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Note 12 - Stockholders' Equity
 9 Months Ended
Sep. 30, 2025
Notes to Financial Statements  
Equity [Text Block]

12.

STOCKHOLDERS’ EQUITY

 

At Market Issuance Sales Agreement

 

On April 11, 2025, the Company entered into an At Market Issuance Sales Agreement with B. Riley Securities, Inc., pursuant to which the Company has the right, but not the obligation, to sell shares of its common stock having an aggregate offering price of up to $8 million, subject to certain terms and conditions. The At Market Issuance program generated aggregate net proceeds of $6.6 million during the nine months ended September 30, 2025.

 

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 nine months ended September 30, 2025 is as follows:

 

      

Weighted

 
      

Average

 
  

Number of

  

Exercise

 
  

Options

  

Price

 

Outstanding at December 31, 2024

  663,004  $6.69 

Granted

  27,500   2.58 

Forfeited

  (32,750)  8.65 

Outstanding at September 30, 2025

  657,754  $6.42 

Vested and Exercisable at September 30, 2025

  421,731  $8.42 

 

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.

 

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions in the table below and we assumed there would not be dividends paid during the life of the options granted during the nine months ended September 30, 2025 and 2024:

 

  

Nine Months Ended September 30,

 
  

2025

  

2024

 

Expected volatility

 88.38% - 90.10%  89.04% - 90.37% 

Expected term (Years)

 6.5 - 7  6.5 - 7 

Risk-free interest rate

 3.79% - 4.14%  3.67% - 4.25% 

Weighted-average FV

 $1.25  $4.45 

 

The Company’s stock option compensation expense was $0.1 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively, and $0.4 million and $0.5 million for the nine months ended September 30, 2025 and 2024, respectively. There was $0.7 million of total unrecognized compensation costs related to outstanding stock options at September 30, 2025 which will be recognized over 4.0 years. There were no options exercised in the nine months ended September 30, 2025. The number of stock options vested and unvested as of September 30, 2025 were 421,731 and 236,023, respectively. Stock-based compensation expense is generally included in selling, general and administrative expenses in the consolidated statement of operations.

 

On June 4, 2025, the Compensation Committee recommended and approved a one-time stock award of 870,000 shares of common stock to the Company’s chief executive officer, Desmond Wheatley, under the Company’s 2021 Equity Incentive Plan. The common stock award was granted as bonus compensation based on his performance in fiscal years ending  December 31, 2023 and 2024, and in connection with the completed acquisitions of All Cell Technologies, LLC, Amiga DOO Kraljevo and Telcom d.o.o. Beograd.

 

Restricted Stock Units

 

In November 2022, the Board approved a stock grant under the Company’s 2021 Equity Incentive Plan to Mr. Wheatley, 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 nine months ended September 30, 2025.

 

A summary of activity of the RSUs for the nine months ended September 30, 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 September 30, 2025

 -  - 

 

Stock compensation expense related to restricted stock units was $35 thousand during the nine months ended September 30, 2025. Stock compensation expense related to performance stock units was $0.2 million during the nine months ended September 30, 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 nine months ended September 30, 2025:

 

  

Shares

  Weighted Average Grant Date Fair Value 

Unvested at December 31, 2024

  -  $- 

Granted

  121,359   3.09 

Vested

  (91,020)  2.13 

Forfeited

  -   - 

Unvested at September 30, 2025

  30,339  $3.09 

 

Stock compensation expense related to restricted stock awards was $0.3 million for the nine months ended September 30, 2025 and $0.4 million for the nine months ended September 30, 2024. Fair values of restricted stock vested during each of the nine months ended September 30, 2025 and 2024 were $0.2 million and $0.3 million, respectively.

 

As of September 30, 2025, there were unvested shares of common stock representing $0.1 million of unrecognized restricted stock grant expense which will be recognized over three months.

 

Warrants

 

During the nine months ended September 30, 2025, the Company had an exercisable warrant 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 warrant is immediately exercisable but is subject to repurchase by the Company until the required service is provided. The fair value of such warrant is $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 nine months ended September 30, 2025, $0.2 million was recorded as expense and at September 30, 2025, $0.8 million of cost has not been recognized and will be recognized over the next 2.4 years. These warrants are not cashless and expire on March 31, 2028.

 

A summary of activity of warrants outstanding for the nine months ended September 30, 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 September 30, 2025

  200,000  $17.00 

 

The intrinsic value of the shares of common stock underlying the exercisable warrants at September 30, 2025 was $0.00.