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Note 12 - Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Shareholders' Equity and Share-Based Payments [Text Block] |
12. | Stock-Based Compensation
Stock-based compensation expense for the years ended December 31, 2023 and 2022, is allocated as follows:
|  | Year Ended December 31, |
(in thousands) |  | 2023 |  |  | 2022 |
Cost of revenues |  | $ | 308 |  |  | $ | 121 |
Sales and marketing expenses |  |  | 746 |  |  |  | 557 |
General and administrative expenses |  |  | 3,560 |  |  |  | 3,487 |
Research and development expenses |  |  | 386 |  |  |  | 246 |
Total stock-based compensation expenses |  | $ | 5,000 |  |  | $ | 4,411 |
As of December 31, 2023, the total compensation costs related to unvested awards not yet recognized is $4.7 million and the weighted average period over which it is expected to be recognized is approximately 1.6 years. During the years ended December 31, 2023 and 2022, the Company did not capitalize any stock-based compensation. Equity Incentive Plans During 2021, the Company’s board of directors and stockholders adopted the 2021 Incentive Plan which authorized additional shares available for grants to officers, employees, non-employee directors and other key persons of the Company and its subsidiaries. As of December 31, 2023, there were approximately 3.1 million shares available for issuance under the 2021 Incentive Plan. Restricted Stock Units with a Market Condition The Company grants deferred awards of market condition restricted stock units (the “Market Condition RSUs”) to certain members of the Company’s management team. The vesting of the Market Condition RSUs is linked to the achievement of a relative total shareholder return (“TSR”) of the Company’s common stock measured from the earlier of (i) the measurement period as set out in the award agreement or (ii) upon a change of control (measured relative to the Nasdaq Biotechnology or Russell 2000 index and based on a 20-day trading average price) and is subject to a one-year holding period after vesting. For Market Condition RSUs with a measurement period that concluded during the years ended December 31, 2023, the TSR of the Company’s common stock relative to the applicable index resulted in achieving 100% of the target. Market Condition RSUs outstanding as of December 31, 2023 remain subject to a TSR measurement which can result in vesting rates ranging from 0% to 150% of the target number. The weighted average assumptions used in the valuation of the Market Condition RSUs granted during the years ended December 31, 2023 and 2022, are as follows:
|  | 2023 |  |  | 2022 |
Volatility |  |  | 56.8 | % |  |  | 62.6 | %
Risk-free interest rate |  |  | 4.6 | % |  |  | 2.1 | %
Correlation coefficient |  |  | 41.7 | % |  |  | 41.5 | %
Dividend yield |  |  | - | % |  |  | - | %
Liquidity discount |  |  | 14.1 | % |  |  | 11.7 | %
The Company used historical volatility to calculate the expected volatility matching the expected holding period. The risk-free interest rate assumption is based upon observed U.S. Treasury bill interest rates (risk-free) appropriate for the term of the award. Additionally, the Company assumes a liquidity discount to adjust the fair value for the one-year holding period post-vest restrictions. Stock-Based Payment Awards RSU and Market Condition RSU activity for the years ended December 31, 2023 and 2022, is as follows:
|  |  |  |  |  |  |  |  |  | Condition |  |  |  |  |
|  | Restricted |  |  | Grant Date |  |  | Restricted |  |  | Grant Date |
|  | Stock Units |  |  | Fair Value |  |  | Stock Units |  |  | Fair Value |
Balance at December 31, 2021 |  |  | 1,141,164 |  |  | $ | 3.57 |  |  |  | 860,155 |  |  | $ | 3.13 |
Granted |  |  | 918,870 |  |  |  | 4.64 |  |  |  | 320,272 |  |  |  | 5.08 |
Vested |  |  | (733,611 | ) |  |  | 4.08 |  |  |  | (401,308 | ) |  |  | 2.11 |
Cancelled/Forfeited |  |  | (232,622 | ) |  |  | 4.44 |  |  |  | (132,884 | ) |  |  | 4.21 |
Balance at December 31, 2022 |  |  | 1,093,801 |  |  | $ | 3.94 |  |  |  | 646,235 |  |  | $ | 4.51 |
Granted |  |  | 1,350,125 |  |  |  | 2.87 |  |  |  | 558,958 |  |  |  | 2.61 |
Vested |  |  | (1,144,065 | ) |  |  | 3.38 |  |  |  | (316,210 | ) |  |  | 4.01 |
Cancelled/Forfeited |  |  | (134,865 | ) |  |  | 3.71 |  |  |  | (87,138 | ) |  |  | 4.64 |
Balance at December 31, 2023 |  |  | 1,164,996 |  |  | $ | 3.28 |  |  |  | 801,845 |  |  | $ | 3.37 |
Stock option activity for the years ended December 31, 2023 and 2022, is as follows:
|  | Number of Options |  |  | Weighted-Average Exercise Price |  |  | Weighted-Aveage Remaining Contractual Term (years) |  |  | Average Intrinsic Value (in thousands) |
Outstanding at December 31, 2021 |  |  | 1,404,816 |  |  | $ | 3.10 |  |  |  |  |  |  |  |  |
Exercised |  |  | (40,267 | ) |  |  | 2.64 |  |  |  |  |  |  |  |  |
Cancelled/Forfeited |  |  | (125,773 | ) |  |  | 2.77 |  |  |  |  |  |  |  |  |
Outstanding at December 31, 2022 |  |  | 1,238,776 |  |  | $ | 3.15 |  |  |  |  |  |  |  |  |
Exercised |  |  | (213,644 | ) |  |  | 2.38 |  |  |  |  |  |  |  |  |
Cancelled/Forfeited |  |  | (101,065 | ) |  |  | 2.71 |  |  |  |  |  |  |  |  |
Outstanding and Exerciseable at December 31, 2023 |  |  | 924,067 |  |  | $ | 3.37 |  |  |  | 3.4 |  |  | $ | 1,836 |
The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the Company’s closing stock price of $5.35 as of December 31, 2023, which would have been received by the option holders had all option holders exercised their options as of that date. The aggregate intrinsic value of options exercised was $0.6 million and $0.1 million for the years ended December 31, 2023 and 2022, respectively. Employee Stock Purchase Plan (“ESPP”) The Company has an employee stock purchase plan under which eligible employees may purchase a limited number of shares of common stock at a discount of up to 15% of the market value of such stock at pre-determined and plan-defined dates. There were 0.1 million and 0.2 million shares issued under the ESPP during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, there were 0.3 million shares available for issuance under the ESPP.

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