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STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

 

13.STOCK-BASED COMPENSATION

 

Stock-based compensation expense for restricted stock in the consolidated statements of operations is summarized as follows:

 

   2023   2022 
Cost of sales  $65,470   $36,794 
           
Selling, general and administrative   705,156    319,084 
Total stock-based compensation expense  $770,626   $355,878 

 

The Company grants restricted stock units (“RSUs”) to its board of directors as partial compensation. These RSUs vest quarterly on a straight-line basis over a one-year period.

 

The following table summarizes activity related to outstanding RSUs for the year ended December 31, 2023:

 

    RSUs  

Weighted Average 

Grant Date 

Fair Value
of RSUs 

 
Non-vested – January 1, 2023    —   $— 
Granted    173,718   $3.43 
Vested    (139,969)  $3.43 
Forfeited    (33,749)  $3.42 
Non-vested – December 31, 2023    —   $— 

 

The Company grants shares of common stock (“Restricted Stock Awards”) to select employees. These shares have various vesting dates, ranging from vesting on the grant date to as late as four years from the date of grant. In the event that the employee’s employment is voluntarily terminated prior to certain vesting dates, portions of the shares may be forfeited. At December 31, 2023, the weighted average remaining amortization period was 2.7 years.

 

The following table summarizes activity related to outstanding Restricted Stock Awards for the year ended December 31, 2023:

 

    Restricted Stock Awards  

Weighted Average 

Grant Date 

Fair Value of

Restricted Stock

Awards 

 
Non-vested – January 1, 2023    130,583   $2.37 
Granted    111,447   $3.82 
Vested    (39,331)  $3.07 
Forfeited    (35,628)  $2.04 
Non-vested – December 31, 2023    167,071   $3.25 

 

The Company grants shares of common stock (“Performance Restricted Stock Awards” or “PRSAs”) to select officers as part of our long-term incentive program that will result in that number of PRSAs being paid out if the target performance metric is achieved. The award vesting is based on specific performance metrics related to accounts payable delinquency, debt, and net income during the performance period. The PRSAs vest at 0% or 100% and all three metrics must be met to vest at 100%. The PRSAs granted under this program will vest on the fourth anniversary of the grant date, subject to the aforementioned performance criteria. At December 31, 2023, the weighted average remaining amortization period was 2.9 years.

 

The following table summarizes activity related to outstanding PRSAs for the year ended December 31, 2023:

 

    PRSAs  

Weighted Average 

Grant Date 

Fair Value
of PRSAs 

 
Non-vested – January 1, 2023    31,737   $2.65 
Granted    48,050   $3.27 
Vested    (20,971)  $2.65 
Forfeited    (10,766)  $2.65 
Non-vested – December 31, 2023    48,050   $3.27 

 

The fair value of all RSUs, PRSAs and Restricted Stock Awards is based on the closing price of our common stock on the grant date. All RSUs, PRSAs, and Restricted Stock Awards vest and settle in common stock (on a one-for-one basis).

 

As of December 31, 2023, unamortized stock-based compensation costs related to restricted share arrangements was $274,415.

 

In addition, our income tax liabilities for 2023 and 2022 were reduced by $174,617 and $101,497, respectively, due to recognized tax benefits on stock-based compensation arrangements.

 

In 2009, the Company adopted the Performance Equity Plan 2009 (the “2009 Plan”). The 2009 Plan reserved 500,000 common shares for issuance. The 2009 Plan provides for the issuance of either incentive stock options or nonqualified stock options to employees, consultants or others who provide services to the Company. The Company has 2,364 shares available for grant under the 2009 Plan as of December 31, 2023.

 

In 2016, the Company adopted the 2016 Long Term Incentive Plan (the “2016 Plan”). The 2016 Plan reserved 600,000 common shares for issuance, provided that, no more than 200,000 common shares be granted as incentive stock options. Awards may be made or granted to employees, officers, directors and consultants in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Any shares of common stock granted in connection with awards other than stock options and stock appreciation rights are counted against the number of shares reserved for issuance under the 2016 Plan as one and one-half shares of common stock for every one share of common stock granted in connection with such award. Any shares of common stock granted in connection with stock options and stock appreciation rights are counted against the number of shares reserved for issuance under the 2016 Plan as one share for every one share of common stock issuable upon the exercise of such stock option or stock appreciation right awarded. In the fourth quarter of 2020, the Company added 800,000 shares to the 2016 Plan, which increased the number of shares reserved for issuance under the 2016 Plan to 1,400,000 shares. In the second quarter of 2023, the Company added an additional 800,000 shares to the 2016 Plan, which increased the number of shares for reserved for issuance under the 2016 Plan to 2,200,000 shares. The Company has 619,055 shares available for grant under the 2016 Plan as of December 31, 2023.