8. Stock-Based Compensation

 

2021 Incentive Plan

 

Our 2021 Equity Incentive Plan (the “2021 Plan”) authorizes the grant of stock options (incentive and non-statutory), stock appreciation rights and restricted stock covering a total of 3,166,667 shares of our common stock. Options are granted at the fair value of our common stock on the date of grant and generally vest either immediately or over a period of up to three years from the date of grant and expire 10 years from the date of grant. As of December 31, 2025, 1,076,332 shares were reserved for issuance related to the 2021 Plan and 2,090,335 shares of our common stock remain available for awards.

 

Recipients of stock awards under our 2021 Incentive Plan become the owner of record of the stock immediately upon grant, which may be subject to certain restrictions. The balance of unvested restricted stock will be forfeited and automatically transferred back to us at no cost upon the termination of the recipient’s employment. Upon vesting of restricted stock that is made to recipients who are employees, the recipient has the option to settle minimum withholding taxes by electing to have us withhold otherwise deliverable shares having a fair value equal to the required tax obligations (“net-settlement”). The net-settlement shares are then immediately cancelled and retired and reduce the shares available for issuance under the 2021 Incentive Plan.

 

We use the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant. The assumptions employed in the calculation of the fair value of share-based compensation expense were calculated as follows for all years presented:

 

Expected dividend yield – zero based on the fact that we do not plan to issue dividends.
Expected volatility – based on our historical market price at consistent points in a period equal to the expected life of the options.
Risk-free interest rate – based on the U.S. Treasury yield curve in effect at the time of grant.
Expected life of options – based on the simplified method of estimating the expected life. Forfeitures are accounted for as they occur.

 

 

Assumptions used to estimate the fair value of stock options granted were as follows:

 

Granted in Period  High   Low   Weighted Average 
Award/Strike Price   1.03    0.86    0.93 
Market Price   0.93    0.86    0.92 
Volatility   117.87%   117.79%   117.87%
Dividend Yield   0.00%   0.00%   0.00%
Expected Life   6.00 yrs    5.00 yrs    5.25 yrs 
Risk Free Rate   3.82%   3.72%   3.74%

 

Unrecognized Stock-Based Compensation Costs

 

Total stock-based compensation related to stock options was $555,747 and $516,049 for the years ended December 31, 2025, and 2024, respectively. As of December 31, 2025, there was $208,004 of unrecognized stock-based compensation related to stock options, which is expected to be recognized over a weighted average period of three years.

 

Stock Option Activity

 

Stock option activity for the year ended December 31, 2025, was as follows:

 

           Weighted
Average
     
       Weighted Average   Remaining
Contractual
   Aggregate 
   Number of
Shares
   Exercise
Price
   Term
(In Years)
   Intrinsic
Value(1)
 
Outstanding at December 31, 2024   33,150   $142.71    6.72   $ 
Granted   1,052,320    0.93    5.25     
Forfeited   (9,138)   105.90         
Outstanding at December 31, 2025   1,076,332    4.41    9.89   $ 
Exercisable at December 31, 2025   812,332    5.54    9.87     

 

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing market price of our common stock as of December 31, 2025, and 2024, respectively

 

Certain other information regarding our stock-based awards was as follows:

 

   2025   2024 
Weighted average grant date fair value of stock options granted per share  $0.77   $11.46 
Grant date fair value of stock options that vested  $819,842   $305,632 

 

Historical Timeline

Fiscal YearFiled
2025Mar 16, 2026Showing above
2024Mar 14, 2025
2022Apr 17, 2023
2021Mar 24, 2022
2020Mar 1, 2021
2019Mar 4, 2020
2018Mar 29, 2019
2017Feb 16, 2018
2016Feb 27, 2017
2015Mar 30, 2016

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.