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ShareBased Employee Compensation | 12 Months Ended
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Dec. 31, 2022
ShareBased Employee Compensation |
Share-based Employee Compensation | 10. Share-Based Employee Compensation The Company has an employee and non-employee director incentive compensation equity plan. Related to these programs, the Company recorded $271 and $253 of share-based employee compensation expense during the years ended December 31, 2022 and 2021, respectively, which is included as a component of cost of products and SG&A expenses in the accompanying consolidated statements of operations. No amount of share-based employee compensation expense was capitalized as part of capital expenditures or inventory for the years presented. Restricted Stock Units On September 30, 2022, the Company granted 9,600 restricted stock units to Joshua Horowitz for strategic advisory service compensation. These restricted stock units were fully vested and settled on the date of grant. On August 12, 2022, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $50 per award (resulting in total 129,310 units granted with the aggregate grant-date fair value of $300), which will vest in five equal, annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board of Directors for election by stockholders, other than for good reason, as determined by the Board of Directors in its discretion, then the restricted stock units shall vest in full as of the director’s last date of service as a director of the Company. On July 1, 2022, the Company, at the direction of the Board of Directors, granted on a pro rata basis for 2022 compensation 18,715 and 11,062 restricted stock units to former directors Michael Dill and Inez Tenenbaum, respectively. These restricted stock units were fully vested and settled on the date of grant. On June 30, 2022, the Company granted 3,200 restricted stock units to Joshua Horowitz for strategic advisory service compensation. These restricted stock units were fully vested and settled on the date of grant. On June 30, 2022, the Company, at the direction of the Board of Directors, accelerated the vesting of former director Michael Dill’s unvested restricted stock units granted September 6, 2018, September 6, 2019, August 24, 2020, and July 30, 2021, and issued 34,264 shares of common stock to Mr. Dill. On June 8, 2022, the Company, at the direction of the Board of Directors, granted 10,000 restricted stock units to John Suzuki for bonus compensation. These restricted stock units were fully vested and settled on the date of grant. On May 31, 2022, the Company granted 3,200 restricted stock units to Joshua Horowitz for strategic advisory service compensation. These restricted stock units were fully vested and settled on the date of grant. On April 30, 2022, the Company granted 3,200 restricted stock units to Joshua Horowitz for strategic advisory service compensation. These restricted stock units were fully vested and settled on the date of grant. On March 31, 2022, the Company granted 16,000 restricted stock units to Joshua Horowitz for strategic advisory service compensation. These restricted stock units were fully vested and settled on the date of grant. On December 17, 2021, upon the resignation of former director John Struble, the Company, at the direction of the Board of Directors, accelerated the vesting of Mr. Struble’s unvested restricted stock units granted September 6, 2018, September 6, 2019, August 24, 2020, and July 30, 2021, and issued 34,264 shares of common stock to Mr. Struble. On August 24, 2021, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $40 per award (resulting in total aggregate grant-date fair value of $240), which will vest in five equal, annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board of Directors for election by stockholders, other than for good reason, as determined by the Board of Directors in its discretion, then the restricted stock units shall vest in full as of the director’s last date of service as a director of the Company. On July 30, 2021, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $50 per award (resulting in total aggregate grant-date fair value of $250), which will vest in five equal, annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board of Directors for election by stockholders, other than for good reason, as determined by the Board of Directors in its discretion, then the restricted stock units shall vest in full as of the director’s last date of service as a director of the Company. On March 4, 2021, upon the resignation of former director Lewis Johnson, the Company, at the direction of the Board of Directors, accelerated the vesting of Mr. Johnson’s unvested restricted stock units granted September 6, 2018, September 6, 2019, and August 24, 2020, and issued 24,505 shares of common stock to Mr. Johnson. There were 205,644 and 137,055 restricted stock units outstanding as of December 31, 2022, and December 31, 2021, respectively. The Company recorded non-cash restricted stock unit compensation expense of $404 and $306 for the years ended December 31, 2022 and 2021. A summary of non-vested restricted stock under the Company’s non-employee director share-based incentive compensation plan is as follows:
|  | Number of Shares |  |  | Weighted Average Price per Share |
Unvested at January 1, 2022 |  |  | 137,055 |  |  | $ | 3.33 |
Granted |  |  | 204,287 |  |  | $ | 2.39 |
Vested and issued |  |  | (135,698 | ) |  | $ | 2.96 |
Cancelled/forfeited |  |  | --- |  |  |  |  |
Unvested at December 31, 2022 |  |  | 205,644 |  |  | $ | 2.64 |
The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The share-based employee compensation expense recorded in the years ended December 31, 2022 and 2021 was calculated using the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time, commensurate with the expected life of the stock options. The dividend yield assumption is based on the Company’s expectations of dividend payouts at the grant date. In 2022, the Company paid dividends on January 10, for a dividend declared in 2021, May 16, August 8 and November 8. The Company has estimated its future stock option exercises. The expected term of option grants is based upon the observed and expected time to the date of post vesting exercises and forfeitures of options by the Company’s employees. The risk-free interest rate is derived from the average U.S. Treasury rate for the period, which approximates the rate at the time of the stock option grant.
|  | FY 2022 |  |  | FY 2021 |
Expected Volatility |  |  | 55.3 | % |  |  | 52.3 | %
Expected Dividends |  |  | 5.0 | % |  |  | 3.0 | %
Expected Term (in years) |  |  | 6.5 |  |  |  | 6.5 |
Risk-Free Rate |  |  | 2.38 | % |  |  | 0.80 | %
Estimated Forfeitures |  |  | 0.0 | % |  |  | 0.0 | %
A summary of stock option activity under the Company’s equity compensation plans as of December 31, 2022, and changes during the year ended December 31, 2022, are presented below:
|  | Stock Options |  |  | Wgt. Avg. Exercise Price ($) Per Share |  |  | Wgt. Avg. Remaining Contractual Life (Years) |  |  | Wgt Avg. Grant Date Fair Value ($) Per Share |  |  | Aggregate Intrinsic Value ($) |
As of January 1, 2022 |  |  |  |  |  |  |
Outstanding |  |  | 676,500 |  |  |  | 3.68 |  |  |  | 7.33 |  |  |  | 1.41 |  |  |  | 4,500 |
Vested |  |  | 361,600 |  |  |  | 3.80 |  |  |  | 6.66 |  |  |  | 1.44 |  |  |  | 4,500 |
Nonvested |  |  | 314,900 |  |  |  | 3.53 |  |  |  | 8.10 |  |  |  | 1.39 |  |  |  | — |
Period activity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issued |  |  | 430,000 |  |  |  | 2.41 |  |  |  | — |  |  |  | 0.80 |  |  |  | — |
Exercised |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited |  |  | 100,000 |  |  |  | 3.98 |  |  |  | — |  |  |  | 1.65 |  |  |  | — |
Expired |  |  | 5,000 |  |  |  | 4.95 |  |  |  | — |  |  |  | 1.05 |  |  |  | — |
As of December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding |  |  | 1,001,500 |  |  |  | 3.10 |  |  |  | 7.87 |  |  |  | 1.13 |  |  |  | 460,925 |
Vested |  |  | 434,233 |  |  |  | 3.57 |  |  |  | 6.73 |  |  |  | 1.31 |  |  |  | 101,090 |
Nonvested |  |  | 567,267 |  |  |  | 2.74 |  |  |  | 8.74 |  |  |  | 0.99 |  |  |  | 359,835 |
Outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |
Range of Exercise Prices ($) Per Share |  |  | Stock Options Outstanding |  |  | Wgt. Avg. Exercise Price ($) Per Share |  |  | Wgt. Avg. Remaining Contractual Life (Years) |
| 2.23 |  |  |  | 3.83 |  |  |  | 832,500 |  |  |  | 2.80 |  |  |  | 8.44 |
| 4.07 |  |  |  | 5.10 |  |  |  | 169,000 |  |  |  | 4.54 |  |  |  | 5.06 |
|  |  |  |  |  |  |  |  | 1,001,500 |  |  |  | 3.10 |  |  |  | 7.87 |
Exercisable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Range of Exercise Prices ($) Per Share |  |  | Stock Options Exercisable |  |  |  | Wgt. Avg. Exercise Price ($) Per Share |  |  |  |  |
| 2.23 |  |  |  | 3.83 |  |  |  | 290,833 |  |  |  | 3.05 |  |  |  |  |
| 4.07 |  |  |  | 5.10 |  |  |  | 143,400 |  |  |  | 4.62 |  |  |  |  |
|  |  |  |  |  |  |  |  | 424,233 |  |  |  | 3.57 |  |  |  |  |
The weighted-average grant-date fair value per option granted during the years ended December 31, 2022 and 2021 was $1.13 and $1.16, respectively. There were no stock options exercised during the years ended December 31, 2022 and 2021. In connection with the restricted stock units granted to non-employee directors, the Company accrues compensation expense based on the estimated number of shares expected to be issued, utilizing the most current information available to the Company at the date of the consolidated financial statements. The Company estimates the fair value of the restricted stock unit awards based upon the market price of the underlying common stock on the date of grant. As of December 31, 2022 and 2021, there was approximately $1,058 and $802, respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including stock options and restricted stock units. This compensation cost is expected to be recognized approximately over four years.

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