Note 12 - Stock-based Compensation

6 Months Ended

Jun. 30, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

12. STOCK-BASED COMPENSATION

2023 Equity Incentive Plan

On August 1, 2023, the Company’s stockholders approved the 2023 Equity Incentive Plan (the “2023 Plan”), which replaced the 2019 Omnibus Incentive Plan (the “2019 Plan”). The 2023 Plan has a share reserve equal to the sum of (a) 3,231,755 shares of common stock, (b) shares that are subject to awards granted under the 2019 Plan that are outstanding on or after August 1, 2023 (the “Effective Date”) and that are subsequently forfeited, cancelled, expire or lapse unexercised or unsettled or are reacquired by the Company, (c) the number of shares reserved under the 2019 Plan that are not issued or subject to outstanding awards under the 2019 Plan on the Effective Date, and (d) the increase in shares described in the next sentence. On the first anniversary of the Effective Date, the number of shares of common stock that may be issued under the 2023 Plan will increase by a number of shares equal to 6% of the number of outstanding shares of common stock. Under the 2023 Plan, the Compensation Committee of the Company’s board of directors is authorized to grant equity-based incentive awards that include stock options, restricted stock units (“RSUs”), shares of restricted stock (“RSS”) and performance-based restricted stock units (“PSUs”) to officers, directors, employees and contractors. Equity-based awards are also outstanding under the Company’s 2019 and 2010 equity incentive plans, although no new awards can be granted under either plan. The Company’s equity incentive plans permit the issuance of various types of awards including but not limited to stock options, restricted stock, RSUs and PSUs.

2024 Equity Inducement Plan

On February 8, 2024, upon recommendation of the Compensation Committee of the Board of Directors of the Company, they approved and adopted the 2024 Equity Inducement Plan (the “2024 Equity Inducement Plan”), and subject to the adjustment provisions of the 2024 Equity Inducement Plan, reserved 800,000 shares of the Company’s common stock, par value $0.01 per share, for issuance of equity awards under the 2024 Equity Inducement Plan. The 2024 Equity Inducement Plan was approved and adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. The 2024 Equity Inducement Plan provides for grants of non-statutory stock options, RSUs, PSUs, stock appreciation rights, and restricted shares (each, an “Inducement Award”). In addition, the Compensation Committee of the Board of Directors also approved various forms of stock-based awards. The terms and conditions of the 2024 Equity Inducement Plan are intended to comply with the Nasdaq inducement award rules. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, the only persons eligible to receive grants of Inducement Awards are individuals who were not previously employees or directors of the Company (or following a bona fide period of non-employment), as an inducement material to the individuals’ entry into employment with the Company.

An aggregate 440,814 and 142,511 shares of the Company’s common stock were available for issuance of new awards granted under the Company’s equity incentive plans as of June 30, 2024 and December 31, 2023, respectively.

Stock Options

Options granted to employees typically become exercisable over a four-year vesting period and have a ten-year contractual term. Initial options granted to directors typically vest over a four-year period and have a ten-year contractual term. Annual option grants to directors typically vest in full on the date of the Company’s next annual meeting of shareholders and have a ten-year contractual term.

During the three months ended June 30, 2024 and 2023, the Company recorded compensation expense related to stock options of approximately $0.5 million and $0.1 million, respectively. During the six months ended June 30, 2024 and 2023, the Company recorded compensation expense related to stock options of approximately $1.0 million and $0.3 million, respectively. As of June 30, 2024, the total unrecognized compensation cost related to non-vested stock options granted was $4.5 million and is expected to be recognized over a weighted average period of 3.16 years.

The following table presents a summary of stock option activity for the three months ended June 30, 2024 and 2023:

	Three Months Ended
	June 30,
	2024					2023
				Weighted					Weighted
				Average					Average
				Exercise					Exercise
	Options			Price ($)		Options			Price ($)
Options outstanding at beginning of period		3,239,384			7.38		1,216,953			18.03
Grants		64,000			3.00		17,321			2.55
Forfeitures and expirations		(27,491	)		12.80		(17,229	)		45.18
Exercises		—			—		—			—
Options outstanding at period end		3,275,893			7.25		1,217,045			17.43
Options exercisable at period end		1,245,003			13.51		893,401			22.07
Weighted average per share fair value of options granted during the period	$	2.19				$	1.77

The following table presents a summary of stock option activity for the six months ended June 30, 2024 and 2023:

	Six Months Ended
	June 30,
	2024					2023
				Weighted					Weighted
				Average					Average
				Exercise					Exercise
	Options			Price ($)		Options			Price ($)
Options outstanding at beginning of period		3,194,574			7.42		1,175,339			19.03
Grants		163,500			3.72		117,723			2.70
Forfeitures and expirations		(69,056	)		7.55		(76,017	)		19.41
Exercises		(13,125	)		2.82		—			—
Options outstanding at period end		3,275,893			7.25		1,217,045			17.43
Options exercisable at period end		1,245,003			13.51		893,401			22.07
Weighted average per share fair value of options granted during the period	$	2.60				$	1.86

The following table provides additional information related to outstanding stock options as of June 30, 2024:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
	Shares		Price ($)		Term (in years)		Value ($)
							(In thousands)
Outstanding		3,275,893		7.25		7.25		5,600
Exercisable		1,245,003		13.51		5.88		1,206
Outstanding, vested and expected to vest		2,826,910		7.86		7.76		4,617

The following table provides additional information related to outstanding stock options as of December 31, 2023:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
	Shares		Price ($)		Term (in years)		Value ($)
							(In thousands)
Outstanding		3,194,574		7.42		8.35		2,460
Exercisable		993,037		16.34		5.40		258
Outstanding, vested and expected to vest		2,887,226		7.84		8.20		2,164

Shares outstanding, vested and expected to vest in the table above do not reflect any accelerated vesting of unvested stock options that may result from the ANI Merger Agreement.

As of June 30, 2024, 110,179 shares remain available for grant under the 2023 Plan. As of June 30, 2024, 311,500 shares remain available for grant under the 2024 Equity Inducement Plan.

Restricted Stock and Restricted Stock Units

The following table presents a summary of restricted stock and RSUs activity for the three months ended June 30, 2024 and 2023:

	Three Months Ended
	June 30,
	2024					2023
				Weighted					Weighted
				Average					Average
				Grant Date					Grant Date
	Shares			Fair Value ($)		Shares			Fair Value ($)
Restricted stock and RSUs outstanding at beginning of period		1,281,120			2.66		685,176			1.67
Grants		—			—		—			—
Vested restricted stock and RSUs		—			—		—			—
Forfeitures		(750	)		1.35		(3,000	)		1.35
Restricted stock and RSUs outstanding at period end		1,280,370			2.67		682,176			1.67

The following table presents a summary of restricted stock and RSUs activity for the six months ended June 30, 2024 and 2023:

	Six Months Ended
	June 30,
	2024					2023
				Weighted					Weighted
				Average					Average
				Grant Date					Grant Date
	Shares			Fair Value ($)		Shares			Fair Value ($)
Restricted stock and RSUs outstanding at beginning of period		1,217,076			2.35		73,594			4.98
Grants		223,300			3.77		632,050			1.39
Vested restricted stock and RSUs		(159,256	)		1.82		(20,468	)		4.98
Forfeitures		(750	)		1.35		(3,000	)		1.35
Restricted stock and RSUs outstanding at period end		1,280,370			2.67		682,176			1.67

Employee stock-based compensation expense related to restricted stock and RSUs recognized in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”) was $0.3 million and approximately $0.1 million for the three months ended June 30, 2024 and 2023. Employee stock-based compensation expense related to restricted stock and RSUs recognized in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”) was $0.6 million and $0.1 million for the six months ended June 30, 2024 and 2023.

As of June 30, 2024, the total unrecognized compensation cost related to restricted stock and RSUs was $3.0 million and is expected to be recognized over a weighted average period of 3.16 years.

Performance-based restricted stock units

During the fourth quarter of 2023, the Company began granting performance-based PSUs that will settle in stock. PSUs awarded to employees have a three-year performance period and vest equally upon the achievement of annual performance measures established at the date of grant. Participants may ultimately earn between zero and 100% of the number of PSUs granted based on the degree of achievement of the performance metrics. If zero PSUs vest in a given year because the annual performance metric was not achieved, such PSUs will not be eligible to vest in a later year for the participant.

The following table summarizes the PSUs activity for three months ended June 30, 2024 and 2023:

	Three Months Ended
	June 30,
	2024				2023
			Weighted				Weighted
			Average				Average
			Grant Date				Grant Date
	Shares		Fair Value ($)		Shares		Fair Value ($)
PSUs outstanding at beginning of period		900,000		3.23		—		—
Grants		—		—		—		—
Vested		—		—		—		—
Forfeitures		—		—		—		—
Restricted stock and RSUs outstanding at period end		900,000		3.23		—		—

The following table summarizes the PSUs activity for six months ended June 30, 2024 and 2023:

	Six Months Ended
	June 30,
	2024				2023
			Weighted				Weighted
			Average				Average
			Grant Date				Grant Date
	Shares		Fair Value ($)		Shares		Fair Value ($)
PSUs outstanding at beginning of period		625,000		2.99		—		—
Grants		275,000		3.77		—		—
Vested		—		—		—		—
Forfeitures		—		—		—		—
Restricted stock and RSUs outstanding at period end		900,000		3.23		—		—

The Company recognized $0.9 million in compensation costs related to the PSUs during the three and six months ended June 30, 2024, as performance conditions were expected and probable to be achieved as of June 30, 2024. The Company recognized no compensation costs related to the PSUs during the three and six months ended June 30, 2023. As of June 30, 2024, there was approximately $2.0 million of total unrecognized compensation cost related to outstanding PSUs that could be recognized over a weighted average period of 2.64 years if the PSUs vest.

In July 2024, 299,999 PSUs vested in accordance with the performance conditions outlined in the PSU agreements. Per the PSU agreements, the vested PSUs will be settled in the form of common stock as soon as practicable on or following the end of each measurement year within the performance period. 

Employee Stock Purchase Plan

During the three months ended June 30, 2024 and 2023, the Company recorded compensation expense related to its employee stock purchase plan of less than $0.1 million for each period. For both the six months ended June 30, 2024 and 2023, the Company recorded compensation expense related to its employee stock purchase plan of less than $0.1 million for each period.