Stock Option Plan – During the year ended December 31, 2023. we had one active fixed stock option plan which was our 2001 Nonqualified Stock Plan (“2001 Plan”). We were authorized to grant nonqualified stock options, stock appreciation rights and stock awards to our employees and directors for up to 8,000,000 shares of common stock under this plan. As of December 31, 2023, there were 1,577,130 shares available for grant under the 2001 Plan. Subsequent to December 31, 2023, our shareholders approved the Aware, Inc. 2023 Equity and Incentive Plan, which replaced the 2001 Plan. See Note 13, Subsequent Events, for more information regarding the 2023 Equity and Incentive Plan.

Options are granted with exercise prices as determined by the Board of Directors and have a maximum term of ten years. Options generally vest over three to five years.

The following table presents stock-based compensation expenses included in our consolidated statements of operations and comprehensive loss (in thousands):


	For the Year Ended December 31,
	2023		2022
Cost of services and other	$	20	$	21
Research and development		289		265
Selling and marketing		88		286
General and administrative		1,128		1,135
Stock-based compensation expense	$	1,525	$	1,707

Stock-based compensation expense in the preceding table includes expenses associated with grants of: i) stock options, ii) unrestricted shares of our common stock; and iii) performance share awards. The methods used to determine stock-based compensation expense for each type of equity grant are described in the following paragraphs.

Stock Option Grants. During the years ended December 31, 2023 and 2022, we did not grant any stock options. We estimate the fair value of stock options using the Black-Scholes valuation model.

The Black-Scholes valuation model takes into account the exercise price of the award, as well as a variety of significant assumptions. The assumptions used to estimate the fair value of stock options include the expected term, the expected volatility of our stock over the expected term, the risk-free interest rate over the expected term, and our expected annual dividend yield. We account for forfeitures as they occur. We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of stock options granted. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

Unrestricted Stock Grants. Our 2001 Plan permits us to grant shares of unrestricted stock to our directors, officers, and employees. Stock-based compensation expense for stock grants is determined based on the fair market value of our stock on the date of grant; provided the number of shares in the grant is fixed on the grant date.

We granted 134,211 and 167,921 shares of unrestricted stock to directors, officers, and employees during the years ended December 31, 2023 and 2022, respectively. Of the shares granted in 2023, 67,104 were issued shortly after June 30, 2023 and 67,107 were issued shortly after December 31, 2023. Of the shares granted in 2022, 61,460 were issued shortly after June 30, 2022 and 46,461 were issued shortly after December 31, 2022. The remaining 60,000 shares of unrestricted stock granted to an officer is to be issued in four equal installments in February 2023, and August of 2023, 2024, and 2025.

Stock Options. Total options outstanding at December 31, 2023 and 2022 were as follows:


	2023					2022
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding at beginning of year		2,560,000		$	4.96		3,240,000		$	4.97
Granted		-			-		-			-
Exercised		-			-		-			-
Forfeited or cancelled		(300,000	)		4.94		(680,000	)		5.00
Outstanding at end of year		2,260,000		$	4.88		2,560,000		$	4.96
Exercisable at year end		1,681,037		$	4.94		25,000		$	6.00

At December 31, 2023, the weighted average remaining contractual term for total options outstanding and total options exercisable was approximately 6.98 and 6.92 years, respectively.

At December 31, 2023, the aggregate intrinsic value of options outstanding and exercisable was $0. The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option.

The following table summarizes the stock options outstanding at December 31, 2023:


	Options Outstanding						Options Exercisable
Exercise Price Range	Number		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Number		Weighted Average Exercise Price
$4 to $5		2,053,750	$	4.72		7.10		1,474,787	$	4.72
$5 to $6		68,750	$	5.50		5.76		68,750	$	5.76
$6 to $7		68,750	$	6.50		5.76		68,750	$	5.76
$7 to $8		68,750	$	7.50		5.76		68,750	$	5.76
		2,260,000	$	4.88		6.98		1,681,037	$	4.94

At December 31, 2023, unrecognized compensation expense related to non-vested stock options was approximately $1.0 million, which is expected to be recognized over a weighted average period of 1.2 years.

We issue common stock from previously authorized but unissued shares to satisfy option exercises and purchases under our Employee Stock Purchase Plan.

Employee Stock Purchase Plan – In May 2021, we adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”) under which eligible employees could purchase common stock at a price equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each six-month offering period. Participation in the 2021 ESPP is limited to $25,000 worth of stock for each calendar year, may be terminated at any time by the employee, and automatically ends on termination of employment. A total of 1,000,000 shares of common stock were reserved for issuance under the 2021 ESPP, and as of December 31, 2023, there were 800,844 shares available for future issuance thereunder. We issued 69,591 and 75,066 shares under the 2021 ESPP Plan during the years ended December 31, 2023 and 2022, respectively.

Share Purchases – On March 1, 2022, our Board of Directors authorized a stock repurchase program pursuant to which we may purchase up to $10.0 million of our common stock. On November 30, 2023, our Board of Directors extended the program through December 31, 2025. As of December 31, 2023 we have repurchased $1.8 million of our common stock pursuant to this program. During the years ended December 31, 2023 and 2022 we repurchased 299,780 and 705,201 shares of our common stock, respectively. The program does not obligate us to acquire any particular amount of common stock and the program may be modified or suspended at any time at our Board of Directors discretion.

Dividends – We did not pay dividends in the years ended December 31, 2023 and 2022.