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STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 11 - STOCK-BASED COMPENSATION

During the first fiscal quarter of 2023, the Company granted 75 shares of restricted stock to certain executives, which vests as to 25% of such shares on each of the first, second, third and fourth anniversaries of the grant date, provided that the executive is employed by the Company on each such date.

During the first fiscal quarter of 2023, the Company granted options to purchase 405 shares of the Company’s common stock to certain executives, consisting of options to purchase 130 shares of common stock with time-based vesting conditions and options to purchase 275 shares of common stock with performance-based vesting conditions (which we refer to as “market-based stock options”). The options have an exercise price of $3.00. The market-based stock options will vest and become exercisable if the volume weighted average price of the Company’s common stock during a consecutive 60-day trading period (the “60 Day VWAP”) reaches 12.00. The Company valued the market-based stock option awards using a Monte Carlo simulation model using a daily price forecast over ten years until expiration utilizing Geometric Brownian Motion that considers a variety of factors including, but not limited to, the Company’s common stock price, risk-free rate (3.7%), and expected stock price volatility (50%) over the expected life of awards (5.1 years). The weighted average fair value of market-based stock options granted during the period was $1.38.

[A] Stock options:

The following table summarizes the activity relating to the Company’s market-based stock options that were granted to certain executives for the three-month period ended March 31, 2023:

SCHEDULE OF STOCK OPTIONS ACTIVITY

		Options				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Terms				Aggregate Intrinsic Value

Outstanding at beginning of year			5,065			$	14.14
Granted			275				3.00
Exercised			-				-
Forfeited or expired			-				-

Outstanding at end of period			5,340			$	13.56				8.1 years			$	-

Exercisable at end of period			-			$	-				-			$	-

The following table summarizes the activity relating to the Company’s stock options, excluding the market-based stock options that were granted to certain executives, for the three-month period ended March 31, 2023:

		Options				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Terms				Aggregate Intrinsic Value

Outstanding at beginning of year			2,727			$	5.29
Granted			130				3.00
Exercised			-				-
Forfeited or expired			(393	)			6.05

Outstanding at end of period			2,464			$	5.04				5.7 years			$	6

Exercisable at end of period			1,482			$	5.55				4.4 years			$	6

The fair value of each option grant on the date of grant is estimated using the Black-Scholes option-pricing model reflecting the following weighted-average assumptions:

		2022				2023
		March 31,
		2022				2023

Expected volatility			49.4	%			54.8	%
Expected life of options (in years)			7				6.25
Risk free interest rate			1.73	%			3.81	%
Dividend yield			0	%			0	%
Weighted-average fair value of options granted during year		$	2.04			$	1.40

Expected volatility is based on historical volatility of the Company’s common stock and the expected life of options is based on historical data with respect to employee exercise periods.

The Company recorded stock-based compensation expense of $34 and $618 for the three-month periods ended March 31, 2022 and March 31, 2023, respectively, in connection with awards made under the stock option plans.

The fair value of options vested during the three-month periods ended March 31, 2022 and 2023 was $235 and $540, respectively. There were no option exercises that occurred during the three-month periods ended March 31, 2022 and 2023.

As of March 31, 2023, there was $1,657 of total unrecognized compensation cost related to non-vested options granted under the Company’s stock option plans excluding the market-based stock options that were granted to certain senior managers, including the Company’s executive officers. That cost is expected to be recognized over a weighted-average period of 2.58 years.

As of March 31, 2023, there was $5,838 of total unrecognized compensation cost related to non-vested options granted under the Company’s stock option plans for the market-based stock options that were granted to certain senior managers, including the Company’s executive officers. That cost is expected to be recognized over a weighted-average period of 3.20 years.

The Company estimates forfeitures at the time of valuation and reduces expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

[B] Restricted Stock Awards:

The Company grants restricted stock to employees, whereby the employees are contractually restricted from transferring the shares until they are vested. The stock is unvested at the time of grant and, upon vesting, there are no legal restrictions on the stock. The fair value of each share is based on the Company’s closing stock price on the date of the grant. A summary of all non-vested restricted stock for the three-month period ended March 31, 2023 is as follows:

		Number of Non- Vested Shares				Weighted- Average Grant Date Fair Value

Restricted stock, non-vested, beginning of year			706			$	4.75
Granted			75				2.62
Vested			(149	)			5.11
Forfeited			(59	)			7.28

Restricted stock, non-vested, end of period			573			$	4.12

The Company recorded stock-based compensation expenses of $388 and $214 for the three-month periods ended March 31, 2022 and 2023, respectively, in connection with restricted stock grants. As of March 31, 2023, there was $1,877 of total unrecognized compensation cost related to non-vested shares. That cost is expected to be recognized over a weighted-average period of 2.43 years.