12. EQUITY-BASED COMPENSATION |
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| 12. EQUITY-BASED COMPENSATION |
Stock Options
Stock option activity for three and six month periods ended June 30, 2025 was as follows:
Equity-based compensation expense totaling $ and $ has been recognized relating to these stock options during the three months ended June 30, 2025 and 2024, respectively. Equity-based compensation expense totaling $0 and $3,251 has been recognized relating to these stock options during the six months ended June 30, 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.
In March 2025, 53,480 warrants were granted with the sale of Series C Preferred Stock and 308,435 were granted with the issuance of Series D Preferred Stock. See Note 11.
Warrant activity for three and six month periods ended June 30, 2025 was as follows:
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. Prior to the Company’s IPO, the price per share of common stock was determined by the Company’s board based on recent prices of common stock sold in private offerings. Subsequent to the IPO, 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.
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