7.    Stockholders’ Equity  

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Equity Line Facility

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On January 21, 2026, the Company entered into a common stock purchase agreement with White Lion Capital, LLC (“White Lion”), pursuant to which White Lion has committed to purchase up to $15.0 million of the Company’s common stock. Under the terms and conditions of this agreement, the Company has the right, but not the obligation, to sell to White Lion, and White Lion is obligated to purchase, up to $15.0 million of the Company’s common stock. The actual amount and timing of any sales of Common Stock will be determined by the Company at its discretion.

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The aggregate number of shares that the Company can sell White Lion under this agreement is limited to and may not exceed 1,178,173 shares (subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or other similar transaction), which is equal to 19.99% of the total shares of the Company’s common stock outstanding immediately prior to the execution of the agreement, unless (i) the Company obtains stockholder approval to issue additional shares in excess of this amount, or (ii) the average price paid for all shares of Common Stock issued under the agreement equals or exceeds certain levels as specified in the agreement.

In consideration for White Lion’s execution and entry into such arrangement, the Company agreed to issue White Lion $37,500 worth of common stock, with the number of shares issued determined based on the closing price of the Company’s stock on the business day immediately preceding the day on which the related registration statement is declared effective by the SEC; accordingly, the Company issued 16,094 shares to White Lion on May 6, 2026. Additionally, pursuant to the terms of an advisory agreement between the Company and Maxim Group LLC, the Company agreed to pay Maxim Group LLC a cash fee equal to 4.0% of the gross proceeds received from any sales of securities to White Lion under this arrangement.

For the three and six months ended June 30, 2026, the Company issued an aggregate of 348,000 shares under the equity line facility arrangement and received aggregate net proceeds of approximately $0.67 million.

Also, during the current six months, the Company incurred approximately $0.26 million of fees and expenses (consisting of legal and accounting fees) associated with the equity line arrangement and related registration statement, which were recorded as a reduction to additional paid-in capital.

Equity Incentive Plans

A total of 1,150,000 shares of common stock are eligible for issuance under the Company’s 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the grant of any or all of the following types of awards: stock options (incentive or non-qualified), restricted stock, restricted stock units, performance awards, or cash awards. The 2021 Plan is administered by the Company’s Board of Directors, or, at the Board’s discretion, a committee of the Board. In addition, 10,000 stock options previously granted under the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) remain outstanding and shares of common stock may be issued to satisfy options previously granted under the 2011 Plan, although no new awards may be granted under the 2011 Plan.

Stock-based Compensation

Stock-based compensation expense is recorded as a component of Other selling, general and administrative expenses in the condensed consolidated statements of operations.

Total expense recognized for all forms of stock-based compensation was approximately $0.17 million and $0.18 million for the current quarter and prior year quarter, respectively. Of the current quarter expense amount, approximately $0.10 million related to employees and approximately $0.07 million related to directors and consultants. Of the prior year quarter expense amount, approximately $0.15 million related to employees and approximately $0.03 million related to directors and consultants.  

Total expense recognized for all forms of stock-based compensation was approximately $0.31 million and $0.33 million for the current six months and prior year six months, respectively. Of the current six months expense amount, approximately $0.20 million related to employees and approximately $0.11 million related to directors and consultants. Of the prior year six months expense amount, approximately $0.27 million related to employees and approximately $0.06 million related to directors and consultants.  

Stock Options

A summary of the Company’s stock options activity for the current six months is as follows:

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Effective January 21, 2026, certain stock options originally issued in 2019 to executive management (including the Company’s Chief Executive Officer, Chief Financial Officer, and Executive Vice President of Business Development and Treasury) to purchase an aggregate of 350,000 shares of common stock, were cancelled through mutual agreement between the Company and the respective executives. None of these options had vested, and no compensation was paid to the executives in exchange for such cancellation.

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On April 20, 2026, the Company granted options to purchase an aggregate of 14,000 shares of common stock to non-management directors. The exercise price of the options is $2.24 per share; 50% of the options will vest on April 1, 2027 and the remaining 50% will vest on April 1, 2028.

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Compensation expense related to stock options for the current quarter and the prior year quarter was approximately $0.01 million and $0.04 million, respectively. Compensation expense related to stock options for the current six months and the prior year six months was approximately $0.03 million and $0.06 million, respectively. Total unrecognized compensation expense related to unvested stock options at June 30, 2026 was approximately $0.18 million and is expected to be recognized over a weighted average period of approximately 3.74 years.

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A summary of the Company’s non-vested stock options activity for the current six months is as follows:

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Of the non-vested stock options outstanding at June 30, 2026, the vesting of 340,201 options is contingent upon the Company’s common stock achieving certain target prices, the vesting of 20,000 options is contingent upon the achievement of certain revenue targets, the vesting of 60,000 options is contingent upon the Company’s common stock achieving certain target prices or the Company achieving certain financial performance targets, and the vesting of 14,000 options is subject to service-based criteria.

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Stock Awards

A summary of the Company’s restricted stock activity for the current six months is as follows:  

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On April 20 2026, the Company issued an aggregate of 5,000 shares of common stock to non-management directors, of which 50% vests on each of April 1, 2026 and April 1, 2027.

On April 24, 2026, the Company issued 62,112 shares of common stock to a consultant, which vested immediately.

In accordance with the amended employment agreement with Mr. D’Loren, the Company is paying 40% of such executive officer’s base salary via the issuance of shares of the Company’s common stock. Mr. D’Loren is permitted to pay the withholding tax through the exchange of a portion of the shares. Under the terms of this amended agreement, the Company issued 29,905 and 62,640 shares of common stock (net of shares exchanged for withholding taxes) to Mr. D’Loren for the current quarter and current six months, respectively, all of which vested immediately.

Compensation expense related to stock awards was approximately $0.16 million for the current quarter and approximately $0.14 million for the prior year quarter. Compensation expense related to stock awards was approximately $0.28 million for the current six months and approximately $0.27 million for the prior year six months. Total unrecognized compensation expense related to unvested restricted stock grants at June 30, 2026 was approximately $0.01 million and is expected to be recognized over a weighted average period of approximately 1.45 years.

Restricted Stock Units

There were no restricted stock units outstanding as of June 30, 2026 and December 31, 2025, and no restricted stock units have been issued since the inception of the 2021 Plan.

Shares Available Under the Company’s Equity Incentive Plans

At June 30, 2026, there were 111,863 shares of common stock available for future award grants under the 2021 Plan.

Shares Reserved for Issuance

As of June 30, 2026, there were 729,564 shares of common stock reserved for issuance under the Company’s Equity Incentive Plans, including 10,000 shares reserved pursuant to unexercised stock options previously granted under the 2011 Plan, 607,701 shares reserved pursuant to unexercised stock options granted under the 2021 Plan, and 111,863 shares available for issuance under the 2021 Plan.

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As of June 30, 2026, there were also the following shares of common stock reserved for issuance that were unrelated to the Company’s Equity Incentive Plans:

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Warrants

A summary of the Company’s warrants activity for the current six months is as follows:

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In connection with the entrance into the Halston Master License in 2023 (see Note 4), the Company issued to G-III a ten-year warrant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $15.00 per share, which vests based upon certain annual royalty targets being satisfied under the license agreement. The fair value of this warrant is being recognized as a reduction of revenue over the term of the related license agreement, with an offsetting increase to stockholders’ equity as additional paid-in capital. The amount of contra-revenue recognized related to this

warrant during the current quarter and prior year quarter was approximately $0.01 million in each period, and the amount of contra-revenue recognized was during the current six months end prior year six months was approximately $0.02 million in each period. As of June 30, 2026, no portion of this warrant had vested.