Share-Based Compensation
Share-Based Compensation
The Company utilizes share-based compensation in the form of stock options, restricted stock, restricted stock units and warrants. The following table summarizes the components of share-based compensation expense for the years ended December 31, 2025 and 2024 ($ in thousands):
| | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | |
| Research and development | $ | 228 | | | $ | 270 | | | |
| General and administrative | 998 | | | 1,383 | | | |
| | | | | |
| Total share-based compensation expense | $ | 1,226 | | | $ | 1,653 | | | |
Total compensation cost related to unvested awards not yet recognized and the weighted-average periods over which the awards are expected to be recognized at December 31, 2025 were as follows ($ in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options | | Restricted Stock Units | | Warrants | | Restricted Stock |
| Unrecognized compensation cost | $ | 216 | | | $ | 7 | | | $ | — | | | $ | 527 | |
| Expected weighted-average period in years of compensation cost to be recognized | 1.65 | | 0.02 | | 0.00 | | 1.74 |
Total fair value of shares vested and the weighted average estimated fair values of shares granted for the years ended December 31, 2025 and 2024 were as follows ($ in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Stock Options | | Warrants |
| | Year Ended December 31, | | Year Ended December 31, |
| | 2025 | | 2024 | | | | 2025 | | 2024 | | |
| Total fair value of shares vested | | $ | 267 | | | $ | 204 | | | | | $ | 150 | | | $ | — | | | |
| Weighted average estimated fair value of shares granted | | 2.60 | | | 2.15 | | | | | — | | | 1.99 | | | |
Valuation Assumptions
The fair value of stock options and warrants at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based upon historical volatility of the Company’s stock. The expected term for the options is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. The expected term for the warrants is based upon the contractual term of the warrants.
The range of assumptions made in calculating the fair values of stock options was as follows: | | | | | | | | | | | | | | | | | | | |
| Stock Options | | |
| Year Ended December 31, | | |
| 2025 | | 2024 | | | | | | | | |
| Expected term - minimum (in years) | 6.3 | | 6.0 | | | | | | | | |
| Expected term - maximum (in years) | 6.3 | | 6.3 | | | | | | | | |
| Expected volatility - minimum | 73% | | 73% | | | | | | | | |
| Expected volatility - maximum | 73% | | 77% | | | | | | | | |
| Weighted average volatility | 73% | | 77% | | | | | | | | |
| Expected dividend yield | — | | — | | | | | | | | |
| Risk-free interest rate - minimum | 4.51% | | 3.54% | | | | | | | | |
| Risk-free interest rate - maximum | 4.51% | | 4.30% | | | | | | | | |
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.