13. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Stock-Based Compensation

The Company includes stock compensation expense within general and administrative expenses in the Consolidated Statements of Operations. The Company recognized total stock-based compensation costs, net of forfeitures, of $0.4 million and $1.2 million for the years ended December 31, 2025 and 2024, respectively. Stock-based compensation expense is related to equity awards to executives and other employees, awarded from the Company's Amended and Restated long-term incentive plan.

Issuance of Stock-based Awards

The Company has a long-term incentive plan, originally approved by the Board of Directors in 2019. In July 2021 and in August 2023, the plan was amended (the “Amended and Restated Plan”) to increase the maximum number of shares of common stock available for issuance from its original 1,675,000 shares to 4,000,000 (in July 2021) and to 5,500,000 (in August 2023). The plan provides for the award of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, substitute awards, other stock-based awards, cash awards and/or any combination of the foregoing which may be granted to employees, officers and directors of the Company and affiliates or to any other person who performs services to the Company and affiliates, including independent contractors and consultants of the Company and its subsidiaries. At December 31, 2025, the number of shares of common stock available for issuance under the Amended and Restated Plan is 3,872,379 shares.

No participant may receive a grant covering more than 2,000,000 shares of our common stock in any year and a non-employee member of the Board may not be granted more than 100,000 shares in any year. In the event of certain changes in the Company’s common stock such as recapitalization, reclassification, stock split, combination or exchange of shares, stock dividends or the like, appropriate adjustment will be made in the number and kind of shares available for issuance under the Amended and Restated Plan as well as the purchase price, if any, per share.

(a) Restricted Stock Units ("RSU's")

No RSUs were granted during the years ended  December 31, 2025 and 2024.  All remaining RSU's vested in 2025 and there are no RSU's outstanding at December 31, 2025. A summary of the Company's RSUs activity during the fiscal years ended  December 31, 2025 and 2024 are presented in the following table:

During the years ended  December 31, 2025 and 2024, the Company expensed stock based compensation related to restricted stock units of $7 thousand and $0.1 million, respectively. 

(b) Stock Options

On February 18, 2022, the Company granted executives 774,505 stock options under the 2019 plan to purchase an equal number of shares of the Company’s common stock, with a strike price equal to $6.00 per share. The stock options vested equally over a three-year vesting period. The Company estimated the value of the options using a valuation model. The full aggregate fair value determined was $1.5 million using observable inputs from trading values of the Company's shares of stock. The stock options were expensed over the vesting period. Assumptions used in determining the valuation of the options included the following:

 Management Transition

Effective January 31, 2025, the Company appointed the Company’s Chairman of the Board, J. Casey Crenshaw, as its Executive Chairman, and interim President and Chief Executive Officer. Mr. Crenshaw replaced Westervelt T. Ballard, Jr., who mutually agreed with the Company to terminate his employment as the Company’s President and Chief Executive Officer and voluntarily resigned his position as a director. As part of Mr. Ballard’s separation, the Company entered into a release and consulting agreement with Mr. Ballard whereby the Company will paid Mr. Ballard separation pay of $1.0 million over a twelve-month period, and will pay additional pay of $41 thousand representing an amount equal to a prorated bonus at "target" performance that Mr. Ballard would have received for his 2025 performance and reimbursement of COBRA premiums over what Mr. Ballard would normally pay for Company provided insurance up to a maximum of 18 months. Additionally, Mr. Ballard received a payment of $49 thousand per month for the remainder of 2025 for his consulting services all of which was included in selling, general and administrative expenses in the accompanying Consolidated Statement of Operations for the year ended December 31, 2025.  

Effective January 31, 2025, the Company and Mr. Ballard additionally agreed that 7,765 unvested restricted stock units and 147,525 unvested stock options granted under the Company's Amended and Restated Long-Term Incentive Plan would vest as of the date of Mr. Ballard’s separation of employment. The exercise period of these options plus 1.6 million options which had vested prior to Mr. Ballard’s separation, was amended to expire December 31, 2025. The amendment of the exercise period represents a modification of an equity award under U.S. GAAP and the Company recognized $0.4 million in additional non-cash stock compensation expense related to the adjustment of the exercise period of his options to December 31, 2025. The assumptions included in estimating the additional expense include:

On  December 31, 2025, in accordance with Mr. Ballard's release and consulting agreement, Mr. Ballard's 1,742,574 stock options expired unexercised. At  December 31, 2025, all remaining stock options were out-of-the money with strike prices in excess of market prices and remain unexercised. These options have a weighted average remaining term of 6.1 years at  December 31, 2025. A summary of the Company's stock option awards activity during the fiscal years 2025 and 2024 are presented in the following table:

During the years ended  December 31, 2025 and 2024, the Company expensed stock based compensation related to stock options of $0.4 million and $1.1 million, respectively, which is included in general and administrative expenses in the Consolidated Statements of Operations. The stock based expense incurred during the year ended 2025 primarily included a $0.4 million charge for the modification of Mr. Ballard's 2021 and 2022 stock option grants, related to Mr. Ballard's separation.

 Unrecognized Stock-Based Compensation

As of December 31, 2025, the Company had no unrecognized compensation costs. The Company has no remaining unvested equity awards.

Common Stock

The Company is authorized to issue up to 37,500,000 shares of Common Stock, $0.001 par value per share. The following table summarizes issuances of shares of our common stock for the years ended December 31, 2025 and 2024 (amounts in thousands):

Preferred Stock

Our Board of Directors has the authority, without stockholder approval, to issue up to 1,000,000 shares of Preferred Stock, $0.001 par value. The authorized Preferred Stock may be issued by the Board of Directors in one or more series and with the rights, privileges and limitations of the Preferred Stock determined by the Board of Directors. The rights, preferences, powers and limitations of different series of Preferred Stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions, and other matters. As of December 31, 2025, we have no Preferred Stock issued or outstanding.

Employee 401(k) Plan

The Company has established a savings plan ("Savings Plan") which is qualified under Section 401(k) of the Internal Revenue Code. Eligible employees may elect to make contributions to the Savings Plan through salary deferrals of up to 90% of their base pay, subject to Internal Revenue Code limitations. The Company contributes to the Savings Plans, subject to limitations. For the years ended December 31, 2025 and 2024, the Company contributed $0.3 million and $0.3 million, respectively, in matching contributions to the Savings Plan.