XML 26 R16.htm IDEA: XBRL DOCUMENT
v3.23.3

Note 10 - Share-based Compensation | 9 Months Ended
--- | ---
Sep. 30, 2023
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] | 10. SHARE-BASED COMPENSATION On March 31, 2017, the Company adopted, and the stockholders approved, the 2017 Stock Incentive Plan (the “Plan”) authorizing 2,000,000 shares of Common Stock for issuance as awards to employees, directors or consultants. In May 2019, the stockholders ratified an increase in the Plan authorizing an additional 2,100,000 shares of Common Stock; in June 2020 ratified an additional 1,900,000 shares of Common Stock; in June 2021 ratified an additional 1,500,000 shares of Common Stock; and in June 2022 ratified an additional 1,500,000 shares of Common Stock; for a total of 9,000,000 shares subject to the Plan. At September 30, 2023, there were 4,438,539 shares of Common Stock remaining available for grant under the Plan. The Company generally recognizes share-based compensation expense on the grant date and over the period of vesting or period that services will be provided. In April 2023 the Company recognized severance acceleration of $178 of share-based compensation expense resulting from the resignation of the Company’s Chief Executive Officer and Chief Operating Officer due to a reduction in force that resulted in changes in the composition of the executives of the Company. In January 2022 the Company recognized severance acceleration of $242 of share-based compensation expense resulting from the resignation of the Company’s Chief Executive Officer as part of a management transition plan. Stock Options The following table summarizes stock option activity for the nine months ended September 30, 2023:
|  |  |  |  |  | Weighted Average |  |  |  |  |
|  | Options on Common Shares |  |  | Exercise Price |  |  | Remaining Contractual Term |  |  | Aggregate Intrinsic Value |
Outstanding January 1, 2023 |  |  | 5,491,399 |  |  | $ | 3.72 |  |  |  | 5.96 |  |  | $ | 92 |
Granted |  |  | 60,000 |  |  | $ | 1.34 |  |  |  |  |  |  |  |  |
Exercised |  |  | (250 | ) |  | $ | 1.50 |  |  |  |  |  |  |  |  |
Forfeited, cancelled, expired |  |  | (3,329,476 | ) |  | $ | 5.54 |  |  |  |  |  |  |  |  |
Outstanding September 30, 2023 |  |  | 2,221,673 |  |  | $ | 3.56 |  |  |  | 7.65 |  |  | $ | 10 |
Exercisable September 30, 2023 |  |  | 1,033,504 |  |  | $ | 4.37 |  |  |  | 7.02 |  |  | $ | - |
At September 30, 2023, there were 1,529,275 service-based stock options outstanding, and 692,398 performance-based stock options outstanding, which performance-based stock options were granted in April 2022 to the Company’s former Chief Executive Officer and President, subject to future market capitalization targets. 1,207,698 of the 2,221,673 stock options granted included in the table above were granted in April 2022 outside the Plan as an employment inducement grant but are subject to the terms and conditions of the Plan. The Company uses the Black-Scholes option pricing model to determine the fair value of service-based options granted. The following table summarizes the assumptions used to compute the fair value of options granted to employees and non-employees:
|  | For the Nine Months |
|  | Ended September 30, |
|  | 2023 |  |  | 2022 |
Expected stock price volatility |  |  | 49 | % |  |  | 49 | %
Risk-free interest rate |  |  | 3.64 | % |  |  | 1.17 | %
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Expected life of options |  |  | 6.66 |  |  |  | 3.46 |
Weighted-average fair value of options granted |  | $ | 0.55 |  |  | $ | 1.25 |
Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of awards. The Company’s estimated volatility was based on an average of the historical volatility of peer entities whose stock prices were publicly available. The Company’s calculation of estimated volatility is based on historical stock prices of these peer entities over a period equal to the expected life of the awards. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price. The Company records forfeitures as they are incurred. The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options. The dividend yield of zero is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. The Company calculates the expected life of the options using the Simplified Method for the employee stock options as the Company does not have sufficient historical exercise data. The Company used the Monte Carlo Simulation Model to value at the grant date the aggregate of 1,614,230 market condition performance options granted in April 2022 to the Company’s former Chief Executive Officer and President. The assumptions used in the Monte Carlo Simulation were stock price on date of grant of $2.89, contract term of 10 years, expected volatility of 49% and risk-free interest rate of 2.9%. Vesting is based on sustained market capitalization of $250 million, $500 million and $1 billion and resulted in implied service periods ranging from approximately 4 to 7 years. At September 30, 2023, 921,832 of the 1,614,230 market condition performance options granted in April 2022 were cancelled. Stock option expense was $(169) and $399 for the three and nine months ended September 30, 2023, respectively, and $308 and $1,448 for the three and nine months ended September 30, 2022, respectively. Restricted Stock Units The Plan provides for the grant of restricted stock units (“RSUs”). RSUs are settled in shares of the Company’s Common Stock as the RSUs become vested. The following table summarizes RSU activity for the nine months ended September 30, 2023:
|  | Service-Based RSU's |  |  | Weighted Average Grant Date Fair Value |  |  | Weighted Average Vesting Period (Years) |
Unvested at January 1, 2023 |  |  | 922,057 |  |  | $ | 2.88 |  |  |  | 2.11 |
Granted - service based |  |  | 686,394 |  |  | $ | 1.33 |  |  |  |  |
Vested |  |  | (862,993 | ) |  | $ | 2.87 |  |  |  |  |
Forfeited and cancelled |  |  | (298,381 | ) |  | $ | 2.47 |  |  |  |  |
Unvested at September 30, 2023 |  |  | 447,077 |  |  | $ | 2.00 |  |  |  | 1.74 |
RSU expense was $(33) and $1,249 for the three and nine months ended September 30, 2023, respectively, and $564 and $1,180 for the three and nine months ended September 30, 2022, respectively. Share-Based Compensation Expense The Company recorded share-based compensation for options and RSUs in its statements of operations for the relevant periods as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Selling, general and administrative |  | $ | (149 | ) |  | $ | 700 |  |  | $ | 1,404 |  |  | $ | 2,180 |
Research and development |  |  | (53 | ) |  |  | 172 |  |  |  | 244 |  |  |  | 448 |
Total share-based expense |  | $ | (202 | ) |  | $ | 872 |  |  | $ | 1,648 |  |  | $ | 2,628 |
As of September 30, 2023, total estimated compensation cost of stock options granted and outstanding but not yet vested was $1,168 which is expected to be recognized over the weighted average period of 2.73 years. As of September 30, 2023, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $757 which is expected to be recognized over the weighted average period of 1.61 years.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a)(1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//718/tableOfContent Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 718 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (l) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480429/718-10-50-2 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration