Note 7. Stockholders’ Equity and Stock-Based Compensation

Increase in Authorized Common Shares

On May 8, 2025, the Company held the 2025 annual meeting of stockholders (the Annual Meeting) at which the Company’s stockholders approved increasing the authorized common shares from 25,000,000 shares to 100,000,000 shares. The Amendment to the Articles of Incorporation became effective upon the filing of the Amended and Restated Certificate of Incorporation with the Secretary of State of Nevada on May 8, 2025.

Common Stock and Common Stock Equivalents Outstanding

At June 30, 2025, the Company had a total of 25,905,929 shares of common stock and common stock equivalents outstanding, comprised of 25,545,488 common shares outstanding (including outstanding restricted stock awards (RSAs) totaling 1,017,521 shares) and stock options to purchase 360,441 shares of common stock (of which 340,776 stock options were vested).

At December 31, 2024, the Company had a total of 19,248,852 shares of common stock and common stock equivalents outstanding, comprised of 18,783,912 common shares outstanding (including outstanding RSAs totaling 781,864 shares) and stock options to purchase 464,940 shares of common stock (of which 445,275 stock options were vested).

Issuance and Redemption of Series X Preferred Stock 

On February 27, 2025, the Company entered into a Subscription and Investment Representation Agreement with the chair of the Audit Committee, an independent member of the Board (the Purchaser), pursuant to which the Company agreed to issue and sell one (1) share of the Company’s Series X Preferred Stock, par value $0.001 per share (the Series X Preferred Stock), to the Purchaser for $100 in cash. The sale closed on February 27, 2025 and the $100 was received by the Company. The Company redeemed the Series X Preferred Stock for $100 cash after the Annual Meeting and filed the Certificate of Withdrawal with the Secretary of State of Nevada on May 8, 2025. The Series X Preferred Stock did not have any voting rights except with respect to any proposal to increase the number of authorized shares of common stock of the Company. Each share of Series X Preferred Stock was entitled to 25,000,000 votes on such proposal, voting together with the holders of the Company’s common stock. The votes by the holder of Series X Preferred Stock were cast at the Annual Meeting automatically in the same “mirrored” proportion as the aggregate votes cast “for” and “against” the proposal by the holders of the common stock who voted on such proposal (excluding abstentions, broker non-votes and shares of common stock that were not voted “for” or “against” such proposal). The voting power attributable to the Series X Preferred Stock was disregarded for purposes of determining whether a quorum is present at the Annual Meeting.

Common Stock Equity Offerings

At-the-Market (ATM) Offerings

On May 28, 2019, the Company entered into an at-the-market equity offering sales agreement with Stifel, Nicolaus & Company, Incorporated (Stifel), which was amended on April 9, 2021 and May 8, 2024, pursuant to which the Company issued and sold shares of its common stock from time to time through Stifel as the Company’s sales agent. Under this amended agreement, the Company paid Stifel a commission equal to 3.0% of the aggregate gross proceeds of any sales of common stock under the agreement. The agreement was terminated on May 30, 2025. Sales of the Company’s common stock through Stifel, were made by any method that is deemed to be an at-the-market equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

The Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (SEC) on March 29, 2024, registering the sale of up to $75.0 million of the Company’s securities that was declared effective on April 19, 2024. On May 10, 2024, the Company filed a prospectus supplement, which was further supplemented on July 19, 2024 and August 9, 2024 (collectively, the First Prospectus Supplement), pursuant to which the Company offered and sold shares of common stock having an aggregate offering price of up to $12.6 million from time to time through an ATM offering. The Company exhausted all sales under the First Prospectus Supplement. On November 22, 2024, the Company filed a prospectus supplement (the Second Prospectus Supplement) pursuant to which the Company offered and sold shares of common stock having an aggregate offering price of up to $45.0 million from time to time through an ATM offering. The Company exhausted all sales under the Second Prospectus Supplement.

The Company filed a shelf registration statement on Form S-3 (File No. 333-287563) with the SEC on May 23, 2025, registering the sale of up to $150.0 million of the Company’s securities that was declared effective on June 4, 2025. On June 5, 2025, the Company filed a prospectus supplement (the Prospectus Supplement) pursuant to which the Company may issue and sell from time to time up to $75.0 million of its shares of common stock through the Company’s new sales agent, Jefferies LLC (Jefferies).

On June 5, 2025, the Company entered into an Open Market Sale Agreement^SM with Jefferies, pursuant to which the Company may issue and sell from time to time up to $75,000,000 of shares of its common stock through Jefferies as the Company’s sales agent. Sales of the Company’s common stock through Jefferies, if any, will be made by any method that is deemed to be an “at-the-market” equity offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-287563), the base prospectus filed as part of such registration statement and the Prospectus Supplement.

The Company records its ATM sales on a settlement date basis. The Company sold 6,242,266 shares under the ATM for the six months ended June 30, 2025 resulting in net proceeds of $63.1 million (stock issuance costs were approximately $2.2 million). The Company sold 828,131 shares under the ATM for the six months ended June 30, 2024 resulting in net proceeds of $2.2 million (stock issuance costs were approximately $0.3 million). The Company sold 3,636,647 shares under the ATM for the three months ended June 30, 2025 resulting in net proceeds of $42.9 million (stock issuance costs were approximately $1.6 million). The Company sold 400,831 shares under the ATM for the three months ended June 30, 2024 resulting in net proceeds of $1.0 million (stock issuance costs were approximately $0.1 million).

Stock-Based Compensation

2020 Omnibus Incentive Plan

On March 9, 2020, the Board of Directors adopted the Company’s 2020 Omnibus Incentive Plan (as subsequently amended, the 2020 Plan). On September 3, 2020, the stockholders approved the 2020 Plan to authorize grants of the following types of awards: (a) Options, (b) Stock Appreciation Rights, (c) Restricted Stock Awards and Restricted Stock Units, and (d) Other Stock-Based and Cash-Based Awards.

On February 27, 2024, the Board of Directors approved an increase of 700,000 shares to the authorized number of shares under the 2020 Plan, increasing the total authorized number of shares from 1,800,000 shares to 2,500,000 shares. This increase was approved by the stockholders at the annual meeting of stockholders on April 19, 2024.

On February 26, 2025, the Company’s Board of Directors approved an increase of 2,500,000 shares to the authorized number of shares under the 2020 Plan, increasing the total authorized number of shares from 2,500,000 to 5,000,000. This increase was approved by the stockholders at the annual meeting of stockholders on May 8, 2025.

The total number of shares of common stock available for future issuance under the 2020 Plan was 3,120,331 shares at June 30, 2025.

Stock Options

Stock options issued to the Company’s employees, directors and consultants are summarized as follows for the six months ended June 30, 2025:

For the six months ended June 30, 2025 and 2024, the Company issued 10,448 and 58,309 stock options, respectively, to one consultant. The 10,448 stock options and the 58,309 stock options were assigned a fair value of $5.74 per share and $1.03 per share, respectively (total fair value of $60,000 for each grant). The weighted-average grant-date exercise price per share of the stock options granted for the six months ended June 30, 2025 and 2024, was $9.42 and $3.00, respectively.

The intrinsic value is calculated as the difference between the fair value of the Company’s common stock and the exercise price of the stock options. The fair value of the Company’s common stock was $13.37 per share and $3.37 per share at June 30, 2025 and 2024, respectively.

The fair value was determined using the Black-Scholes pricing model. For expected volatility, the Company concluded that the historical volatility over the option’s expected holding term provided the most reasonable basis for this estimate. For the risk-free interest rate, the Company used U.S. Treasury Note rates, which mature at approximately the same time as the option’s expected holding term or option life determined by using the simplified method. The Company recognizes forfeitures of equity-based awards as a reduction to compensation costs in the period in which they occur.

The following assumptions were used in the Black-Scholes pricing model to determine the fair value of stock options granted for the three months ended June 30, 2025 and 2024:

As of June 30, 2025, total unrecognized compensation cost related to option awards was $29,155, which is expected to be recognized over a remaining weighted-average vesting period of 1.7 years. As of June 30, 2024, total unrecognized compensation cost related to option awards was $29,166, which is expected to be recognized over a remaining weighted-average vesting period of 1.7 years.

Exercise of Options

For the six months ended June 30, 2025, the Company received approximately $0.6 million of net proceeds from the exercise of 99,714 stock options from employees and consultants. There were no options exercised for the six months ended June 30, 2024.

Common Stock

Consultants’ Stock Issuances

For the six months ended June 30, 2025 and 2024, the Company issued 5,181 shares (with an average stock price of $5.79 per share) and 8,750 shares (with stock prices at $3.00 to $4.00 per share) of common stock, respectively, to its investor relations firm for services provided during the period, which were recorded as stock-based compensation expenses. These shares vested immediately upon issuance. The expense recorded for these share issuances was $15,000 for each quarter. The shares were valued based on the closing market price of the Company’s common stock on the date of grant.

On August 19, 2024, the Board of Directors approved an equity grant valued at $180,000 to a consulting and investment research firm, for corporate advisory services to be provided over a twelve-month period, and preparation and dissemination of a report regarding the Company, which resulted in issuing the consultant 71,713 shares of common stock on the grant date, valued at $2.51 per share. These shares vested immediately upon issuance and are not forfeitable. The compensation cost of $180,000 began to be recognized on a straight-line basis over the requisite service period. Approximately $90,000 was recorded as consulting expenses for the six months ended June 30, 2025.

As of June 30, 2025, the unrecognized compensation cost of approximately $24,000 was recorded under prepaid expenses and other current assets on the accompanying condensed consolidated balance sheet, which is expected to be recognized over a remaining service period of 0.14 years.

Director Compensation - Equity-Settled Awards 

On December 4, 2024, the Board of Directors approved an equity grant valued at $500,000 in total to its five independent directors for the service period and year ended December 31, 2024, which resulted in granting a total of 85,915 shares of common stock, valued on the grant date at $5.82 per share on December 4, 2024, which shares vested on January 2, 2025.

On November 20, 2023, the Board of Directors approved an equity grant valued at $240,000 in total to its six independent directors for the service period and year ended December 31, 2023, which resulted in granting a total of 60,456 shares of common stock, valued on the grant date at $3.97 per share on November 20, 2023, which shares vested on January 2, 2024.

The fair value of the shares granted was determined based on the closing market price of the Company’s common stock on the grant date.

Restricted Stock Awards

Restricted stock awards (RSAs) are awards of common stock that are legally issued and outstanding. RSAs are subject to time-based restrictions on transfer and unvested portions are generally subject to a risk of forfeiture if the award recipient ceases providing services to the Company prior to the lapse of the restrictions or does not meet certain performance conditions.

RSAs were included in common stock issued and outstanding and were considered contingently issuable in the calculation of weighted-average shares outstanding for purposes of calculating diluted loss per share. The Grantees receiving RSAs have all rights as a shareholder with respect to these shares, whether vested or unvested, including, without limitation, rights to vote the shares, receive dividends, etc.

The following summarizes the Company’s restricted stock award activity and the RSAs outstanding:

The aggregate fair value was calculated as the fair value of the Company’s common stock. The fair value of the Company’s common stock was $13.37 per share and $3.37 per share at June 30, 2025 and 2024, respectively. The fair value of the RSAs vested for the six months ended June 30, 2025 and 2024 was $1.0 million and $0 million, respectively.

As of June 30, 2025, all the outstanding shares of RSAs are unvested. As of June 30, 2025, total unrecognized compensation cost related to RSAs was $4.9 million, which is expected to be recognized over a remaining weighted-average vesting period of 2.29 years.

Issuance of Performance-Based Restricted Stock Awards (PSAs)

On April 3, 2025, the Company’s Compensation Committee and Board of Directors approved the grant of 300,000 performance-based RSAs (PSAs) to certain executives, key employees, and consultants under the 2020 Plan. These PSAs are subject to both service and performance-based vesting conditions. The performance condition requires the achievement of a specific R&D milestone, the successful insertion of the Company’s coupon fuel samples into the Advanced Test Reactor at INL for irradiation testing by December 31, 2026. The service condition requires continuous service over a three-year period from the grant date.

The Company recognizes stock-based compensation expense for PSAs beginning on the grant date. The amount and timing of expense recognition is based on management’s assessment of the probability of achieving the specified performance condition. These awards were valued at $2.1 million, based on the Company’s closing stock price of $6.99 per share on April 7, 2025. For the three and six months ended June 30, 2025, the Company recognized $0.2 million in stock-based compensation expense, reflecting management’s assessment that achievement of the performance condition was probable as of June 30, 2025.

Issuance of Restricted Stock Awards (RSAs)

On March 12, 2025, the Board of Directors approved a grant of RSAs with a total value of $0.5 million to its five independent directors for the service year ending December 31, 2025. This grant comprised 57,940 RSAs, valued at $8.63 per share on the grant date, with vesting scheduled in four quarterly installments commencing on March 31, 2025. As of June 30, 2025, a total of 28,970 RSAs had vested. This resulted in the recognition of $0.2 million and $0.3 million in stock-based compensation expense for the three and six months ended June 30, 2025.

Restricted Stock Awards Modification and Net Share Settlements for Payments of Withholding Taxes

On March 24, 2025, the Company entered into a separation agreement with a former employee. As part of the agreement, the Board of Directors approved the accelerated vesting of 70,710 RSAs, which would have otherwise been forfeited upon termination. In accordance with ASC 718, this was treated as a modification, leading to the recognition of $0.5 million in stock-based compensation expense in March 2025, including $0.3 million of incremental fair value from the modification of the RSAs awarded.

To satisfy approximately $0.2 million in payroll withholding taxes associated with the accelerated RSAs vesting, the Company withheld 21,285 shares, resulting in the issuance of 49,425 net shares to the former employee. The withheld shares were returned to the 2020 Plan share reserve for potential future issuance.

On March 14, 2025, 10,907 RSAs vested to the former employee based on his service to the Company. To satisfy approximately $36,000 in payroll withholding taxes, the Company withheld 3,863 shares, resulting in the issuance of 7,044 net shares to the former employee. The withheld shares were returned to the 2020 Plan share reserve for potential future issuance.

RSAs Summary - 2025 and 2024

As of June 30, 2025 and December 31, 2024, there were 1,017,521 shares and 781,864 shares of RSAs included in the total issued and outstanding common stock, respectively. Compensation expense for service-based RSAs issued to employees and consultants are generally recognized straight line over the three-year vesting period. RSAs with combined performance-based and service-based vesting conditions are expensed using the graded vesting attribution method. A total of $1.9 million (including the $0.5 million accelerated RSAs vesting for the former employee) and $0.8 million of stock-based compensation expense was recorded for the six months ended June 30, 2025 and 2024, respectively, for the RSAs.

Stock-Based Compensation Expense

Total non-cash stock-based compensation expense recorded related to options and RSAs included in the Company’s unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 are as follows (rounded in millions):