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Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Note 5. Stock-Based Compensation

Stock options

The 2013 Equity Incentive Plan (the “2013 Plan”) authorizes the issuance of nonqualified stock options. Payment for the shares may be made in cash, shares of the Company’s common stock or a combination thereof. Under the terms of the 2013 Plan, non-qualified stock options are granted at a minimum of 100% of fair market value on the date of grant and may be exercised at various times depending upon the terms of the option. All existing options expire 10 years from the date of grant, subject to early termination 12 months after termination of employment or service due to death, disability, or termination other than for cause. The grants include a provision providing for acceleration of vesting upon a change of control in the Company.

As of September 30, 2024, the total unrecognized compensation expense related to outstanding stock options was $115, which the Company expects to recognize through April 2028. The Company recognized compensation expense in connection with the vesting of stock options of $9 and $33 for the three and nine months ended September 30, 2024, respectively. The Company recognized compensation expense in connection with the vesting of stock options of $30 for the three and nine months ended September 30, 2023.

During the second quarter of 2024, the Company granted 25,000 non-qualified stock options to one of its non-employee board members. During the third quarter of 2023, the Company granted 25,000 non-qualified stock options to its Chief Executive Officer and to three of its four non-employee board members. The options all vest 20% on the grant date, with an additional 20% vesting annually thereafter. There were no stock options exercised in the nine months ended September 30, 2024 and 2023.

The assumptions made in estimating the fair value of the options on the grant date based upon the BSM option-pricing model during the nine-month period ended September 30, 2024 are as follows:

Dividend Yield	0.00%
Expected Volatility	25.07%
Risk Free Interest Rate	4.65%
Expected Life	6 Years

The Company calculates expected volatility for stock options and other awards using historical volatility as the Company believes the expected volatility will approximate historical volatility.

The following table summarizes the activity for all stock options outstanding for the nine months ended September 30:

	2024				2023
	Shares			Weighted Average Exercise Price	Shares			Weighted Average Exercise Price
Options outstanding at beginning of year	175,000		$	4.06	300,000		$	4.36
Granted	25,000			4.13	100,000			4.11
Exercised	0				0
Expired	(25,000	)		4.39	(225,000	)		4.57
Options outstanding at September 30	175,000		$	4.04	175,000		$	4.03

Options exercisable at September 30	95,000		$	3.8	50,000		$	4.21

Restricted stock units

The 2013 Plan authorizes the issuance of restricted stock units. Stock-based compensation expense is determined on the grant date based on the closing market value of the Company's common stock. The amount of expense is calculated based on an estimate of the number of awards expected to vest at the end of each vesting period and is expensed evenly over the vesting period. In connection with the time of vesting and issuance of shares, an eligible recipient of common stock may elect to have some shares withheld by the Company to satisfy any requirement for withholding taxes. The grants include a provision providing for acceleration of vesting upon a change of control in the Company.

In the third quarter of 2023, the Company granted 35,000 restricted stock units to its Chief Executive Officer and 17,500 restricted stock units to each of its four non-employee board members. The restricted stock units all vest 20% on the first anniversary of the grant and 20% annually thereafter.

As of September 30, 2024, the total unrecognized compensation expenses related to outstanding restricted stock units is $338, which the Company expects to recognize through August 2028. The Company recognized compensation expense in connection with the vesting of restricted stock units of $22 and $65 for the three and nine months ended September 30, 2024, respectively. The Company recognized compensation expense in connection with the vesting of restricted stock units of $8 for the three and nine months ended September 30, 2023.

There were no restricted stock units granted or exercised in the nine months ended September 30, 2024. There were no restricted stock units exercised in the nine months ended September 30, 2023.