v3.26.1
EQUITY
 9 Months Ended
Mar. 31, 2026
Equity [Abstract]  
EQUITY

NOTE 12. EQUITY

 

Common Stock Issued

 

Common stock issued to Employees as Compensation

 

During the nine months ended March 31, 2026, the Company issued 21,000 unrestricted shares of common stock to an employee as compensation and recorded share-based compensation expense of approximately $0.03 million in sales and marketing expenses in the condensed consolidated statement of operations.

 

During the nine months ended March 31, 2025, the Company issued 26,500 unrestricted shares of common stock to an employee as compensation and recorded share-based compensation expense of approximately $0.04 million in sales and marketing expenses in the condensed consolidated statement of operations.

 

Common stock issued to Vendors

 

During the nine months ended March 31, 2025, the Company issued 1,250 unrestricted shares of common stock to a vendor for services performed and recorded share-based expense of approximately $0.01 million in sales and marketing expenses in the condensed consolidated statement of operations.

 

Common stock issued for Exercise of Stock Options

 

During the nine months ended March 31, 2025, the Company issued approximately 8,000 shares of common stock in cashless transactions upon exercise of the respective option grants and realized cash proceeds of zero.

 

Securities Purchase Agreements (“SPA”)

 

In December 2024, the Company completed a SPA with an institutional investor selling 1,990,000 shares of common stock at $2.65 per share and prefunded warrants to purchase up to 760,000 shares of common stock at $2.649 per warrant (which is convertible to one share of common stock on a one for one basis). The prefunded warrants had an exercise price of $0.001 per share of common stock, and were exercised in full in January 2025 for a de minimis amount (760,000 shares at $0.001 per share).

 

The Company realized total net proceeds (after underwriting and professional fees) of $6.79 million from the December 2024 SPA.

 

Exercise of Warrants

 

In December 2024, an institutional investor exercised warrants (issued in connection with the November 2021 SPA) convertible into 100,000 shares of common stock. The Company realized proceeds of $0.18 million ($1.75 per share).

 

In January 2025, an institutional investor exercised warrants (issued in connection with a December 2024 SPA) convertible into 760,000 shares of common stock. The Company realized de minimis proceeds (760,000 shares at $0.001 per share).

 

Warrants

 

In connection with the July 2021 initial public offering (“IPO”), the November 2021 SPA and the December 2024 SPA, the Company issued warrants, which are exercisable into Company common shares on a one-for-one basis, as detailed below. The warrants are not publicly traded.

 

The remaining outstanding warrants as of March 31, 2026 are:

     

  

Warrants

Outstanding

  

Exercise

Price

  

Expiration

Date

            
July 2021 IPO   87,500   $7.00   June 2026
November 2021 SPA   481,000   $1.75   November 2026
November 2021 SPA   169,000   $1.75   May 2027
Total   737,500         

 

 

Employee Stock-Based Compensation

 

Stock Option issuance to Executives

 

In February 2023, pursuant to the Equity Incentive Plan, the Company granted certain executive officers 2.20 million stock options as a long-term incentive. The options have an exercise price of $7.00 per share. 0.22 million of these options vest ratably over four years (“Initial Options”). The remainder (“Target Options”) vest in fixed amounts based on achieving various revenue or common stock prices within seven years of grant date. Given the Company’s current stock price and revenue, the Company views the achievement of the milestones that would trigger vesting of the Target Options as remote.

 

Equity Incentive Plan

 

The Company’s 2016 Equity Incentive Plan (the “Plan”), as amended, has approximately 14.23 million common shares reserved for issuance. As of March 31, 2026, there were approximately 8.60 million shares available for issuance under the Plan. The shares available are after the granting of 1.98 million shares of executive Target Options.

 

The Company recognizes compensation expense relating to awards ratably over the requisite period, which is generally the vesting period.

 

Stock options have been recorded at their fair value. The Black-Scholes option-pricing model assumptions used to value the issuance of stock options under the Plan for the specific periods below are noted in the following table:

     

   2026   2025   2026   2025 
   For the Three Months Ended
March 31,		   For the Nine Months Ended
March 31,		 
   2026   2025   2026   2025 
Weighted average expected terms (in years)   6.5    5.6    6.2    5.6 
Weighted average expected volatility   86.5%   125.4%   121.0%   121.4%
Weighted average risk-free interest rate   3.9%   4.4%   4.0%   4.3%
Expected dividend yield   0.0%   0.0%   0.0%   0.0%

 

The grant date fair value for options granted during the nine months ended March 31, 2026 and 2025 was approximately $0.37 million and $0.73 million, respectively.

 

The following is a summary of the Company’s stock option activity for the nine months ended March 31, 2026 and 2025, excluding the executive Target Options:

      

       Weighted Average     
           Remaining     
       Exercise   Contractual   Intrinsic 
   Options   Price   Term (Yrs)   Value 
Outstanding as of July 1, 2025   2,766,206   $3.37    5.6   $    - 
Options granted   240,000    2.15    9.5    - 
Options exercised   -    -    0.0    - 
Options forfeited / cancelled   (387,778)   3.67    5.4    - 
Outstanding as of March 31, 2026   2,618,428   $3.22    5.2   $- 
Exercisable as of March 31, 2026   2,086,809   $3.39    4.6   $- 

 

 

The above table excludes executive Target Options: 1,980,000 granted, $7.00 exercise price, 6.9 remaining term in years, no intrinsic value. Vesting of these is considered remote.

 

       Weighted Average     
           Remaining     
       Exercise   Contractual   Intrinsic 
   Options   Price   Term (Yrs)   Value 
Outstanding as of July 1, 2024   3,643,880   $3.95    6.5   $- 
Options granted   521,801    2.37    9.6    31,928 
Options exercised   (35,600)   2.50    2.1    - 
Options forfeited / cancelled   (1,180,125)   4.55    6.9    7,429 
Outstanding as of March 31, 2025   2,949,956   $3.46    6.0   $- 
Exercisable as of March 31, 2025   1,874,221   $3.78    4.8   $- 

 

The above table excludes executive Target Options: 1,980,000 granted, $7.00 exercise price, 7.87 remaining term in years, no intrinsic value. Vesting of these is considered remote.

 

The intrinsic value of stock options activity for the nine months ended March 31, 2026 and 2025 was computed using a fair market value (fiscal year to date VWAP – volume weighted average price) of the common stock of $1.25 per share and $2.36 per share, respectively.

 

The intrinsic value of stock options outstanding and exercisable as of March 31, 2026 and 2025 was computed using NASDAQ market closing prices of the common stock of $0.52 per share and $1.16 per share, respectively.

 

The Company’s stock option-based expense for the three and nine months ended March 31, 2026 and 2025 consisted of the following:

      

                 
   For the Three Months Ended   For the Nine Months Ended 
   March 31,   March 31, 
   2026   2025   2026   2025 
Stock option-based expense:                    
Research and development expenses  $49,600   $50,245   $133,296   $171,855 
General and administrative expenses   79,420    81,363    301,837    303,206 
Sales and marketing expenses   9,690    6,803    43,903    73,338 
Board option expense   -    102,235    204,470    127,154 
Total  $138,710   $240,646   $683,506   $675,553 

 

There is no expense included for the executive officers’ Target Options.

 

As of March 31, 2026 total unrecognized compensation expense to employees, board members and vendors related to stock options was approximately $0.64 million (excluding executive Target Options of $8.08 million, which vesting and expense is considered remote) and is expected to be recognized over a weighted average period of 1.63 years (which excludes the executive Target Options).