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STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2024

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

13. STOCKHOLDERS’ EQUITY

Common Stock

Pursuant to the Company’s amended and restated certificate of incorporation with the Delaware Secretary of State, , among other things, (i) the total number of shares of all classes of capital stock that Battalion has the authority to issue is 101,000,000 of which 100,000,000 shares are common stock, par value $0.0001 per share and 1,000,000 shares are preferred stock, par value $0.0001 per share and (ii) Battalion is restricted from issuing any non-voting equity securities in violation of Section 1123(a)(6) of chapter 11 of title 11 of the United States Code.

Incentive Plans

The Company’s board of directors adopted the 2020 Long-Term Incentive Plan (the “Plan”), as amended in 2021, in which an aggregate of approximately 1.8 million shares of the Company’s common stock were available for grant pursuant to awards under the Plan. As of December 31, 2024, a maximum of 1.2 million shares of the Company’s common stock remained reserved for issuance under the Plan. For the years ended December 31, 2024 and 2023, the Company recognized an expense of approximately $0.2 million and a benefit of $1.1 million, respectively, related to stock-based compensation awards granted to employees and directors, primarily related to restricted stock unit grants. The benefit recognized in the twelve months ended December 31, 2023 is due to forfeitures of stock options and restricted stock related to the departure of certain executives and employees. Stock-based compensation is recorded as a component of “General and administrative” on the consolidated statements of operations.

Restricted Stock Units

From time to time, the Company grants shares of restricted stock units (“RSUs”) under the Plan to employees of the Company. Under the Plan, employee RSUs will vest and convert to shares typically in equal amounts over a three or four year vesting period from the date of the grant, depending on award, or when the performance or market conditions described below occur. At December 31, 2024 and 2023, the Company had less than $0.1 million and $0.3 million, respectively of unrecognized compensation expense related to non-vested RSU awards to be recognized over a weighted average period of 0.1 years and 0.3 years, respectively.

The following table sets forth the restricted stock unit transactions for the periods indicated:


		Number of Shares		Weighted Average Grant Date Fair Value Per Share			Aggregate Intrinsic Value⁽¹⁾(In thousands)
Unvested outstanding shares at December 31, 2020		874,134		$	9.48		$	3,287
Granted		12,000			8.00
Vested		(95,994)			11.51
Forfeited		(14,625)			11.89
Unvested outstanding shares at December 31, 2021		775,515		$	9.16		$	2,914
Granted		225,700			13.75
Vested		(98,121)			11.40
Forfeited		(13,700)			12.20
Unvested outstanding shares at December 31, 2022		889,394		$	10.03		$	3,993
Granted		30,000			10.68
Vested		(158,845)			12.48
Forfeited		(509,013)			9.04
Unvested outstanding shares at December 31, 2023		251,536			10.56			1,141
Granted		—			—
Vested		—			—
Forfeited		(104,499)			7.28
Unvested outstanding shares at December 31, 2024		147,037		$	12.90		$	192

(1)	The intrinsic value of restricted stock was calculated as the closing market price on December 31, 2024 and 2023 of the underlying stock multiplied by the number of restricted shares that would be issuable. There were no shares vested during the year ended December 31, 2024.

The discussion below outlines the vesting conditions and fair values for each type of the Company’s approximately 0.1 million unvested outstanding RSUs under the Plan issued to employees of the Company as of December 31, 2024.

●

Time-Based RSUs. 0.1 million Time-Based RSUs will vest over a three or four year vesting period from the date of the grant, depending on award. The aggregate grant date fair value of these RSUs was $1.5 million.

●

Performance-Based RSUs. Less than 0.1 million Performance-Based RSUs will vest in full only upon achievement of certain business combination goals, as defined in the awards agreements. The aggregate grant date fair value of these RSUs was $0.4 million. As of December 31, 2024, no expense had been recognized for these awards as a business combination, as defined in the award agreements, had not been consummated.

The assumptions used in calculating the Monte Carlo valuation model fair value of the Company’s RSUs with market-based vesting conditions granted in 2020 are set forth in the following table:


		Year Ended
		December 31, 2020
Weighted average value per performance based RSUs granted during the period		$	6.13
Assumptions:
Stock price volatility⁽¹⁾			51.79	%
Risk free rate of return			1.22	%
Expected term			3.9	years

(1)	Due to the Company’s limited historical data, expected volatility was estimated using volatilities of peer entities as defined in the award agreements whose share prices and assumptions were publicly available.

Equity Grant Units

During September and November 2024, the Company issued in aggregate 229,023 equity grant units (“EGUs”) to Company executives and certain eligible employees. Each EGU represented the right to receive a cash payment equivalent to the value of a share of the Company’s common stock upon the closing of a change of control event. In March 2025, all outstanding EGU awards were rescinded and cancelled. The Company did not record any expense related to the EGUs during the year ended December 31, 2024.

Stock Options

Prior to 2020, the Company granted stock options under the Plan covering shares of common stock to employees of the Company. Stock options, if exercised, are settled through the payment of the exercise price in exchange for new shares of stock underlying the option. Stock option awards granted under the Plan vest over a four-year period at a rate of one-fourth on the annual anniversary date of the grant and expire seven years from the date of grant.

At December 31, 2024, the Company had 106,257 options outstanding (three equal tranches of 35,419 options at exercise prices of $18.91, $28.23, and $37.83 per share) with a weighted average exercise price of $28.32/share. As of December 31, 2024 and 2023, no options were either exercisable nor had intrinsic value due to service performance conditions and/or based on the exercise price of the option exceeding the closing market price. The weighted average remaining contractual life at December 31, 2024 was approximately 2.1 years. There is no unrecognized compensation expense remaining as the stock options have been fully expensed as of December 31, 2024.

The assumptions used in calculating the Black-Scholes-Merton valuation model fair value of the Company’s stock options granted in 2020 are set forth in the following table:


		Year Ended
		December 31, 2020
Weighted average value per option granted during the period		$	3.36
Assumptions:
Stock price volatility⁽¹⁾			61.87	%
Risk free rate of return			1.21	%
Expected term			4.75	years

(1)	Due to the Company’s limited historical data, expected volatility was estimated using volatilities of similar entities whose share or option prices and assumptions were publicly available.