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STOCK-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION 5.STOCK-BASED COMPENSATION

 

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 June 30, 2024.

 

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 331,912 shares available for grant under the 2016 Plan as of June 30, 2024.

 

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

 

                                 
    Three months ended
June 30,		     Six months ended
June 30,		  
    2024     2023     2024     2023  
Cost of sales   $ —     $ 37,171     $ (10,755 )    $ 52,248  
Selling, general and administrative     175,536       143,045       467,813       466,891  
 Total stock-based compensation expense   $ 175,536     $ 180,216     $ 457,058     $ 519,139  

 

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. At June 30, 2024, the weighted average remaining amortization period was six months.

 

The following table summarizes activity related to outstanding RSUs for the six months ended June 30, 2024:

 

   RSUs  

Weighted Average 

Grant Date 

Fair Value of 

RSUs

 
Non-vested – January 1, 2024    —   $— 
Granted    181,323   $2.45 
Vested    (90,660)  $2.45 
Forfeited    —   $— 
Non-vested – June 30, 2024    90,663   $2.45 

 

The Company grants shares of common stock (“Restricted Stock Awards” or “RSAs”) 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 June 30, 2024, the weighted average remaining amortization period was 3 years.

 

The following table summarizes activity related to outstanding Restricted Stock Awards for the six months ended June 30, 2024:

 

  

Restricted

Stock Awards

  

Weighted Average  

Grant Date

Fair Value of 

Restricted Stock 

Awards

 
Non-vested – January 1, 2024    167,071   $3.25 
Granted    87,604   $2.33 
Vested    (58,587)  $3.18 
Forfeited    (12,572)  $3.03 
Non-vested – June 30, 2024    183,516   $2.84 

 

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 June 30, 2024, the weighted average remaining amortization period was 2.7 years.

 

The following table summarizes activity related to outstanding PRSAs for the six months ended June 30, 2024:

 

   PRSAs  

Weighted Average 

Grant Date 

Fair Value of 

PRSAs 

 
Non-vested – January 1, 2024   48,050   $3.27 
Granted   64,611   $2.91 
Vested   —   $— 
Forfeited   (49,295)  $3.23 
Non-vested – June 30, 2024   63,366   $2.93 

 

The fair value of all RSUs, PRSAs and RSAs 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 June 30, 2024, unamortized stock-based compensation costs related to restricted share arrangements was $482,781.