13. EQUITY-BASED COMPENSATION

 

Restricted Stock Units

 

In December 2025, the Company granted 2,431,385 restricted stock units to executives of the Company and 834,164 restricted stock units to its board members. The Company recognized approximately $94,000 in equity-based compensation on restricted stock units for the year ended December 31, 2025. These restricted stock units have vesting periods over the next three years.

 

Restricted stock unit activity as of and for the years ended December 31, 2025 and 2024 was as follows

 

   Number of
RSUs
   Weighted
Average
Remaining
Contractual
Term
(Years)
 
Outstanding at December 31, 2023        
Granted        
Vested or released        
Forfeited        
Outstanding at December 31, 2024        
Granted   3,265,548    1.46 
Vested or released   (208,544)    
Forfeited        
Outstanding at December 31, 2025   3,057,004    1.52 

 

Shares of Restricted Stock

 

In 2025, employees and contractors were granted a total of 615,405 shares of restricted stock. The restricted stock award vested 100% on December 13, 2025.

 

Total equity-based compensation expense related to shares of restricted stock issuances was $2,067,061 and $0 for the years ended December 31, 2025 and 2024, respectively.

 

Restricted stock activity for the years ended December 31, 2025 and 2024 was as follows:

 

   Number of
Shares of Restricted Stock
   Weighted
Average
Remaining
Contractual
Term
(Years)
 
Outstanding at December 31, 2023   20,000    0.00 
Granted        
Vested or released   (20,000)    
Forfeited        
Outstanding at December 31, 2024       0.00 
Granted   615,405    0.50 
Vested or released   (615,405)    
Forfeited        
Outstanding at December 31, 2025        

 

 

13. EQUITY-BASED COMPENSATION (continued)

 

Stock Options

 

Stock option activity for the years ended December 31, 2025 and 2024 was as follows:

 

   Number of
Options
   Weighted
Average
Exercise
Price
   Weighted
Average
Remaining
Contractual
Term
(Years)
 
Outstanding at December 31, 2023   19,416   $204.24    8.08 
Granted            
Exercised            
Forfeited   (16,377)        
Outstanding at December 31, 2024   3,039   $69.92    7.67 
Granted            
Exercised            
Forfeited   -         
Outstanding at December 31, 2025   3,039   $69.92    6.67 
                
Exercisable at December 31, 2025   3,039   $69.92    6.67 

 

Equity-based compensation expense totaling $0 and $6,259 has been recognized relating to these stock options during 2025 and 2024, respectively.

 

Warrants

 

As disclosed in Note 11, 13,043 warrants were granted in March 2024 to our financial advisor and placement agent in connection with our offering and sale of Series B Preferred Stock. In 2024 the Company issued 32,175 warrants in connection with the 2024 Convertible Notes described in Note 10.

 

The Company granted 699,204 warrants in connection with the issuance of Series C Preferred Stock, Series D Preferred Stock, and debt agreements.

 

   Number of
Warrants
   Weighted
Average
Exercise
Price
   Weighted
Average
Remaining
Contractual
Term
(Years)
 
Outstanding at December 31, 2023   141,477   $37.03    4.16 
Granted   45,218    9.89    5.20 
Vested or released            
Forfeited            
Outstanding at December 31, 2024   186,695   $30.59    3.65 
Granted   699,204    16.93    5.00 
Vested or released            
Forfeited            
Outstanding at December 31, 2025   885,899   $19.79    3.93 

 

The Company uses the Black-Scholes option-pricing model to estimate the fair value of equity-based awards. The inputs for the Black-Scholes valuation model require management’s significant assumptions. The price per share of common stock is determined by using the closing market price on the New York Stock Exchange on the grant date. The risk-free interest rate is based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant date. The expected term for employee and non-employee awards ranged from 5 to 10 years based on industry data, vesting period, contractual period, among other factors. The expected volatility was estimated based on historical volatility information of the Company. The Company does not expect to pay dividends. For awards with a performance condition, stock compensation is recognized over the requisite service period if it is probable that the performance condition will be satisfied.

 

Historical Timeline

Fiscal YearFiled
2025Apr 1, 2026Showing above
2024Mar 31, 2025
2022Mar 31, 2023

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.