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STOCK COMPENSATION | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
STOCK COMPENSATION | STOCK COMPENSATION The Company has issued grants under two equity incentive plans, both of which have been approved by the Company’s shareholders: (i) the 2014 Equity Incentive Plan, as amended (the “2014 Plan”), pursuant to which a total of 798,805 shares of the Company’s Class A common stock have been approved for issuance, and (ii) the 2021 Equity Incentive Plan (the “2021 Plan”), pursuant to which a total of 625,000 shares of the Company’s Class A common stock have been approved for issuance. Upon approval of the 2021 Plan in September 2022, any shares remaining available for issuance under the 2014 Plan were cancelled, and all future grants were issued under the 2021 Plan. The 2021 Plan allows for issuance of shares of our Class A common stock, whether through restricted stock, restricted stock units, options, stock appreciation rights or otherwise, to the Company’s officers, directors, employees and consultants. Stock Options Under the Company’s stock option program, pursuant to the 2014 Plan and 2021 Plan, employees may be eligible to receive awards that provides the opportunity in the future to purchase the Company’s shares at the market price of the stock on the date the award is granted (the strike price). Following the issuance, such options become exercisable over a range of immediately vested to four-year vesting periods and expire five years from the grant date, unless stated differently in the option agreements, if they are not exercised. Stock options have no financial statement effect on the date they are granted but rather are reflected over time through compensation expense. We record compensation expense based on the estimated fair value of the awards which is amortized as compensation expense on a straight-line basis over the vesting period. Accordingly, total expense related to the award is reduced by the fair value of options that are forfeited by employees that leave the Company prior to vesting as they occur. The following is a summary of the option activities during the nine months ended September 30, 2024:
| Number of Units
Outstanding, December 31, 2023 | 348,259 |
Granted | — |
Exercised | — |
Forfeited | (29,302) |
Expired | (138,125)
Outstanding, September 30, 2024 | 180,832 |
Exercisable, September 30, 2024 | 173,013 |
Restricted Stock Units Under the Company’s 2014 Plan and 2021 Plan, the Company may grant restricted stock units (“RSUs”) to certain employees and non-employee directors. Upon granting the RSUs, the Company recognizes a fixed compensation expense equal to the fair market value of the underlying shares of RSUs granted on a straight-line basis over the requisite services period for the RSUs. Compensation expense related to the RSUs is reduced by the fair value of units that are forfeited by employees that leave the Company prior to vesting. The RSUs vest over a range of immediately vested to four-year vesting periods in accordance with the terms of the applicable RSU grant agreement. The following is a summary of the RSU activities during the nine months ended September 30, 2024:
| Number of Units
Outstanding, December 31, 2023 | 408,451 |
Granted | 15,999 |
Vested | (137,370) |
Forfeited | (202,488) |
Outstanding, September 30, 2024 | 84,592 |
Stock Compensation Expense Long-term incentive plan On August 15, 2024, the Company granted a long-term incentive plan (LTIP) cash award pursuant to its 2021 Equity Incentive Plan to members of the Company’s Board of Directors and senior management. The amount of each award earned will depend on the performance of the Company relative to certain performance targets related to share price appreciation of the Company’s Class A common stock during the respective performance cycles. The LTIP awarded to the Company's Board of Directors have a performance period ending on March 31, 2025, whereas the LTIP awarded to senior management have three consecutive 12-month performance periods ending June 30, 2025, June 30, 2026, and June 30, 2027. If the Company’s performance relative to the performance goal during the performance cycle is not equal to the performance target, the target Cash LTIP Award will be adjusted based on actual performance. At no time during the performance cycle shall the payout be less than 1/3 or exceed 3 times the target cash LTIP Award, unless a change a control has occurred. Cash payments are subject to the Company’s compliance with all covenants contained in the Company’s credit facilities in effect at the conclusion of each performance cycle. There have been no cash payments as of September 30, 2024. As amounts earned for the awards are based on changes in the Company's stock price, the Company will recognize a liability for compensation cost each reporting period based on the fair value as of each reporting date proportionally with the elapsed time at each reporting period. The liability is recognized in other short-term liabilities in the consolidated balance sheets. The Company used a Model Monte Carlo Simulation model to determine the fair value of the LTIP as of September 30, 2024 to be $274 thousand. Key inputs to the valuation of the awards include the stock price as of the award effective date and the valuation date, the discount rate, and historical volatility in the Company’s stock price.
| September 30, 2024 |  |
Market value of common stock on measurement date | $ | 0.53 |  |  |
Risk free interest rate (1) | 3.54% - 4.29% |  |
Expected life in years | 0.5 - 2.75 years |  |
Expected volatility (2) | 60% - 76% |  |
(1)The risk-free interest rate was determined by management using the applicable Treasury Bill as of the measurement date. (2)The historical trading volatility was based on historical fluctuations in stock price for Boxlight and certain peer companies. For the three and nine months ended September 30, 2024 and 2023, the Company recorded the following stock compensation in general and administrative expense (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Stock options | $ | 6 |  |  | $ | 125 |  |  | $ | 75 |  |  | $ | 446 |
Restricted stock units | 161 |  |  | 545 |  |  | 883 |  |  | 1,375 |
Warrants | — |  |  | 1 |  |  | 1 |  |  | 2 |
Long-term incentive plan | 274 |  |  | — |  |  | 274 |  |  | — |
Total stock compensation expense | $ | 441 |  |  | $ | 671 |  |  | $ | 1,233 |  |  | $ | 1,823 |

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