Note 7 - Equity |
3 Months Ended |
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Mar. 31, 2026 | |
| Notes to Financial Statements | |
| Equity [Text Block] |
Note 7 — Equity
We have two classes of capital stock authorized for issuance under our Charter: 500,000,000 shares of common stock, par value $0.0001 per share, and 100,000,000 shares of preferred stock, par value $0.0001 per share, of which 97,000 are designated as shares of Series 1 Preferred Stock, 50,000 are designated as shares of Series A Preferred Stock and 60,000 are designated as shares of Series 2 Preferred Stock.
Series A Convertible Redeemable Preferred Stock
The terms of the Series A Preferred Stock provide that the holders of the Series A Preferred Stock are entitled to receive, when and as authorized by the Board and declared by us out of legally available funds, cumulative cash dividends on each share at an annual rate of 5.75% of the stated value pari passu with the dividend preference of the Series 1 Preferred Stock and in preference to any payment of any dividend on our common stock.
Series 1 Convertible Redeemable Preferred Stock
The terms of the Series 1 Preferred Stock provide that the holders of the Series 1 Preferred Stock are entitled to receive, when and as authorized by the Board and declared by us out of legally available funds, cumulative cash dividends on each share at an annual rate of 5.50% of the stated value pari passu with the dividend preference of the Series A Preferred Stock and in preference to any payment of any dividend on our common stock.
Series 1 Preferred Stock and Series A Preferred Stock Distributions
On September 11, 2024, the Board declared payment of accrued and unpaid dividends for all past dividend periods on the Series 1 Preferred Stock and Series A Preferred Stock. Additionally, we declared monthly dividend payments on the Series A Preferred Stock and Series 1 Preferred Stock for each subsequent month through March 2026. The payment of future dividends is subject to the Board’s discretion and will be determined by the Board based on the Company’s financial condition, applicable law and such other considerations as the Board deems relevant.
Series 1 Preferred Stock and Series A Preferred Stock Redemptions and Conversions
Upon receipt of written notice to convert shares of Series 1 Preferred Stock and Series A Preferred Stock into common stock, we have the option to redeem the shares for cash with the redemption price equal to the stated value of $1,000, plus any accrued but unpaid dividends. Should we elect to convert the shares, each share of Series 1 Preferred Stock and Series A Preferred Stock will convert into a number of shares of common stock determined by dividing the sum of (i) 100% of the stated value of $1,000, plus (ii) any accrued but unpaid dividends up to, but not including, the date of conversion, by the volume weighted average price per share of common stock for the 20 trading days prior to the delivery date of the receipt of the notice.
During the three months ended March 31, 2026, 102 shares of the Series 1 Preferred Stock and 30 shares of Series A Preferred Stock were redeemed for cash. In addition, requested redemptions at March 31, 2026 of approximately 100 shares with a stated value of $0.1 million of Series 1 Preferred Stock and Series A Preferred Stock were reclassified to Accrued Preferred Distributions and Redemptions on the Consolidated Balance Sheets, as we intend to redeem the shares for cash. During the three months ended March 31, 2026, shares of Series 1 Preferred Stock or Series A Preferred Stock were converted to shares of common stock.
During the three months ended March 31, 2025, approximately 1,100 shares of the Series 1 Preferred Stock and approximately 60 shares of Series A Preferred Stock were redeemed for cash. In addition, requested redemptions at March 31, 2025 of approximately 800 shares with a stated value of $0.8 million of Series 1 Preferred Stock and Series A Preferred Stock were reclassified to Accrued Preferred Distributions and Redemptions on the Consolidated Balance Sheet, as we intended to redeem the shares for cash. During the three months ended March 31, 2025, no shares of Series 1 Preferred Stock of Series A Preferred Stock were converted to shares of common stock.
Warrants
In accordance with the warrant agreement dated August 25, 2021 (the “Warrant Agreement”), which was further amended on August 29, 2023, Color Up, LLC (“Color Up”) had the right to purchase up to 2,553,192 shares of common stock, at an exercise price of $7.83 per share for an aggregate cash purchase price of up to $20.0 million (the “Common Stock Warrants”) and could exercise the Common Stock Warrants on a cashless basis at Color Up’s option. Subsequently, Color Up distributed the entirety of the Common Stock Warrants to HSCP Strategic III, LP, an entity controlled by Mr. Osher, and Bombe Asset Management, LLC, an entity owned and controlled by Mr. Chavez and Ms. Hogue.
The Common Stock Warrants expire on August 25, 2026 and are classified as equity and recorded at the issuance date fair value.
Convertible Non-controlling Interests
As of March 31, 2026 and 2025, the Operating Company had approximately 43.6 million and 45.1 million Common Units outstanding, respectively, excluding any equity incentive units granted and the Earn-Out Shares, as defined below. Beginning six months after first acquiring Common Units, each member will have the right to redeem the Common Units for either cash or common stock on a one-for-one basis, subject to both our discretion and the terms and conditions set forth in the limited liability company agreement of the Operating Company (the “Operating Agreement”). During the three months ended March 31, 2026 and 2025, no Common Units were converted to shares of common stock.
The Common Units not held by the Company outstanding as of March 31, 2026 are classified as noncontrolling interests within permanent equity on our Consolidated Balance Sheets.
Share Repurchase Program
In September 2024, the Board authorized a share repurchase program of up to $10 million of shares of our outstanding common stock. Repurchases may be made from time to time through open-market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Securities Exchange Act of 1934, as amended. We may also enter into Rule 10b5-1 plans to facilitate repurchases of our shares under this authorization. During the three months ended March 31, 2026 and 2025, we repurchased approximately 0.5 million and 0.1 million shares under the program, for a cost of approximately $1.4 million and $0.3 million, respectively.
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