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Note 11 - Share-based Compensation | 6 Months Ended
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Jun. 30, 2024
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] | 11. 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. As of June 30, 2024, there were 849,534 shares of Common Stock remaining available for grant under the Plan. Stock Options The following table summarizes stock option activity for the six months ended June 30, 2024:
|  |  |  |  |  | Weighted Average |  |  |  |  |
|  | Options on Common Shares |  |  | Exercise Price |  |  | Remaining Contractual Term |  |  | Aggregate Intrinsic Value |
Outstanding January 1, 2024 |  |  | 4,657,635 |  |  | $ | 2.52 |  |  |  | 8.75 |  |  | $ | 3,979 |
Granted |  |  | 735,000 |  |  | $ | 2.90 |  |  |  | - |  |  |  | - |
Exercised |  |  | (232,081 | ) |  | $ | 2.53 |  |  |  | - |  |  |  | - |
Forfeited, cancelled, expired |  |  | (1,359,495 | ) |  | $ | 3.01 |  |  |  | - |  |  |  | - |
Outstanding June 30, 2024 |  |  | 3,801,059 |  |  | $ | 2.43 |  |  |  | 8.13 |  |  | $ | 1,195- |
Exercisable June 30, 2024 |  |  | 1,019,9810 |  |  | $ | 4.09 |  |  |  | 4.81 |  |  | $ | 20 |
As of June 30, 2024, there were 2,510,893 service-based stock options outstanding, and 1,290,166 performance-based stock options outstanding which were granted in October 2023 to the Company's current Chief Executive Officer subject to future market capitalization targets. 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 Six Months |
|  | Ended June 30, |
|  | 2024 |  |  | 2023 |
Expected stock price volatility |  |  | 76 | % |  |  | 49 | %
Risk-free interest rate |  |  | 3.97 | % |  |  | 3.64 | %
Expected dividend yield |  |  | 0 | % |  |  | 0 | %
Expected life of options |  |  | 6.00 |  |  |  | 6.66 |
Weighted-average fair value of options granted |  | $ | 2.90 |  |  | $ | 0.55 |
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. Stock option expense was ($33) and $434 for the three and six months ended June 30, 2024, respectively, and $255 and $567 for the three and six months ended June 30, 2023, 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 vest. The following table summarizes RSU activity for the six months ended June 30, 2024:
|  | Service-Based RSU's |  |  | Weighted Average Grant Date Fair Value |  |  | Weighted Average Vesting Period (Years) |
Unvested at January 1, 2024 |  |  | 810,588 |  |  | $ | 1.73 |  |  |  | 2.52 |
Granted - service based |  |  | 739,836 |  |  | $ | 2.77 |  |  |  | - |
Vested |  |  | (159,805 | ) |  | $ | 2.85 |  |  |  | - |
Forfeited and cancelled |  |  | (237,727 | ) |  | $ | 2.26 |  |  |  | - |
Unvested at June 30, 2024 |  |  | 1,152,892 |  |  | $ | 2.15 |  |  |  | 5.19 |
The Company used the Monte Carlo Simulation Model to value at the grant date the aggregate of 632,911 market condition performance RSUs granted in January 2024 to the Company’s Chief Executive Officer. The assumptions used in the Monte Carlo Simulation were stock price on the date of grant of $3.40, a contract term of 10 years, expected volatility of 78% and risk-free interest rate of 4.10%. Vesting is based on sustained market capitalization of $1 billion, and the derived service period is 4.3 years. RSU expense was $275 and $484 for the three and six months ended June 30, 2024, respectively, and $966 and $1,282 for the three and six months ended June 30, 2023, 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 June 30, |  |  | Six Months Ended June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Selling, general and administrative |  | $ | 208 |  |  | $ | 990 |  |  | $ | 856 |  |  | $ | 1,552 |
Research and development |  |  | 34 |  |  |  | 231 |  |  |  | 62 |  |  |  | 297 |
Total share-based expense |  | $ | 242 |  |  | $ | 1,221 |  |  | $ | 918 |  |  | $ | 1,849 |
As of June 30, 2024, total estimated compensation cost of stock options granted and outstanding but not yet vested was $ 2,772 which is expected to be recognized over the weighted average period of 2.33years. As of June 30, 2024, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $2,206, which is expected to be recognized over the weighted average period of 5.19 years.

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