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Note 9 - Capital Stock and Stock-based Compensation | 9 Months Ended
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Sep. 30, 2020
Notes to Financial Statements |
Shareholders' Equity and Share-based Payments [Text Block] |
9. | Capital Stock and Stock-Based Compensation
Fourth Amended and Restated 2000 Stock Option and Incentive Plan On June 11, 2020, the stockholders of the Company approved the Fourth Amended and Restated 2000 Stock Option and Incentive Plan (the “Fourth A&R Plan”), which plan authorizes the grant of stock options and stock-based awards to officers, employees, non-employee directors and other key persons of the Company and its subsidiaries. The Fourth A&R Plan modified the Company’s Third Amended and Restated 2000 Stock Option and Incentive Plan to, among other things, increase the aggregate number of shares authorized for issuance by 3,700,000 shares and reduce the fungible share ratio for deferred stock awards from 1.79 to 1.49. As of September 30, 2020, there were 3,288,084 shares available for issuance under the Fourth A&R Plan. Under the terms of the Fourth A&R Plan, each restricted stock unit or other deferred stock award that is granted decreases the shares available for grant by 1.49 shares and each restricted stock unit that is cancelled or forfeited increases the shares available for grant by 1.49 shares. Stock-Based Payment Awards Stock option and restricted stock unit activity for the nine months ended September 30, 2020 were as follows:
|  | Stock Options |  |  | Restricted Stock Units |  |  | Market Condition RSUs |
|  | Stock |  |  | Weighted |  |  | Restricted |  |  |  |  |  |  | Market |  |  |  |  |
|  | Options |  |  | Average |  |  | Stock Units |  |  | Grant Date |  |  | Condition RSUs |  |  | Grant Date |
|  | Outstanding |  |  | Exercise Price |  |  | Outstanding |  |  | Fair Value |  |  | Outstanding |  |  | Fair Value |
Balance at December 31, 2019 |  |  | 2,266,122 |  |  | $ | 3.93 |  |  |  | 1,590,450 |  |  | $ | 2.27 |  |  |  | 529,491 |  |  | $ | 1.67 |
Granted |  |  | 894,154 |  |  |  | 2.61 |  |  |  | 1,001,113 |  |  |  | 2.73 |  |  |  | 332,622 |  |  |  | 2.98 |
Exercised |  |  | (9,994 | ) |  |  | 2.56 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Vested (RSUs) |  |  | - |  |  |  | - |  |  |  | (748,096 | ) |  |  | 2.34 |  |  |  | (233,056 | ) |  |  | 1.47 |
Cancelled/Forfeited |  |  | (253,419 | ) |  |  | 3.43 |  |  |  | (89,864 | ) |  |  | 3.27 |  |  |  | (39,286 | ) |  |  | 3.03 |
Market Condition RSU - Performance Factor Adjustment |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 233,055 |  |  |  | 1.47 |
Balance at September 30, 2020 |  |  | 2,896,863 |  |  | $ | 3.56 |  |  |  | 1,753,603 |  |  | $ | 2.46 |  |  |  | 822,826 |  |  | $ | 2.13 |
As of September 30, 2020, the total compensation costs related to unvested awards not yet recognized is $5.4 million and the weighted average period over which it is expected to be recognized is approximately 2.4 years. Stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019 was allocated as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |  |  |  |  |  |  |  |  |
Cost of revenues |  | $ | 19 |  |  | $ | 13 |  |  | $ | 43 |  |  | $ | 34 |
Sales and marketing expenses |  |  | 92 |  |  |  | 39 |  |  |  | 205 |  |  |  | 68 |
General and administrative expenses |  |  | 908 |  |  |  | 895 |  |  |  | 2,249 |  |  |  | 1,975 |
Research and development expenses |  |  | 60 |  |  |  | 40 |  |  |  | 144 |  |  |  | 116 |
Total stock-based compensation expenses |  | $ | 1,079 |  |  | $ | 987 |  |  | $ | 2,641 |  |  | $ | 2,193 |
The Company did not capitalize any stock-based compensation. The weighted average estimated fair value per share of stock options granted during the nine months ended September 30, 2020 and 2019 was $1.21 The following assumptions were used to estimate the fair value of the options granted during the nine months ended September 30, 2020:
Volatility |  |  | 58.3 | %
Risk-free interest rate |  |  | 0.3 | %
Expected holding period (in years) |  |  | 4.4 |
Dividend Yield |  |  | - | %
The weighted average estimated fair value of the Market Condition RSUs that were granted during the nine months ended September 30, 2020 was $2.98. The following assumptions were used to estimate the fair value of the Market Condition RSUs granted during the nine months ended September 30, 2020, using a Monte-Carlo valuation simulation:
Volatility |  |  | 80.6 | %
Risk-free interest rate |  |  | 0.2 | %
Correlation coefficient |  |  | 0.3 |
Dividend Yield |  |  | - | %
Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. The calculation of diluted earnings per share assumes conversion of stock options, restricted stock units and Market Condition RSUs into common stock using the treasury method. The weighted average number of shares used to compute basic and diluted earnings per share consists of the following:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30 ,2020 |  |  | September 30, 2019 |  |  | September 30 ,2020 |  |  | September 30, 2019 |
Basic |  |  | 38,920,041 |  |  |  | 38,036,261 |  |  |  | 38,539,703 |  |  |  | 37,764,489 |
Dilutive effect of equity awards |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Diluted |  |  | 38,920,041 |  |  |  | 38,036,261 |  |  |  | 38,539,703 |  |  |  | 37,764,489 |
The shares used in calculating the diluted earnings per share of common stock in the above table exclude options, restricted stock units and Market Condition RSUs of approximately 5,473,292 and 4,055,076 as of September 30, 2020 and 2019, respectively, as the impact of these shares would be anti-dilutive.

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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