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Note 15 - Stockholders' Equity and Stock-based Compensation

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Shareholders' Equity and Share-Based Payments [Text Block]

15. STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Stock-Based Compensation

The Company includes stock compensation expense within general and administrative expenses in the Consolidated Statements of Operations. The Company recognized total stock-based compensation costs, net of forfeitures of $2.1 million and $2.3 million for the years ended December 31, 2023 and 2022, respectively. Stock-based compensation expense is related to equity awards to executives and other employees, awarded from the Company's Amended and Restated long-term incentive plan.

Issuance of Stock-based Awards

The Company has a long-term incentive plan, originally approved by the Board of Directors in 2019. In July 2021 and in August 2023, the plan was amended (the “Amended and Restated Plan”) to increase the maximum number of shares of common stock available for issuance from its original 1,675,000 shares to 4,000,000 (in July 2021) and to 5,500,000 (in August 2023). The plan provides for the award of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, substitute awards, other stock-based awards, cash awards and/or any combination of the foregoing which may be granted to employees, officers and directors of the Company and affiliates or to any other person who performs services to the Company and affiliates, including independent contractors and consultants of the Company and its subsidiaries.

No participant may receive a grant covering more than 2,000,000 shares of our common stock in any year and a non-employee member of the Board may not be granted more than 100,000 shares in any year. In the event of certain changes in the Company’s common stock such as recapitalization, reclassification, stock split, combination or exchange of shares, stock dividends or the like, appropriate adjustment will be made in the number and kind of shares available for issuance under the Amended and Restated Plan as well as the purchase price, if any, per share.

(a) Stock Appreciation Rights

On June 26, 2023, the Company granted 685,437 stock appreciation rights (“SARs”) under the Amended and Restated Plan, with a $10.00 strike price. The SARs 100% vest when the closing price of the Company's common stock averages $10.00 over 10 (ten) consecutive trading days, prior to January 1, 2025. The SARs expire December 31, 2026. Once vested, the SARs may be exercised, in whole or in part, prior to their expiration. The SARs may be paid in cash or shares, as elected by the Company, representing the then closing price of the Company's common stock in excess of the strike price. The SARs are valued using a Monte Carlo simulation model and expensed on a straight line basis over the vesting period. In 2023, the Company expensed stock based compensation of $11 thousand.

A summary of the Company's SARs activity during the fiscal year 2023 is presented in the following table:

Stock Appreciation Rights		*Number of SARs*				*Weighted Average Exercise Price per Share*				*Weighted Average Grant Date Value per SARs*				*Weighted Average Remaining Contractual Term (in years)*
Outstanding at December 31, 2022			—			$	—			$	—				—
Granted			685,437				10.00				0.10				9.5
Vested			—				—				—				—
Outstanding at December 31, 2023			685,437				—				—				—
SARs vested and exercisable at December 31, 2023			—				—				—				—

(b) Restricted Stock Units

On February 18, 2022, the Company granted 40,764 restricted stock units ("RSUs") to executives under the Company's 2019 long term incentive plan. The fair value of the RSUs on the date of grant was $0.2 million based on the previous day closing price of our common stock on the grant date and are expensed over a three-year vesting period.

A summary of the Company's RSUs activity during the fiscal years 2023 and 2022 are presented in the following table:

		*# of Restricted Stock Awards and Units*				*Weighted Average Grant Date Fair Value per Share*
Unvested at 12/31/2021			427,019				1.76
Granted			40,764				4.11
Vested			(247,006	)			4.30
Forfeited			(9,838	)			1.75
Unvested at 12/31/2022			210,939				4.43
Granted			—				—
Vested			(183,762	)			5.35
Forfeited			—				—
Unvested at 12/31/2023			27,177				4.11

During the years ended December 31, 2023 and 2022 , the Company expensed stock based compensation related to restricted stock units of $0.6 million and $1.0 million, respectively.

(c) Stock Options

On February 18, 2022, the Company granted executives 774,505 stock options under the 2019 plan to purchase an equal number of shares of the Company’s common stock, with a strike price equal to $6.00 per share. The stock options will vest equally over a three-year vesting period. The Company estimated the value of the options using a valuation model. The full aggregate fair value determined was $1.5 million using observable inputs from trading values of the Company's shares of stock. The stock options are expensed over the vesting period. The Company recognized stock-based compensation for the years ended December 31, 2022 and December 31, 2023, which is included in general and administrative expenses in the Consolidated Statements of Operations. Assumptions used in determining the valuation of the options included the following:

•

A strike price of $6.00 with 3 year vesting terms and the closing price of the common stock of $4.11.

•

The risk free rate assumed the average return of a U.S. Treasury bill of 3 years (the vesting period), which was approximately 0.7% at June 26, 2023.

•

$0 dividends, as we have not historically paid dividends.

•

A term of 6.5 years, which was determined as the midpoint between the vesting period of 3 years with an anticipated expiration date of 10 years.

•

Volatility of approximately 44%.

During the years ended December 31, 2023 and 2022 , the Company expensed stock based compensation for all restricted stock units of $49 thousand and $56 thousand, respectively.

A summary of the Company's stock option awards activity during the fiscal years 2023 and 2022 are presented in the following table:

		*Number of Options*				*Weighted Average Exercise Price per Share*				*Weighted Average Grant Date Value per Option*				*Weighted Average Remaining Contractual Term (in years)*
Outstanding at December 31, 2021			1,300,000			$	10.00			$	2.21				8.7
Granted			774,505				6.00				1.95				8.1
Outstanding at December 31, 2022			2,074,505				8.51				2.11				7.9
Granted			—				—				—				—
Outstanding at December 31, 2023			2,074,505				8.51				2.11				7.9
Options vested and exercisable at December 31, 2023			1,129,168			$	9.09			$	2.15				7.8

During the years ended December 31, 2023 and 2022 , the Company expensed stock based compensation related to stock options of $1.5 million and $1.4 million, respectively.

Unrecognized Stock-Based Compensation

As of December 31, 2023, the Company had $1.3 million, of unrecognized compensation costs. Unrecognized compensation costs related to outstanding SARs of 685,437 is $0.1 million at December 31, 2023, expected to be recognized over a weighted average period of less than three years. Unrecognized compensation costs related to outstanding RSUs of 27,177 is $0.1 million at December 31, 2023, expected to be recognized over a weighted average period of less than two years. Stock options of 945,337 consist of unrecognized compensation costs of $1.1 million and is expected to be recognized over a weighted average period of less than one year. SARs, RSUs and stock options are expected to vest.

Common Stock

The Company is authorized to issue up to 37,500,000 shares of Common Stock, $0.001 par value per share. The following table summarizes issuances of shares of our common stock for the years ended December 31, 2023 and 2022 (amounts in thousands):

			*Year Ended December 31,*
Issuance	*Additional disclosure*		*2023*				*2022*
Vesting of employee stock awards ⁽¹⁾	Stock-Based Compensation discussion above			153,324				728,799

(1)

Amounts are net of shares withheld to cover employee tax payments. Amounts vested are for various employees.

Preferred Stock

Our Board of Directors has the authority, without stockholder approval, to issue up to 1,000,000 shares of Preferred Stock, $0.001 par value. The authorized Preferred Stock may be issued by the Board of Directors in one or more series and with the rights, privileges and limitations of the Preferred Stock determined by the Board of Directors. The rights, preferences, powers and limitations of different series of Preferred Stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions, and other matters. As of December 31, 2023, we have no Preferred Stock issued or outstanding.

Employee 401(k) Plan

The Company has established a savings plan ("Savings Plan") which is qualified under Section 401(k) of the Internal Revenue Code. Eligible employees may elect to make contributions to the Savings Plan through salary deferrals of up to 90% of their base pay, subject to Internal Revenue Code limitations. The Company contributes to the Savings Plans, subject to limitations. For the years ended December 31, 2023 and 2022, the Company contributed $274 thousand and $279 thousand, respectively, in matching contributions to the Savings Plan.