Stock-Based Compensation

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

7. Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation, which requires that compensation related to all stock-based awards be recognized in the condensed consolidated financial statements. Stock-based compensation cost is valued at fair value at the date of grant, and the grant date fair value is recognized as expense over each award’s requisite service period with a corresponding increase to equity or liability based on the terms of each award and the appropriate accounting treatment under ASC 718.

The Company has three stock-based compensation plans as of June 30, 2023, and 2022. These plans include the 2021 Omnibus Incentive Plan, the 2015 Stock Incentive Plan and the 2005 Stock Incentive Plan. These plans are discussed in detail in our Annual Report Form 10-K for the year ended December 31, 2022, filed with the SEC.

The Company grants stock from both the 2021 Omnibus Incentive Plan and the 2015 Stock Incentive Plan. These plans provide a means through which the Company may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants and advisors of the Company can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measured by reference to the value of common stock, thereby strengthening their commitment to the welfare of the Company and aligning their interests with those of the Company’s stockholders.

During the six months ended June 30, 2023, the Company granted 213.7 thousand restricted stock awards “RSAs” compared to 131.6 thousand similar awards in the same period in 2022. The Company recognized compensation expense related to RSAs of $0.1 and $0.2 million, for the three and six month ended June 30, 2023, compared to $0.1 and $0.3 million for the three and six months ended June 30, 2022. As of June 30, 2023, the total unrecognized compensation cost related to non-vested RSAs not yet recognized in the condensed consolidated statement of operations totaled $0.3 million.

During the six months ended June 30, 2023, the Company granted 626.4 thousand stock options compared to 167.5 thousand similar awards in the same period in 2022. The Company recognized compensation expenses related to stock options of $0.2 and $0.2 million, for the three and six month ended June 30, 2023, compared to $0.4 and $0.6 million for the three and six months ended June 30, 2022. As of June 30, 2023, the total unrecognized compensation cost related to non-vested options not yet recognized in the condensed consolidated statement of operations totaled $0.6 million.

The following table summarizes the activities for the Company’s stock options for the six months ended June 30, 2023: 

	June 30, 2023
	Number of Options			Weighted Average
	(In thousands)			Exercise Price
Outstanding at beginning of year		668		$	5.22
Granted		626			1.25
Exercised		(72	)		0.48
Forfeited		(167	)		4.37
Expired		(42	)		8.19
Outstanding on June 30, 2023		1,013		$	3.12
Options exercisable on June 30, 2023		368		$	4.61

Valuation Assumptions

The fair values of employee option awards were estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions: 

	For Three Months Ended June 30, 2023		For Three Months Ended June 30, 2022		For Six Months Ended June 30, 2023		For Six Months Ended June 30, 2022
Weighted average grant date fair value	$	1.09	$	–	$	1.08	$	3.34
Weighted average assumptions used:
Expected dividend yield		0.0%		0.0%		0.0%		0.0%
Risk-free interest rate		3.53%		0.0%		3.68%		0.88%
Expected volatility		103.2%		0.0%		114.1%		133.0%
Expected life (in years)		6.4		–		6.4		6.6

Expected volatility is based on historical volatility and in part on implied volatility. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for United States (“U.S.”) Treasury instruments with maturities matching the relevant expected term of the award.