Note 6 – Equity and Stock-Based Compensation

Under the Second Amended and Restated Certificate of Incorporation, we have the authority to issue a total of 101,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock and 1,000,000 shares of preferred stock, par value $0.0001 per share, which will have such rights, powers and preferences as the Board of Directors shall determine.

Pacific Medical Common Stock and Warrant Purchase Agreement

On August 24, 2022, we entered into a Common Stock and Warrant Purchase Agreement (the “Agreement”) with Pacific Medical, Inc. (“Pacific Med”) for the sale and issuance of shares of common stock and warrants to purchase shares of common stock. Pacific Med is the exclusive distributor for the Aurix products within a territory that covers the states of Washington, Oregon, Idaho, Montana, Wyoming, most of California, the northern half of Nevada, plus Alaska.

Pursuant to the Agreement, Pacific Med purchased 500,000 shares of common stock for $500,000. As part of the purchase of common stock, we agreed to grant to Pacific Med the right to participate in any future financing by Nuo through December 31, 2023 (the “Participation Rights”) in connection with a listing of our common stock on a national securities exchange. The Participation Rights entitled Pacific Med to purchase up to 500,000 shares of common stock upon substantially the same terms, conditions, and price provided for in such financing. If such a financing did not occur by December 31, 2023, we agreed to issue Pacific Med a warrant with a January 1, 2024 issuance date and exercisable until June 30, 2024, to purchase up to 500,000 shares of common stock at a price equal to the lower of $2.00 per share or the 20-day volume weighted average closing price per share ending December 31, 2023 (the “2024 Financing Participation warrant”). We issued the 2024 Financing Participation warrant to Pacific Med on January 1, 2024 with an exercise price of $0.56 per share. Pacific Med exercised (i) 270,000 of the warrants for cash proceeds of $151,200 and (ii) the remaining 230,000 warrants cashlessly in exchange for the issuance of 86,889 shares of common stock during the year ended December 31, 2024. The common stock and Participation Rights are equity classified.

As part of the Agreement and as additional incentive compensation with respect to Pacific Med’s performance under the sales and distribution arrangement, we also provided to Pacific Med two compensatory performance-based stock purchase warrants and certain contingently issuable performance shares. The first warrant entitled Pacific Med to purchase up to 250,000 shares of common stock at a price of $1.00 per share upon Pacific Med attaining certain performance goals based upon exceeding sales quota revenue for calendar years 2023 and/or 2024. The second warrant entitles Pacific Med to purchase up to 200,000 shares of Common Stock at a price of $1.50 per share upon Pacific Med attaining certain performance goals based upon exceeding sales quota revenue for calendar years 2024 and/or 2025. The warrants will expire December 31, 2027 and December 31, 2028, respectively.  However, the performance goals providing for exercisability of the warrants were not achieved and the warrants will not be exercisable throughout the remainder of their term.  Furthermore, the warrants shall be considered cancelled and forfeited upon a determination that the performance goals cannot be attained upon the last of the determination dates.  As a result, the warrant expiring December 31, 2027 is considered cancelled and forfeited.  We also agreed to issue up to 300,000 shares of common stock to Pacific Med subject to and upon the achievement of certain milestones set forth in the Agreement based upon sales of our products over defined 12-month periods of between $4.5 million by June 30, 2024 through at least $12.5 million in calendar year 2025 (the Performance Shares”). The fair value of the Performance Shares at the date of issuance was approximately $615,000 based on the closing stock price on the closing of the Agreement. As the issuance of the shares is not considered probable as of June 30, 2025, there was no expense recognition for the six months ended June 30, 2025. When issuance is determined to be probable, the issuance date fair value of the shares through such date will be recognized with the balance of the fair value recognized ratably over the remaining period of performance.

Stock-Based Compensation

In July 2016, the Board of Directors approved the 2016 Omnibus Incentive Plan (the “Plan”), and in November 2016, holders of a majority of our capital stock approved the Plan, as amended and restated, which provides for the grant of equity and cash incentive awards to officers, directors and employees of, and consultants to, Nuo Therapeutics and its subsidiaries. Further, in March 2022, the Board approved an amendment to the Plan to increase the shares available to 4,250,000 and remove an annual evergreen provision, which was approved by the holders of a majority of our outstanding common stock and which became effective in June 2022.

A summary of stock option activity under the Plan during the six months ended June 30, 2025 is presented below: 

There were 76,000 stock options granted to an employee and a third-party consultant during the six months ended June 30, 2025. The fair value of the options to vest over three years was approximately $59,800. The aggregate intrinsic value for outstanding and exercisable options as of June 30, 2025 was approximately $2.9 million and $2.4 million, respectively. There were no options granted during the six months ended June 30, 2024.

For the three months ended June 30, 2025 and 2024, we recorded stock-based compensation expense of $23,201 and $3,081, respectively.  For the six months ended June 30, 2025 and 2024, we recorded stock-based compensation expense of $42,544 and $6,162, respectively. As of June 30, 2025, there was approximately $120,500 of unrecognized compensation cost related to non-vested stock options which is expected to be recognized prior to year-end 2028.