Note 8 - Incentive Plans

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE 8. INCENTIVE PLANS

In May 2017, the shareholders approved the 2017 Stock Incentive Plan which authorized the issuance of 350,000 shares. An additional 50,000,175,000 and 100,000 shares were authorized by the shareholders in March 2020,May 2022 and May 2023, respectively. There were 116,500 options and restricted stock units and 115,000 options and restricted stock units granted during the years ended December 31, 2023 and 2022, respectively.

Stock Options

We estimate the fair value of share-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense in the consolidated statements of operations over the requisite service periods. Because share-based compensation expense is based on awards that are ultimately expected to vest, share-based compensation expense will be reduced to account for estimated forfeitures. We estimate forfeitures at the time of grant and revise the estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

We used the Black-Scholes option-pricing model to calculate the fair value of option-based awards. Our determination of fair value of option-based awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions regarding several subjective variables. These variables include, but are not limited to, our expected stock price, volatility over the term of the awards, risk-free interest rate, and the expected life of the options. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of our stock options. The expected volatility and holding period are based on our historical experience. For all grants, the amount of compensation expense recognized has been adjusted for an estimated forfeiture rate, which is based on historical data. Weighted average stock option fair value assumptions and the weighted average grant date fair value of stock options granted were as follows:

	2023			2022
Stock option fair value assumptions:
Risk-free interest rate		3.45 - 4.34	%		2.00 - 4.24	%
Expected life (years)		6.5			6.5
Dividend yield		0	%		0	%
Expected volatility		60	%		60	%
Weighted average grant date fair value of stock options granted	$	5.73		$	6.67

We granted 94,000 service-based options during the twelve months ended December 31, 2023. There were 73,000 service-based options granted during the year ended December 31, 2022. We granted 21,000 market condition options to our Chief Executive Officer during the year ended December 31, 2022. The market condition options vest if certain stock prices are exceeded between February 27, 2024 and February 27, 2028. The vesting schedule for the market condition options is as follows:

1. 5,000 Shares to vest if the closing price of the Company’s common stock exceeds $20 per share on average over 20 consecutive trading days after February 27, 2024;

2. 5,000 Shares to vest if the closing price of the Company’s common stock exceeds $24 per share on average over 20 consecutive trading days after February 27, 2025;

3. 5,000 Shares to vest if the closing price of the Company’s common stock exceeds $28.80 per share on average over 20 consecutive trading days after February 27, 2026;

4. 3,000 Shares to vest if the closing price of the Company’s common stock exceeds $34.56 per share on average over 20 consecutive trading days after February 27, 2027; and

5. 3,000 Shares to vest if the closing price of the Company’s common stock exceeds $41.47 per share on average over 20 consecutive trading days after February 27, 2028.

Total compensation expense related to stock options was $256 for the year ended December 31, 2023. Total compensation expense related to stock options was $237 for the year ended December 31, 2022. As of December 31, 2023, there was $873 of unrecognized compensation which will vest and expense over the next 3.96 years.

A summary of option activity as of and for the years ended December 31, 2023 and 2022 as follows:

	Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding – January 1, 2022		387,500		$	4.57
Granted		94,000			11.18
Exercised		(19,800	)		3.40
Forfeited		(9,000	)		4.19
Outstanding – December 31, 2022		452,700		$	5.97		6.87	$	2,855
Granted		94,000			9.36
Exercised		(39,044	)		4.09
Forfeited		(48,956	)		7.77
Outstanding – December 31, 2023		458,700		$	6.63		6.53	$	1,432
Exercisable on December 31, 2023		245,200		$	4.51		4.94	$	1,235

Restricted Stock Units

During the years ended December 31, 2023 and 2022, we granted 22,500 and 21,000 restricted stock units (“RSUs”), respectively, under our 2017 Stock Incentive Plan to non-employee directors which vest over two years. Total compensation expense related to the RSUs were $167 and $97 for the years ended December 31, 2023 and 2022, respectively. Total unrecognized compensation expense related to the RSUs was $206, which will vest over the next 1.11 years. The RSUs granted in the years ended December 31, 2023 and 2022 had an average grant price of $9.11 and $12.00 per share, respectively. As of December 31, 2023, we had 27,000 RSUs outstanding with a weighted average remaining contractual term of 9.12 years. During the twelve months ended December 31, 2023 and 2022, 10,500 and 0 RSUs vested, respectively.