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Stockholders' Equity

12 Months Ended

Dec. 31, 2024

Stockholders' Equity Note [Abstract]

Stockholders' Equity

7.   Stockholders’ Equity

The Company has authority to issue up to 51,000,000 shares, consisting of 50,000,000 shares of common stock and 1,000,000 shares of preferred stock.

Public Offering and Private Placement Transactions

On March 15, 2024, the Company entered into an underwriting agreement with Craig-Hallum Capital Group LLC (the “Representative”), as the representative of the underwriters, relating to a firm commitment underwritten public offering (the “Offering”) of 328,427 shares of the Company’s common stock at a price to the public of $6.50 per share.

The closing of the Offering occurred on March 19, 2024. The net proceeds to the Company from the sale of the shares, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately $1.7 million.

Upon closing of the Offering, the Company issued the Representative certain warrants to purchase up to 18,293 shares of common stock (the “Representative’s Warrants”) as compensation, which amount was offset against the proceeds received.

The Representative’s Warrants became exercisable on September 15, 2024 (180 days after the closing), and have an exercise price of $8.13.

In connection with the Offering, on March 14, 2024, the Company entered into subscription agreements with each of Robert W. D’Loren, Chairman and Chief Executive Officer of the Company; an affiliate of Mark DiSanto, a director of the Company; and Seth Burroughs, Executive Vice President of Business Development and Treasury of the Company to purchase 13,258, 13,258, and 2,946 shares, respectively (collectively, the “Private Placement Shares”), at a price of $9.80 per Private Placement Share. The total number of Private Placement Shares purchased was 29,462. Net proceeds after payment of agent fees to the Representative were approximately $0.3 million. The purchase of the Private Placement Shares closed concurrently with the Offering.

The aggregate number of shares of common stock issued from the Offering and the Private Placement was 357,889 shares and the total net proceeds received was approximately $1.9 million.

Equity Incentive Plans

The Company’s 2021 Equity Incentive Plan (the “2021 Plan”) is designed and utilized to enable the Company to provide its employees, officers, directors, consultants, and others whose past, present, and/or potential contributions to the Company have been, are, or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. A total of 400,000 shares of common stock are eligible for issuance under the 2021 Plan. The 2021 Plan provides for the grant of any or all of the following types of awards: stock options (incentive or non-qualified), restricted stock, restricted stock units, performance awards, or cash awards. The 2021 Plan is administered by the Company’s Board of Directors, or, at the Board’s discretion, a committee of the Board.

In addition, stock-based awards (including options, warrants, and restricted stock) previously granted under the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) remain outstanding and shares of common stock may be issued to satisfy options or warrants previously granted under the 2011 Plan, although no new awards may be granted under the 2011 Plan.

Stock-Based Compensation

Total expense recognized for all forms of stock-based compensation was approximately $0.47 million and $0.22 million in the Current Year and Prior Year, respectively.

Of the Current Year expense amount, approximately $0.23 million related to employees and approximately $0.24 million related to directors and consultants; all of this expense was recorded as a direct operating cost in the accompanying statement of operations. Of the Prior Year expense amount, approximately $0.02 million related to employees and approximately $0.20 million related to directors and consultants; all of this expense was recorded as a direct operating cost in the accompanying statement of operations.

Stock Options

Options granted under the Company’s equity incentive plans expire at various times – generally either five or ten years from the date of grant, depending on the particular grant.

​

A summary of the Company’s stock option activity for the Current Year is as follows:

​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Weighted	​	​	​
​	​	​	​	​	​	​	Average	​	​	​
​	​	​	​	Weighted		​	Remaining	​	​	​
​	​	​	​	Average		​	Contractual	​	Aggregate
​	​	Number of	​	Exercise		​	Life	​	Intrinsic
​		Options		Price			(in Years)		Value
Outstanding at January 1, 2024		514,854	​	$	20.27		4.26	​	$	—
Granted		10,000	​		8.50			​
Exercised		—	​		—			​
Expired/Forfeited		(52,462)	​		29.35			​
Outstanding at December 31, 2024, and expected to vest		472,392	​	$	19.01		3.65	​	$	—
Exercisable at December 31, 2024		97,392	​	$	27.22		1.26	​	$	—

​

Current Year stock option grants were as follows:

On April 3, 2024, the Company granted options to purchase an aggregate of 10,000 shares of common stock to non-management directors. The exercise price of the options is $8.50 per share, and 50% of the options vest on each of April 3, 2025 and April 3, 2026.

Prior Year stock option grants were as follows:

In April 2023, the Company granted options to purchase an aggregate of 10,000 shares of common stock to a key individual. The exercise price of the options is $15.00 per share, and the vesting of such options is dependent upon the achievement of certain revenue targets. None of these options were vested as of December 31, 2023.

On August 23, 2023, the Company granted options to purchase an aggregate of 10,000 shares of common stock to non-management directors. The exercise price of the options is $15.10 per share; 50% of the options vested on April 1, 2024 and the remaining 50% vests April 1, 2025.

The fair values of the options granted were estimated at the respective dates of grant using the Black-Scholes option pricing model with the following range of assumptions:

​

​	​	​	​	​	​
​	​	Year Ended December 31,
​		2024		2023
Expected Volatility		78	%	89 – 90	%
Expected Dividend Yield		—	%	—	%
Expected Life (Term, in years)		3.25		2.75 – 10	​
Risk-Free Interest Rate		4.46	%	4.0 – 4.7	%

​

Compensation expense related to stock options for the Current Year and Prior Year was approximately $0.08 million and $0.09 million, respectively. Total unrecognized compensation expense related to unvested stock options (excluding stock options with performance-based vesting) at December 31, 2024 amounts to approximately $0.04 million and is expected to be recognized over a weighted average period of 0.94 years.

​

Of the total stock options outstanding at December 31, 2024, the vesting of 350,000 options is contingent upon the Company’s common stock achieving certain target prices as follows:

​	​	​
Target Prices		Number of Options Vesting
$30.00	​	100,000
$50.00	​	85,000
$70.00	​	70,000
$90.00	​	55,000
$110.00	​	40,000

​

As of December 31, 2024, none of these 350,000 performance-based stock options have vested, and no compensation expense has been recorded related to such options.

The following table summarizes the Company’s stock option activity for non-vested options for the Current Year:

​

​	​	​	​	​	​
​		​		Weighted
​	​	​	​	Average
​	​	Number of	​	Grant Date
​		Options		Fair Value
Balance at January 1, 2024		375,000	​	$	0.37
Granted		10,000	​		4.72
Vested		(10,000)	​	​	9.02
Forfeited or Canceled		—	​		—
Balance at December 31, 2024		375,000	​	$	0.24

​

Stock Awards

​

A summary of the Company’s restricted stock activity for the Current Year is as follows:

​

​	​	​	​	​	​
​	​	​	​	Weighted
​	​	Number of	​	Average
​	​	Restricted	​	Grant Date
​		Shares		Fair Value
Outstanding at January 1, 2024		33,333	​	$	36.81
Granted		30,770	​		8.45
Vested		(28,770)	​		8.94
Expired/Forfeited		—	​		—
Outstanding at December 31, 2024		35,333	​	$	34.80

​

Current Year stock award grants were as follows:

On January 12, 2024, the Company issued 7,800 shares of common stock to a consultant, which vested immediately.

On April 3, 2024, the Company issued an aggregate of 4,000 shares of common stock to non-management directors, of which 50% vests on each of April 3, 2025 and April 3, 2026.

On July 30, 2024, the Company entered into amendments to the employment agreements dated February 27, 2019 with each of Robert W. D’Loren, its Chairman of the Board, Chief Executive Officer and President, and Seth Burroughs, its Executive Vice President of Business Development. Pursuant to each amendment, the Company agreed with the respective executive officer that commencing July 16, 2024 and ending December 31, 2025, the executive officer shall accept and the Company shall pay for each month 40% of such executive officer’s pro rata portion of Base Salary (as defined in the respective employment agreement) for each such month through the issuance of shares of the Company’s common stock.

The shares of common stock are issued on the last day of each month, and the number of shares issuable for a month to Mr. D’Loren and Mr. Burroughs is determined by dividing 40% of executive officer’s pro-rated Base Salary for such month by the closing sale price of the Company’s common stock on the last trading day of such month. Each of Mr. D’Loren and Mr. Burroughs are permitted to pay the withholding tax through the exchange of a portion of the shares. As a result of these amendments, the Company issued an aggregate of 17,502 shares of common stock (net of shares exchanged for withholding taxes) to executives for the Current Year.

On August 2, 2024, the Company issued 1,468 shares of common stock to a member of management, which vested immediately.

Prior Year stock award grants were as follows:

On January 1, 2023, the Company issued 833 shares of common stock to a consultant, which vested immediately.

On April 17, 2023, the Company issued 833 shares of common stock to a consultant, which vested immediately.

On May 15, 2023, the Company issued 5,000 shares of common stock to a consultant, which vested immediately.

On July 20, 2023, the Company issued 730 shares of common stock to an employee, which vested immediately.

On August 23, 2023, the Company issued an aggregate of 4,000 shares of common stock to non-management directors, of which 50% vests on each of April 1, 2024 and April 1, 2025.

Notwithstanding the foregoing, each grantee may extend the first anniversary of all or a portion of the restricted stock by six months and, thereafter one or more times may further extend such date with respect to all or a portion of the restricted stock until the next following date exactly six months thereafter, by providing written notice of such election to extend such date with respect to all or a portion of the restricted stock prior to such date.

Total compensation expense related to stock awards for the Current Year and Prior Year (inclusive of the amounts detailed above) was approximately $0.39 million and $0.12 million, respectively. Total unrecognized compensation expense related to unvested restricted stock grants at December 31, 2024 amounts to $0.03 million and is expected to be recognized over a weighted average period of 0.95 years.

The following table provides information with respect to restricted stock purchased and retired by the Company during the Current Year:

​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Number of	​	​	​
​	​	​	​	​	​	​	Shares	​	​	​
​	​	​	​	​	​	​	Purchased as	​	​	​
​	​	​	​	​	​	​	Part of	​	​	​
​	​	Total Number	​	Actual		​	Publicly	​	Fair value of
​	​	of Shares	​	Price Paid		​	Announced	​	Re-Purchased
Date		Purchased		per Share			Plan		Shares
July 31, 2024 (i)	​	1,344	​	$	7.20		—	​	$	9,680
August 31, 2024 (i)	​	2,760	​	​	7.03	​	—	​	​	19,411
September 30, 2024 (i)	​	2,594	​	​	7.48	​	—	​	​	19,411
October 31, 2024(i)	​	2,458	​	​	7.89	​	—	​	​	19,411
November 31, 2024 (i)	​	2,824	​	​	6.87	​	—	​	​	19,411
December 31, 2024 (i)		3,768	​		5.15		—	​		19,411
Total 2024		15,748	​	$	6.78		—	​	$	106,735

​

(i) The shares were exchanged from employees in connection with the income tax withholding obligations on behalf of such employees from the receipt of stock awards. The 2011 Plan and 2021 Plan allow for award holders to surrender vested shares to cover withholding tax liabilities.

The Company did not repurchase any shares of common stock during the year ended December 31, 2023.

Restricted Stock Units

There were no restricted stock units outstanding as of December 31, 2024 and 2023, and no restricted stock units have been issued since the inception of the 2021 Plan.

Shares Reserved for Issuance

At December 31, 2024, there were 1,016,306 shares of common stock reserved for issuance, including 423,392 shares reserved pursuant to unexercised stock options previously granted under the 2011 Plan, 49,000 shares reserved pursuant to unexercised stock options granted under the 2021 Plan, and 279,957 shares available for issuance (future award grants) under the 2021 Plan. Also included in the aforementioned total shares reserved for issuance were 263,957 shares reserved pursuant to unexercised warrants issued through various corporate transactions, as described further below.

Warrants

Warrants granted by the Company expire at various times – generally either five or ten years from the date of grant, depending on the particular grant.

A summary of the Company’s warrant activity for the Current Year is as follows:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Weighted	​	​	​
​	​	​	​	​	​	​	Average	​	​	​
​	​	​	​	Weighted		​	Remaining	​	​	​
​	​	​		Average			Contractual	​	Aggregate
​	​	Number of	​	Exercise			Life	​	Intrinsic
​		Warrants		Price			(in Years)		Value
Outstanding and exercisable at January 1, 2024		111,606	​	$	16.71		8.46	​	$	—
Issued		163,957	​		6.52		​	​
Exercised		—	​		—		​	​
Expired/Forfeited		(11,606)	​		31.46		​	​
Outstanding at December 31, 2024		263,957	​	$	9.73		8.96	​	$	—
Exercisable at December 31, 2024		163,957	​	$	6.52		9.31	​	$	—

​

Warrants issued during the Current Year include (i) warrants to purchase up to 18,293 shares of common stock issued in connection with the March 19, 2024 Offering (see “Public Offering and Private Placement Transactions” above) and (ii) warrants to purchase up to 145,664 shares of common stock issued in connection with the December 12, 2024 debt refinancing transaction (see Note 6). There was no compensation expense recognized during the Current Year related to these warrants.

In the Prior Year, in connection with the entrance into the Halston Master License (see Note 5), the Company issued to G-III a ten-year warrant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $15.00 per share, which vests based upon certain annual royalty targets being satisfied under the license agreement. The fair value of this warrant is being recognized as a reduction of revenue over the term of the related license agreement, with an offsetting increase to stockholders’ equity as additional paid-in capital. The amount of contra-revenue recorded related to this warrant during the Current Year and Prior Year was approximately $0.04 million and $0.03 million, respectively. As of December 31, 2024, no portion of this warrant had vested.

Dividends

The Company has not paid any dividends to date.

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- Definition

The entire disclosure for equity.

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