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Note 17 - Subsequent Event
12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Subsequent Events [Text Block]

17. SUBSEQUENT EVENT

 

Management Transition

 

On 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 will replace Westervelt T. Ballard, Jr., who has mutually agreed with the Company to terminate his employment as the Company’s President and Chief Executive Officer and has voluntarily resigned his position as a director. In his new role, Mr. Crenshaw will assume day-to-day operations leadership. Mr. Crenshaw, co-founded the Company in 2013 and has remained actively involved in the Company since its inception. In connection with Mr. Crenshaw’s position as Executive Chairman, the Company’s Board of Directors and Compensation Committee have approved annual cash compensation of $500,000 to Mr. Crenshaw. Mr. Crenshaw will not receive additional compensation for his roles as interim President and Chief Executive Officer.

 

Release and Consulting Agreement

 

Effective January 31, 2025, the Company entered into a release and consulting agreement with Westervelt T. Ballard, Jr. (formerly the Company's President and Chief Executive Officer) pursuant to which the Company and Mr. Ballard mutually agreed to terminate his employment as President and Chief Executive Officer and Mr. Ballard transitioned to a consultant of the Company. Additionally, Mr. Ballard voluntarily resigned as a member of the Company’s Board of Directors. Under the release and consulting agreement, the Company will pay Mr. Ballard separation pay of $1.0 million, paid in equal or near equal installments over a twelve month period, and 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. Additionally, Mr. Ballard will receive a payment of $49 thousand per month for the remainder of 2025 for his consulting services. The Company and Mr. Ballard agreed that 7,765 unvested restricted stock units and 147,525 unvested stock options granted under the Company's long-term incentive plan would vest as of the date of separation of employment, and that the period during which all of Mr. Ballard's stock options may be exercised shall expire December 31, 2025. Mr. Ballard will remain in a consulting role for the Company through the end of 2025.

 

Mr. Ballard’s termination resulted in his forfeiture of approximately $0.5 million of 2024 non-equity incentive plan compensation which is not included in the financial statements as of and for the year ended December 31, 2024. The Company anticipates that it will record additional expense of approximately $1.6 million related to Mr. Ballard’s cumulative separation pay, additional pay and consulting pay as well an estimated $.4 million in additional non-cash stock compensation expense related to the adjustment of the exercise period of his options to December 31, 2025 during 2025 related to the release and consulting agreement.

 

Related Party Lease

 

Subsequent to December 31, 2024, the Company amended its month-to-month lease with The Modern Group, a related party, to increase its rent to $28 thousand per month effective March 1, 2025 and to extend the lease term to June 30, 2026. See Note 11 for further discussion of the Company’s related parties.