Quarterly report [Sections 13 or 15(d)]

Share-based Compensation

v3.25.2
Share-based Compensation
6 Months Ended
Jun. 30, 2025
Share-Based Payment Arrangement [Abstract]  
Share-based Compensation

14. Share-based Compensation

 

The 2019 Plan provides for the granting of incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights (“SARs”), restricted stock units, performance awards, dividend equivalent rights and other awards, which may be granted singly, in combination, or in tandem, and which may be paid in cash, shares of common stock of the Company or a combination of cash and shares of common stock of the Company. The Company initially reserved a total of 57,143 shares of the Company’s common stock for awards under the 2019 Plan. Effective as of May 26, 2020 and May 3, 2021, respectively, the Board approved an increase of the number of authorized shares of common stock reserved under the 2019 Plan from 57,143 shares of common stock to 485,715 and from 485,715 shares of common stock to 571,429 shares of common stock, all of which may be delivered pursuant to incentive stock options.

 

On December 31, 2024, the Board approved an additional 780,000 shares of common stock to be reserved under the 2019 Plan, such that total of number of shares underlying the Plan is 1,651,429 of which 975,907 shares have already been awarded or exercised. The Company’s stockholders approved this 780,000 increase at the Company’s 2025 Annual Meeting of Stockholders held on June 17, 2025. Subject to adjustments pursuant to the 2019 Plan, the maximum number of shares of common stock with respect to which stock options or SARs may be granted to an executive officer during any calendar year is 14,286 shares of common stock.

 

The following table contains information about the 2019 Plan as of June 30, 2025:

 

    Awards Reserved     Awards Issued &     Awards     Awards Available  
    for Issuance     Outstanding     Exercised     for Grant  
2019 Plan(1)     1,651,429       1,104,407       161,422       547,022  
Awards issued outside of 2019 Plan(2)     -       100,821       74,705       -  

 

(1) Includes incentive stock options and restricted stock units discussed below.
(2) Includes shares of restricted common stock granted outside of the 2019 Plan to our Chief Executive Officer, Adam Levy.

 

Incentive stock options

 

On January 2, 2025, the Company granted options to purchase up to 150,000 shares of the Company’s common stock at a per share exercise price of $3.83 to Adam Levy for his service as our Chief Executive Officer pursuant to the terms of his Executive Employment Agreement dated December 31, 2024, all of which vests over a period of four years beginning December 31, 2025.

 

On January 2, 2025, the Company granted options to purchase up to 100,000 shares of the Company’s common stock at a per share exercise price of $3.83 to Joe McGuire for his service as our Chief Financial Officer pursuant to the terms of his Executive Employment Agreement dated December 31, 2024, which 25% vest beginning September 1, 2025 and the remainder over a period of three years.

 

Non-incentive stock options

 

On June 25, 2025, the Company granted to each of its four non-employee Board members options to purchase up to 30,000 shares of the Company’s common stock at a per share exercise price of $2.32 for their services as Board members until the Company’s 2026 Annual Meeting of Stockholders. The options vest in equal 2,500 share amounts over the continuous twelve months beginning on July 31, 2025.

 

The following table summarizes the Company’s incentive stock option activity and related information for the period ended June 30, 2025:

 

                Weighted  
          Weighted     Average  
          Average     Contractual  
    Number of     Exercise     Term in  
    Options     Price     Years  
Outstanding at January 1, 2025     588,397     $ 2.67       7.81  
Granted     370,000       3.34       7.97  
Exercised     (6,458 )     2.05        
Forfeited                  
Cancelled     (58,542 )     2.01        
Expired     (14,286 )     5.25        
Outstanding at June 30, 2025     879,111     $ 2.96       7.45  
Exercisable at June 30, 2025     374,111     $ 2.13       7.30  

 

 

As of June 30, 2025, vested outstanding stock options had $232 thousand intrinsic value as the exercise price is greater than the estimated fair value of the underlying common stock, respectively. As of June 30, 2025, there was approximately $687 thousand of total unrecognized share-based compensation related to unvested stock options, which the Company expects to recognize over the next 3 months excluding options fully contingent upon certain sales-based milestones being achieved within 18 to 36 months of commercial release.

 

The Company recognizes compensation expense for stock option awards on a straight-line basis over the applicable service period of the award. The service period is generally the vesting period.

 

The following assumptions were used to calculate share-based compensation expense for the six months ended June 30, 2025 and 2024:

 

    2025     2024  
Volatility     78.21 %     258.01 %
Risk-free interest rate     4.38 %     4.42 %
Dividend yield     0.0 %     0 %
Expected term      5.00 years        5.00 years  

 

The Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Accordingly, the Company has elected to use the “simplified method” to estimate the expected term of its share-based awards. The simplified method computes the expected term as the sum of the award’s vesting term plus the original contractual term divided by two.

 

The Company estimated the expected volatility input for the Black-Scholes model using the historical volatility of its own publicly traded common stock over a period commensurate with the expected term of the option.

 

Restricted stock awards

 

Effective as of June 25, 2025, the Company granted restricted stock awards of 5,000 shares of the Company’s common stock to two Board members for the services as Chairperson of the Board and Chairperson of the Audit Committee, respectively, until the Company’s 2026 Annual Meeting of Stockholders. The 5,000 shares vest in equal 417 share amounts over the following continuous twelve month beginning on July 31, 2025 (with 413 shares vesting month twelve due to rounding adjustments). Under ASC 718, Compensation—Stock Compensation (“ASC 718”), the Company has measured the value of the aggregated 10,000 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($2.32 per share).

 

Effective as of January 2, 2025, the Company granted an aggregated restricted stock award of 26,116 shares of the Company’s common stock to Adam Levy for his service as our Chief Executive Officer pursuant to the terms of his Executive Employment Agreement dated December 31, 2024. The shares vest monthly from January 2, 2025 through December 31, 2025. Under ASC 718, the Company has measured the value of the 26,116 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($3.83 per share).

 

Effective as of January 1, 2025, the Company granted fully vested restricted stock awards of 2,500 shares of the Company’s common stock to two Board members. Under ASC 718, the Company has measured the value of the aggregated 5,000 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($3.83 per share).

 

Effective as of January 2, 2025, the Company granted an aggregated restricted stock award of 4,082 fully vested shares of the Company’s common stock to Joseph McGuire for reimbursed expenses in the prior year. Under ASC 718, the Company has measured the value of the 4,082 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($4.62 per share).

 

 

Effective as of January 1, 2024, the Company granted an aggregated restricted stock award of 22,222 shares of the Company’s common stock to Adam Levy for his service as our Chief Executive Officer pursuant to the terms of his Executive Employment Agreement dated December 31, 2023. The shares vest monthly from April 1, 2024 through December 31, 2024. Under ASC 718, the Company has measured the value of the 22,222 shares granted based on the closing price of the Company’s stock at the grant date of the RSU Grant ($2.25 per share).

 

          Weighted  
          Average  
    Number of     Grant Date  
    Units     Fair Value  
Outstanding at January 1, 2025     55,874     $ 2.16  
Granted     45,198       3.57  
Exercised and converted to common shares     (9,582 )     4.11  
Forfeited     (1,500 )     2.72  
Outstanding at June 30, 2025     89,990     $ 2.65  
Exercisable at June 30, 2025     36,432     $ 2.66  

 

Compensation expense will be recognized ratably over the total vesting schedule. The Company will periodically adjust the cumulative compensation expense for forfeited awards. The Company recognizes the reversal of any previously recognized compensation expense on forfeited awards in the period the awards are forfeited. Share-based compensation of $293 thousand and $118 thousand has been recorded for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, there was $124 thousand unrecognized share-based compensation related to unvested RSUs, which the Company expects to recognize through December 2025.

 

Warrants

 

The following table shows a summary of common stock warrants through June 30, 2025:

 

          Weighted     Weighted  
          Average     Average  
    Number of     Exercise     Contractual  
    Warrants     Price     Term in Years  
Outstanding at January 1, 2025     4,765,205     $ 5.18       2.42  
Granted                  
Exercised                  
Forfeited                  
Cancelled                  
Expired                  
Outstanding at June 30, 2025     4,765,205     $ 5.18       1.93  
Exercisable at June 30, 2025     4,765,205     $ 5.18       1.93  

 

As of June 30, 2025 and 2024, vested outstanding warrants had no intrinsic value as the exercise price is greater than the estimated fair value of the underlying common stock.