performance stock units was $0.2 million during the three months ended March 31, 2025. There are no further unrecognized stock compensation expenses remaining to be recognized at this time.  

 

Restricted Stock Awards

 

The Company issues restricted stock awards to the members of its board of directors as compensation for such members’ services. Such grants generally vest ratably over four quarters. The common stock related to these awards are issued to an escrow account on the date of grant and released to the grantee upon vesting. The fair value is determined based on the closing stock price of the Company’s common stock on the date granted and the related expense is recognized ratably over the vesting period.

 

A summary of activity of the restricted stock awards for the three months ended March 31, 2025:

          
       Weighted- 
   Nonvested   Average Grant- 
   Shares   Date Fair Value 
Nonvested at December 31, 2024    –     – 
Granted   121,359   $3.09 
Vested   (30,340)   2.04 
Forfeited   –    – 
Nonvested at March 31, 2025   91,019   $3.09 

 

Stock compensation expense related to restricted stock awards was $0.1 million for the three months ended March 31, 2025 and $6 thousand for the three months ended March 31, 2024. Fair values of restricted stock vested during each of the three months ended March 31, 2025 and 2024 were $0.1 million and $2 thousand, respectively.

 

As of March 31, 2025, there were unvested shares of common stock representing $0.3 million of unrecognized restricted stock grant expense which will be recognized over 9 months.

 

Warrants

 

During the three months ended March 31, 2025, the Company had exercisable warrants to purchase up to 200,000 shares of the Company’s common stock at a price per share equal to $17.00 issued to a consultant for investor relations services to be provided over a five-year period starting in March 2023. The warrants are immediately exercisable but are subject to repurchase by the Company until the required service is provided. The fair value of such warrants was $8.05 per share or $1.6 million on the date of grant using the Black-Scholes option-pricing model. This model incorporated certain assumptions for inputs including a risk-free market interest rate of 3.86%, expected dividend yield of the underlying common stock of 0%, expected life of 2.5 years and expected volatility in the market value of the underlying common stock based on our historical volatility of 99.6%. The fair value of the warrant was recorded to prepaid expenses and other current assets to be recognized over the service period. During the three months ended March 31, 2025, $0.1 million was recorded as expense and at March 31, 2025, $1.0 million of cost has not been recognized and will be recognized over the next 3 years. These warrants are not cashless and expire on March 31, 2028.

 

A summary of activity of warrants outstanding for the three months ended March 31, 2025 is as follows:

          
   Number of Shares of Common Stock Underlying Warrants   Weighted Average Exercise Price 
Outstanding at December 31, 2024   200,000   $17.00 
Granted   –    – 
Expired   –    – 
Exercised   –    – 
Outstanding at March 31, 2025   200,000   $17.00 

 

The warrant outstanding as of March 31, 2025 expires in March 2028. The intrinsic value of the shares of common stock underlying the warrants at March 31, 2025 was $0.00.