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Note 12 - Stock-based Compensation | 9 Months Ended
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Sep. 30, 2023
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] | NOTE 12: STOCK-BASED COMPENSATION A summary of outstanding options is included below:
Time Vesting Options |  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  | Average |  |  | Weighted |  |  |  |  |  |  | Weighted |
|  |  |  |  |  | Remaining |  |  | Average |  |  |  |  |  |  | Average |
Range of Exercise |  | Number |  |  | Contractual |  |  | Exercise |  |  | Options |  |  | Exercise |
Prices between |  | Outstanding |  |  | Life |  |  | Price |  |  | Exercisable |  |  | Price |
$4.01 - $8.00 |  |  | 566,673 |  |  |  | 6.89 |  |  | $ | 7.42 |  |  |  | 538,340 |  |  | $ | 7.46 |
$8.01+ |  |  | 96,125 |  |  |  | 2.28 |  |  |  | 25.22 |  |  |  | 96,125 |  |  | $ | 25.22 |
|  |  | 662,798 |  |  |  | 6.22 |  |  | $ | 10.00 |  |  |  | 634,465 |  |  |  |  |
Performance Vesting Options |  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  | Average |  |  | Weighted |  |  |  |  |  |  | Weighted |
|  |  |  |  |  | Remaining |  |  | Average |  |  |  |  |  |  | Average |
Range of Exercise |  | Number |  |  | Contractual |  |  | Exercise |  |  | Options |  |  | Exercise |
Prices between |  | Outstanding |  |  | Life |  |  | Price |  |  | Exercisable |  |  | Price |
$4.01 - $8.00 |  |  | 240,000 |  |  |  | 6.67 |  |  | $ | 7.59 |  |  |  | 240,000 |  |  | $ | 7.59 |
|  |  | 240,000 |  |  |  | 6.67 |  |  | $ | 7.59 |  |  |  | 240,000 |  |  |  |  |
Market Vesting Options |  |  |  |  |  | Weighted |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  | Average |  |  | Weighted |  |  |  |  |  |  | Weighted |
|  |  |  |  |  | Remaining |  |  | Average |  |  |  |  |  |  | Average |
Range of Exercise |  | Number |  |  | Contractual |  |  | Exercise |  |  | Options |  |  | Exercise |
Prices between |  | Outstanding |  |  | Life |  |  | Price |  |  | Exercisable |  |  | Price |
$0.01 - $4.00 |  |  | 733,334 |  |  |  | 1.39 |  |  | $ | 3.00 |  |  |  | - |  |  | $ | - |
|  |  | 733,334 |  |  |  | 1.39 |  |  | $ | 3.00 |  |  |  | - |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Performance Vesting |
|  | Market Vesting Options |  |  | Time Vesting Options |  |  | Options |
|  |  |  |  |  | Weighted |  |  |  |  |  |  | Weighted |  |  |  |  |  |  | Weighted |
|  |  |  |  |  | Average |  |  |  |  |  |  | Average |  |  |  |  |  |  | Average |
|  | Options |  |  | Exercise |  |  | Options |  |  | Exercise |  |  | Options |  |  | Exercise |
Date/Activity |  | Outstanding |  |  | Price |  |  | Outstanding |  |  | Price |  |  | Outstanding |  |  | Price |
Balance, December 31, 2022 |  |  | 633,334 |  |  |  | 3.00 |  |  |  | 662,910 |  |  | $ | 10.02 |  |  |  | 240,000 |  |  | $ | 7.59 |
Granted |  |  | 100,000 |  |  |  | 3.00 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Forfeited or expired |  |  | - |  |  |  | - |  |  |  | (112 | ) |  |  | 162.00 |  |  |  | - |  |  |  | - |
Balance, September 30, 2023 |  |  | 733,334 |  |  |  | 3.00 |  |  |  | 662,798 |  |  |  | 10.00 |  |  |  | 240,000 |  |  | $ | 7.59 |
The weighted average remaining contractual life for options exercisable is 6.28 years as of September 30, 2023. Valuation Information for Stock-Based Compensation For purposes of determining estimated fair value under ASC 718-10, Stock Compensation, the Company computed the estimated fair values of stock options using the Black-Scholes model. Amendment to Performance Options On June 1, 2020, Rick Mills, CEO, and Will Logan, CFO, were issued ten-year options to purchase 160,000 and 80,000 shares of common stock (the “Performance Options”), respectively, which vest in equal installments over a three-year period (2020-2022), subject to satisfying the Company revenue targets and EBITDA (earnings before interest, taxes, depreciation, and amortization) targets for the applicable year. In each of calendar years 2020, 2021 and 2022, one-third of the total shares may vest (if the revenue and EBITDA targets are met), and the shares that are subject to vesting each year are allocated equally to each of the revenue and EBITDA targets for such year. The Performance Options include a catch-up provision, where any options that did not vest during a prior year due to the Company’s failure to meet a prior revenue or EBITDA target may vest in a subsequent vesting year if the revenue or EBITDA target, as applicable, is met in the future year. On June 15, 2022, the Board approved of an amendment to the Performance Options to provide that the revenue target for the calendar year 2022 set forth therein ($38,000) was eliminated, and the remaining shares that are available for vesting under the Performance Options (106,667 unvested shares for Mr. Mills and 53,334 for Mr. Logan) (including the unvested portions of shares based on the satisfaction of the revenue targets for 2020 and 2021 by virtue of the catch-up provisions in the Performance Options) will fully vest upon the achievement of an updated EBITDA target for calendar year 2022 of $3,600. The Performance Options state that the calculation of EBITDA set forth in the Performance Options shall be calculated in a form consistent with the Company’s 2022 approved budget, which
| (i) | excluded any impact on EBITDA of:
(a) the accounting treatment (including any “mark-to-market accounting”) of the Company’s warrants or the Guaranteed Consideration (as defined in the Merger Agreement), (b) non-recurring transaction expenses associated with the Merger and the capital raising financing activities of the Company to effectuate the Merger, and (c) any write-down or write-off of any Company inventory of Safe Space Solutions products. (ii) included deductions related to any cash or stock bonuses paid or payable to any employees of the Company for services provided in calendar year 2022 (even if such bonuses are actually paid after calendar year 2022), including bonuses paid pursuant to the terms of the 2022 Cash Bonus Plan (as described below). The unvested portion of the Performance Options as of December 31, 2022 vested in full effective March 30, 2023 upon confirmation by the Board of Directors of achievement of the performance metrics for the year ended December 31, 2022. The exercise price of the foregoing options is $7.59 per share, the closing price of the Company’s common stock on the date of issuance (as adjusted by the Company's 1-for-3 reverse stock split in March 2023). The options were issued from the 2014 Stock Incentive Plan. Issuance of Options On June 15, 2022, Messrs. Mills and Logan received ten-year options to purchase 333,334 and 200,000 shares of common stock, respectively (the “New Options”). The New Options are eligible to vest at any time on or prior to February 17, 2025 if the trailing 10-trading day VWAP of the Company’s common stock, as reported on the Nasdaq Capital Market, exceeds the share price targets below, subject to such executive serving the Company as a director, officer, employee or consultant at such time:
|  | Share Price Target |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Guaranteed |  |  | Total |
Executive |  | $6.00 |  |  | $9.00 |  |  | $12.00 |  |  | $15.00 |  |  | $18.00 |  |  | Price |  |  | Shares |
Mills Shares Vested |  |  | 16,667 |  |  |  | 33,334 |  |  |  | 50,000 |  |  |  | 66,667 |  |  |  | 83,333 |  |  |  | 83,333 |  |  |  | 333,334 |
Logan Shares Vested |  |  | 10,000 |  |  |  | 20,000 |  |  |  | 30,000 |  |  |  | 40,000 |  |  |  | 50,000 |  |  |  | 50,000 |  |  |  | 200,000 |
Percentage of Shares Vested |  |  | 5 | % |  |  | 10 | % |  |  | 15 | % |  |  | 20 | % |  |  | 25 | % |  |  | 25 | % |  |  |  |
The “Guaranteed Price” has the meaning ascribed to such term in the Merger Agreement, which currently means $19.20 per share. The exercise price of the New Options is $3.00 per share, which exceeded the closing price of the Company’s common stock on the date of issuance (as adjusted by the Company's 1-for-3 reverse stock split in March 2023). The New Options were issued from the Company’s 2014 Stock Incentive Plan, as amended. An additional 100,000 options with identical market vesting restrictions were issued to non-executives. The fair value of the options on the grant date varied between $0.63 and $1.11 per award as determined using the Monte Carlo model. These values were calculated using the following weighted average assumptions:
Risk-free interest rate |  |  | 3.30 | %
Expected term (in years) |  |  | 2.68 |
Expected price volatility |  |  | 123.53 | %
Dividend yield |  |  | 0 | %
At September 30, 2023, the Company evaluated the probability of achieving the share price targets in each tranche based, in part, on work performed by the Company’s third party valuation specialist in conjunction with evaluating the equity guarantee contingent liability. As a result of that evaluation of probability, during the three and nine month period ending September 30, 2023 the Company recorded $3 and $10 of compensation expense, respectively. These awards have not yet vested and are subject to actual share price performance through February 2025. Stock Compensation Expense Information ASC 718-10, Stock Compensation, requires measurement and recognition of compensation expense for all stock-based payments including warrants, stock options, restricted stock grants and stock bonuses based on estimated fair values. Under the Amended and Restated 2006 Equity Incentive Plan, the Company reserved 573,334 shares for purchase by the Company’s employees and under the Amended and Restated 2006 Non-Employee Director Stock Option Plan the Company reserved 233,334 shares for purchase by the Company’s employees. There are 3,890 options outstanding under the 2006 Equity Incentive Plan. In October 2014, the Company’s shareholders approved the 2014 Stock Incentive Plan, under which 7,390,355 shares were reserved for purchase by the Company’s employees. In August 2018, a special meeting of shareholders was held in which the shareholders voted to amend the Company’s 2014 Stock Incentive Plan to increase the reserve of shares authorized for issuance thereunder, from 7,390,355 shares to 18,000,000 shares. Following a 1-for-30 reverse stock split, the shares authorized for issuance under the Company’s 2014 Stock Incentive Plan was reduced to 600,000. On July 10, 2020, the Company’s shareholders approved an amendment to the Company’s 2014 Stock Incentive Plan to increase the reserve of authorized for issuance thereunder to 6,000,000. Following a 1-for-3 reverse stock split, the shares authorized for issuance under the Company's 2014 Stock Incentive Plan was reduced to 2,000,000. There are 1,632,242 options outstanding under the 2014 Stock Incentive Plan. The 2014 Stock Incentive Plan expired in April 2023 (other than with respect to outstanding options issued under the 2014 Stock Incentive Plan). Employee Awards Compensation expense recognized for the issuance of stock options to employees for the three and nine months ended September 30, 2023 of $3 and $379, respectively, was included in general and administrative expense in the Condensed Consolidated Financial Statements. Compensation expense recognized for the issuance of stock options to employees for the three and nine months ended September 30, 2022 of $456 and $1,241, respectively, was included in general and administrative expense in the Condensed Consolidated Financial Statements. At September 30, 2023, there was $19 of total unrecognized compensation expense related to unvested share-based awards with performance vesting criteria for employees. Compensation expense related to performance vesting options will be recognized if it becomes probable that the Company will achieve the identified performance metrics. Non-Employee Awards Compensation expense recognized for the issuance of stock options to our Board of Directors, for the three and nine month period ended September 30, 2023 of $43 and $129, was included in general and administrative expense in the Condensed Consolidated Financial Statements. Compensation expense recognized for the issuance of stock options to our Board of Directors, for the three and nine month period ended September 30, 2022 of $82 and $246, was included in general and administrative expenses in the Condensed Consolidated Financial Statements. At September 30, 2023, there was approximately $22 of total unrecognized compensation expense related to unvested share-based awards with time vesting criteria for non-employee directors. Generally, expense related to the time vesting options will be recognized over the next year and will be adjusted for any future forfeitures as they occur. The Company engages certain consultants to perform services in exchange for Company common stock. Shares issued for services were calculated based on the ten (10) day VWAP for the last ten (10) days during the month of service provided. During the three and nine months ended September 30, 2023, the Company issued shares issuable in exchange for services in the amount of $0 and $55, respectively. During the three and nine months ended September 30, 2022, the Company issued shares issuable in exchange for services in the amount of $30 and $100, respectively.

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