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Note 14 - Stock-based Compensation

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Shareholders' Equity and Share-Based Payments [Text Block]

14.

Stock-Based Compensation

Stock-based compensation expense for the years ended December 31, 2024 and 2023, was allocated as follows:

		Year Ended December 31,
(in thousands)		2024				2023
Cost of revenues		$	122			$	308
Sales and marketing expenses			599				746
General and administrative expenses			3,165				3,560
Research and development expenses			454				386
Total stock-based compensation		$	4,340			$	5,000

As of December 31, 2024, the total compensation costs related to unvested awards not yet recognized is $4.1 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, 2024 and 2023, 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, 2024, there were approximately 2.4 million shares available for issuance under the 2021 Incentive Plan.

Restricted Stock Units with a Market Condition

The Company granted 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, 2024 and 2023, the TSR of the Company’s common stock relative to the applicable index resulted in achieving a weighted average vesting of 21% and 100% of the target, respectively. Market Condition RSUs outstanding as of December 31, 2024 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 year ended December 31, 2023, are as follows:

Volatility			56.8	%
Risk-free interest rate			4.6	%
Correlation coefficient			41.7	%
Dividend yield			-	%
Liquidity discount			14.1	%

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) corresponding with the requisite service period. Additionally, the Company assumes a liquidity discount to adjust the fair value for the one-year holding period post-vest restrictions.

Restricted Stock Units with a Performance Condition

Performance-based RSU awards are contingent on the achievement of certain performance metrics. Compensation cost associated with performance-based RSUs are recognized based on the estimated number of shares that the Company ultimately expects will be earned. If the estimated number of shares to be earned is revised in the future, then stock-based compensation expense will be adjusted accordingly.

Stock-Based Payment Awards

Restricted stock unit (“RSU”) activity for the years ended December 31, 2024 and 2023, was as follows:

										Market-								Performance-
		Time-Based								Based								Based
		Restricted				Grant Date				Restricted				Grant Date				Restricted				Grant Date
		Stock Units				Fair Value				Stock Units				Fair Value				Stock Units				Fair Value
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				-			$	-
Granted			1,078,213				3.85				-				-				375,895				4.19
Vested			(717,119	)			3.62				(51,732	)			3.30				-				-
Forfeited			(147,095	)			3.60				(191,155	)			5.60				-				-
Balance at December 31, 2024			1,378,995			$	3.51				558,958			$	2.61				375,895			$	4.19

The aggregate fair value of RSUs that vested during the years ended December 31, 2024, and 2023 was $1.8 million and $7.5 million, respectively. Unvested shares related to market-based and performance-based vesting conditions are reflected at 100% of their target vesting amount in the table above. Actual vesting could range from zero to 150% of their target amounts.

Stock option activity for the years ended December 31, 2024 and 2023, was as follows:

		Number of Options				Weighted-Average Exercise Price				Weighted-Average Remaining Contractual Term				Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2022			1,238,776			$	3.15
Exercised			(213,644	)			2.38
Cancelled/Forfeited			(101,065	)			2.71
Outstanding and exercisable at December 31, 2023			924,067			$	3.37
Exercised			(13,586	)			3.18
Cancelled/Forfeited			(83,023	)			4.70
Outstanding and exercisable at December 31, 2024			827,458			$	3.24				2.7			$	-

There is no aggregate intrinsic value at December 31, 2024 because the Company’s closing stock price of $2.11 is below the exercise price of the outstanding options. The aggregate intrinsic value of options exercised was nil and $0.6 million for the years ended December 31, 2024 and 2023, 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, 2024 and 2023, respectively. As of December 31, 2024, there were 0.1 million shares available for issuance under the ESPP.