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Note 13 - Equity-based Compensation

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE 13. EQUITY-BASED COMPENSATION

Equity Compensation Plans

In October 2007, the Company adopted the 2007 Omnibus Incentive Plan (the “2007 Plan”) to provide for the granting of equity awards, such as stock options, unrestricted and restricted common stock, stock units, dividend equivalent rights, and stock appreciation rights to employees, directors and outside consultants, as determined by the Board. The 2007 Plan expired on March 15, 2017. Upon expiration, new awards cannot be issued pursuant to the 2007 Plan, but outstanding awards continue to be governed by its terms. Stock options granted under the 2007 Plan expire no later than ten years from the date of grant. All stock options outstanding under the 2007 Plan were fully vested as of December 31, 2021.

In March 2017, the Company adopted the 2017 Omnibus Incentive Plan (the “2017 Plan”), which was approved by stockholders on June 2, 2017, to provide for the granting of equity awards, such as nonqualified stock options (“NQSOs”), incentive stock options (“ISOs”), restricted stock, performance shares, stock appreciation rights (“SARs”), RSUs and other share-based awards to employees, directors, and consultants, as determined by the Board. The 2017 Plan does not affect awards previously granted under the 2007 Plan. Upon adoption, the 2017 Plan allowed for awards of up to 66,243 shares of the Company’s common stock, plus an automatic annual increase in the number of shares authorized for awards on the first day of each of the Company’s fiscal years beginning January 1, 2018 through January 1, 2027 equal to (i) 4% of the number of shares of common stock outstanding on the last day of the immediately preceding fiscal year or (ii) such lesser number of shares of common stock as determined by the Board. On March 31, 2023, the number of shares available for future awards under the 2017 Plan was increased by 81,417 shares. As of March 31, 2024, there were 179,585 shares available for future awards under the 2017 Plan.

Under the terms of the 2017 Plan, the exercise price of NQSOs, ISOs and SARs may not be less than 100% of the fair market value of the common stock on the date of grant and, if ISOs are granted to an owner of more than 10% of the Company’s stock, then not less than 110% of the fair market value of the common stock on the date of grant. The term of awards will not be longer than ten years or, in the case of ISOs, no longer than five years with respect to holders of more than 10% of the Company’s stock. Stock options granted to employees generally vest over four years, while options granted to directors and consultants typically vest over a shorter period, subject to continued service. The Company issues new shares to satisfy options under the 2007 Plan and the 2017 Plan.

Summary of Outstanding Equity Awards

The following table summarizes information about the Company’s stock options and restricted stock outstanding at December 31, 2023, and activity during the three month period ended March 31, 2024:

(in thousands, except years and per share data)		Awards				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Life (years)				Aggregate Intrinsic Value
Outstanding at December 31, 2023			125			$	31.15				7.3			$	1
Options forfeited/cancelled			(8	)		$	20.36
Outstanding at March 31, 2024			117			$	31.91				6.8			$	1

Vested and expected to vest at March 31, 2024			111			$	33.17				6.7			$	1

Vested and exercisable at March 31, 2024			62			$	56.86				5.0			$	—

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing market price of the Company’s common stock as quoted on the NYSE American as of March 31, 2024 for options that have an exercise price that is lower than the market price. There were no stock option awards exercised during the three months ended March 31, 2024 or 2023. The Company received no cash payments for the exercise of stock options during the three months ended March 31, 2024 and 2023.

As of March 31, 2024, total unrecognized compensation cost related to unvested stock options and restricted stock was approximately $0.1 million. This amount is expected to be recognized as stock-based compensation expense in the Company’s condensed consolidated statements of operations over the remaining weighted average vesting period of 1.41 years.

Equity Awards to Employees and Directors

The Company grants options to purchase common stock to its employees and directors at prices equal to or greater than the market value of the stock on the dates the options are granted. The Company has estimated the value of stock option awards as of the date of grant by applying the Black-Scholes option pricing model using the single-option valuation approach. The application of this valuation model involves assumptions that are judgmental and subjective in nature. See Note 2, “Summary of Significant Accounting Policies,” for a description of the accounting policies that the Company applied to value its stock-based awards.

During the three months ended March 31, 2024, the Company did not grant any options to employees or directors. During the three months ended March 31, 2023, the Company granted options to employees or directors to purchase an aggregate of 3,650 shares of common stock.

The weighted-average assumptions used in determining the value of options were as follows:

Assumption		For the Three Months Ended March 31, 2023
Expected price volatility			154.49	%
Expected term (in years)			6.66
Risk-free interest rate			3.41	%
Dividend yield			0.00	%
Weighted-average fair value of options granted during the period		$	2.37

Expected Price Volatility—This is a measure of the amount by which the stock price has fluctuated or is expected to fluctuate. The computation of expected volatility was based on the historical volatility of our own stock.

Expected Term—This is the period of time over which the options granted are expected to remain outstanding. The expected life assumption is based on the Company’s historical data.

Risk-Free Interest Rate—This is the U.S. Treasury rate for the week of the grant having a term approximating the expected life of the option.

Dividend Yield—The Company has not made any dividend payments nor does the Company have plans to pay dividends in the foreseeable future.

Forfeitures are estimated at the time of grant and reduce compensation expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

During the three months ended March 31, 2024 and 2023, the Company did not grant restricted stock to employees or directors.

For the three months ended March 31, 2024 and 2023, the Company recognized stock-based compensation expense of $47 thousand and $75 thousand, respectively, for option awards to employees and directors.

Stock-Based Awards to Non-Employees

During the three months ended March 31, 2024 and 2023, the Company did not grant options to non-employees in exchange for advisory and consulting services.

The Company did not grant restricted stock to non-employees during the three months ended March 31, 2024.

For the three months ended March 31, 2024 and 2023, the Company recognized stock-based compensation expense of $13 thousand and $0, respectively, as it relates to non-employees.

Summary of Stock-Based Compensation Expense

A summary of the stock-based compensation expense included in results of operations for the options and restricted stock awards discussed above is as follows (in thousands):

		For the Three Months Ended March 31,
		2024				2023
Research and development		$	4			$	6
Sales and marketing			26				15
General and administrative			30				54
Total stock-based compensation expense		$	60			$	75