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EQUITY
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
EQUITY

NOTE 8—EQUITY

 

(a) General

 

Reverse Stock Split

 

On September 5, 2023, the Board of Directors of Acorn approved a Certificate of Amendment to Acorn’s Restated Certificate of Incorporation that provided for a 1-for-16 reverse stock split of Acorn’s Common Stock. See Note 1 for related details. At September 30, 2023, Acorn had issued and outstanding 2,484,791 shares of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when and if declared by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.

 

The Company is not authorized to issue preferred stock. Accordingly, no preferred stock is issued or outstanding.

 

(b) Summary Employee Option Information

 

The Company’s stock option plans provide for the grant to officers, directors and employees of options to purchase shares of common stock. The purchase price may be paid in cash or, if the option is “in-the-money” at the end of the option term, it is automatically exercised “net”. In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the optionee but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable for one share of the Company’s common stock. Most options expire within five to ten years from the date of the grant, and generally vest over a three-year period from the date of the grant.

 

At September 30, 2023, 77,540 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. During the nine months ended September 30, 2023, 13,436 options were issued. No options were issued in the three months ended September 30, 2023. The options were issued as follows: an aggregate of 3,437 to directors (excluding the CEO), 2,187 to the CEO, 6,250 to the CFO and an aggregate of 1,562 to employees. In the nine and three months ended September 30, 2023, there were no grants to non-employees (other than the directors, CEO and CFO).

 

No options were exercised in the nine and three months ended September 30, 2023. The intrinsic value of options outstanding and of options exercisable at September 30, 2023 was $38,000. The Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the respective years (all in weighted averages):

 

  

Number

of Options

(in shares)

  

Weighted

Average

Exercise

Price Per

Share

  

Weighted

Average

Remaining

Contractual Life

  

Aggregate

Intrinsic

Value

 
Outstanding at December 31, 2022   58,966   $6.71    4.3 years   $16,000 
Granted   13,436    5.24           
Exercised   —    —           
Forfeited or expired   (1,280)   6.48           
Outstanding at September 30, 2023   71,122   $6.44    4.2 years   $46,000 
Exercisable at September 30, 2023   61,786   $6.49    3.9 years   $38,000 

 

 

The fair value of the options granted of $46,000 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

 

Risk-free interest rate   3.9%
Expected term of options   4.1 years 
Expected annual volatility   94.5%
Expected dividend yield   —%

 

(c) Stock-based Compensation Expense

 

Stock-based compensation expense included in SG&A expenses in the Company’s unaudited condensed consolidated statements of operations was $46,000 and $69,000 for the nine-month periods ended September 30, 2023 and 2022, respectively, and $16,000 and $16,000 for the three-month periods ended September 30, 2023 and 2022, respectively.

 

The total compensation cost related to non-vested awards not yet recognized was $17,000 and $43,000 as of September 30, 2023 and 2022, respectively.

 

(d) Warrants

 

The Company previously issued warrants at exercise prices equal to or greater than the market value of the Company’s common stock at the date of issuance. A summary of warrant activity follows:

 

  

Number

of Warrants

(in shares)

  

Weighted

Average

Exercise

Price Per

Share

  

Weighted

Average

Remaining

Contractual

Life

 
Outstanding at December 31, 2022   2,187   $2.08    2.5 months 
Granted   —    —      
Exercised   (2,187)   2.08      
Forfeited or expired   —    —      
Outstanding at September 30, 2023   —   $—    —