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Note 12 - Share-based Compensation

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

12. Share-based compensation

On June 8, 2022, the stockholders of the Company approved the Fluent, Inc. 2022 Omnibus Equity Incentive Plan (the "2022 Plan") that authorized for issuance 2,570,421 shares of the Company's common stock. As of December 31, 2024, the Company had 665,767 shares of common stock available for grants pursuant to the 2022 Plan, which included 262,517 shares of common stock previously available for issuance under the 2018 Stock Incentive Plan.

The primary purpose of the 2022 Plan and prior plans is to attract, retain, reward, and motivate certain individuals by providing them with opportunities to acquire or increase their ownership interests in the Company. In October 2022, the Company issued to certain of its senior officers and employees, restricted stock units ("RSUs") (time-based), long-term incentive grants (performance and time-based vesting RSUs), or performance stock units ("PSUs") (on achievement of targets, a cash payout) under the 2022 Plan.

Stock options

The Compensation Committee of the Company's Board of Directors approved the grant of stock options to certain Company officers, which were issued on February 1, 2019, December 20, 2019, March 1, 2020, and March 1, 2021. Subject to continuing service, 50% of the shares subject to these stock options will vest if the Company's stock price remains above 125%, 133.33%, 133.3% and 133.33%, respectively, of the exercise prices for twenty consecutive trading days, and the remaining 50% of the shares subject to these stock options will vest if the Company's stock price remains above 156.25%, 177.78%, 177.78% and 177.78%, respectively, of the exercise prices for twenty consecutive trading days; provided, that no shares will vest prior to the first anniversary of the grant date. As of December 31, 2024, the first condition for the stock options issued on February 1, 2019, December 20, 2019 and March 1, 2020 had been met and the second condition for the stock options issued on December 20, 2019 and March 1, 2020 had been met. Any shares that remain unvested as of the fifth anniversary of the grant date will vest in full on such date. The fair value of the stock options granted was estimated at the trading day before the date of grant using a Monte Carlo simulation model. The key assumptions utilized to calculate the grant-date fair values for these awards are summarized below:

Issuance Date		*February 1, 2019*				*December 20, 2019*				*March 1, 2020*				*March 1, 2021*
Fair value lower range		$	16.86			$	9.48			$	8.76			$	26.04
Fair value higher range		$	17.16			$	9.66			$	8.94			$	26.58
Exercise price		$	28.32			$	15.36			$	13.98			$	37.98
Expected term (in years)			1.0 - 1.3				1.0 - 1.6				1.0 - 1.5				1.0 - 1.3
Expected volatility			65	%			70	%			70	%			80	%
Dividend yield			—	%			—	%			—	%			—	%
Risk-free rate			2.61	%			1.85	%			1.05	%			1.18	%

On September 9, 2024, the Compensation Committee of the Company's Board of Directors approved the grant of stock options to the Company's Chief Financial Officer in connection with his employment agreement. Subject to continuing service, 50% of the shares subject to these stock options will vest when the average closing price of the Company's common stock is equal to three times the exercise price of the option for ten consecutive trading days, and the remaining 50% of the shares subject to these stock options will vest when the average closing price of the Company's common stock is equal to five times the exercise price of the option for ten consecutive trading days. Notwithstanding the foregoing, the options will immediately vest upon the occurrence of certain conditions such as a change in control. The fair value of the stock option granted was estimated at the trading day of the date of the grant using a Monte Carlo simulation model. The key assumptions utilized to calculate the grant-date fair value for the award is summarized below:

Issuance Date		September 9, 2024
Fair value lower range		$	—
Fair value higher range		$	15.59
Exercise price		$	2.75
Expected term (in years)			3.0 - 4.3
Expected volatility			65	%
Dividend yield			—	%
Risk-free rate			3.7	%

For the years ended December 31, 2024 and 2023, the activity related to stock options consisted of the following:

		*Number of options*				*Weighted average exercise price per share*				*Weighted average remaining contractual term (years)*				*Aggregate intrinsic value*
Outstanding as of December 31, 2022			356,500			$	26.22				6.3			$	—
Granted			—
Forfeited			(51,334	)											—
Expired			(2,833	)
Outstanding as of December 31, 2023			302,333			$	25.68				5.4				—
Granted⁽¹⁾			136,667				3.06				9.6				—
Forfeited			—				—				—
Expired			(41,333	)			—				—
Outstanding as of December 31, 2024			397,667			$	18.33				6.2				—
Options exercisable as of December 31, 2024			249,001			$	25.90				4.3				—

(1)	Balance also includes the stock options granted on June 3, 2024 to one employee of the Company totaling 16,667 that vest equally over four annual installments and are exercisable for ten years after the grant date.

The aggregate intrinsic value amounts in the table above represent the difference between the closing price of the Company’s common stock at the end of the reporting period and the corresponding exercise prices, multiplied by the number of in-the-money stock options as of the same date.

For the years ended December 31, 2024 and 2023, the unvested balance of stock options was as follows:

		*Number of options*				*Weighted average exercise price per share*				*Weighted average remaining contractual term (years)*
Unvested as of December 31, 2023			123,833			$	29.72				5.4
Granted ⁽¹⁾			136,667			$	3.06				9.6
Forfeited			(6,000	)			—				—
Vested			(105,834	)			—				—
Unvested as of December 31, 2024			148,666			$	5.66				9.4

(1)	Balance also includes the stock options granted on June 3, 2024 to one employee of the Company totaling 16,667 that vest equally over four annual installments and are exercisable for ten years after the grant date.

For the years ended December 31, 2024 and 2023, compensation expense recognized for stock options of $29 and $0, respectively, was recognized in product development and general and administrative expenses in the consolidated statements of operations. As of December 31, 2024, there was $240 of unrecognized share-based compensation with respect to outstanding stock options.

Restricted stock units and restricted stock

For the years ended December 31, 2024 and 2023, details of unvested RSUs were as follows:

						*Weighted average*
		*Number of units*				*grant date fair value*
Unvested as of December 31, 2022			703,859			$	32.22
Granted			581,185				5.34
Vested and delivered			(203,503	)			17.76
Withheld as treasury stock ⁽¹⁾			(51,903	)			10.92
Vested not delivered ⁽²⁾			(6,599	)			17.10
Forfeited			(291,501	)			7.20
Unvested as of December 31, 2023			731,538				25.95
Granted			701,028				3.62
Vested and delivered			(319,933	)			10.42
Withheld as treasury stock ⁽¹⁾			—				—
Vested not delivered ⁽²⁾			3,833				10.60
Forfeited			(314,941	)			7.29
Unvested as of December 31, 2024			801,525				20.72

(1)	As discussed in Note 11, Equity, the treasury stock was related to shares withheld to cover statutory withholding taxes upon the delivery of shares following the vesting of RSUs. As of December 31, 2024 and 2023, there were 768,595 outstanding shares of treasury stock for both periods.

(2)

Vested not delivered represents vested RSUs with delivery deferred to a future time. During the year ended December 31, 2024, there was a 3,833 change in the vested not delivered balance due to a net 568 shares that were deferred due to timing of delivery of certain shares, along with 3,265 shares that elected deferred delivery. As of December 31, 2024 and 2023, there were 286,099 and 289,932 outstanding RSUs that were vested not delivered, respectively.

For the years ended December 31, 2024 and 2023, the Company recognized compensation expense for RSUs of $1,982 and $3,903, respectively, in sales and marketing, product development, and general and administrative in the consolidated statements of operations, and intangible assets in the consolidated balance sheets. As of December 31, 2024, there was $1,946 of unrecognized share-based compensation with respect to outstanding RSUs and restricted stock. The fair value of the RSUs and restricted stock was estimated using the closing prices of the Company's common stock on the dates of grant.

As of December 31, 2024, unrecognized share-based compensation expense associated with the granted RSUs, restricted stock and stock options is $2,186, which is expected to be recognized over a weighted average period of 2.0 years. For the years ended December 31, 2024 and 2023, share-based compensation for the Company’s equity awards were allocated to the following lines in the consolidated financial statements:

		*Year Ended December 31,*
(In thousands)		*2024*				*2023*
Sales and marketing		$	218			$	543
Product development			239				626
General and administrative			1,506				2,640
Share-based compensation expense			1,963				3,809
Capitalized in intangible assets			48				94
Total share-based compensation		$	2,011			$	3,903

As of December 31, 2024, the Company recorded a liability of $29 and $22, respectively, related to PSUs that are to be settled in cash.

401(k) Profit Sharing Plan and Trust Plan

The Company maintains a 401(k) Profit Sharing Plan and Trust ("Plan") covering all U.S. employees. Under the Plan, the Company makes a safe harbor matching contribution equal to 100% of an employee’s salary deferrals that do not exceed 3% of the employee’s compensation plus 50% of the employee’s salary deferrals between 3% and 5% of such employee’s compensation. This safe harbor matching contribution is 100% vested. During 2024, we made matching contributions to the Plan of $966. During 2023, we made matching contributions to the Plan of $1,034.

The Company also has a discretion to award eligible employees under the Plan, profit sharing contributions