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Note 10 - Stockholders Equity
9 Months Ended
Sep. 30, 2023
Notes to Financial Statements  
Equity [Text Block]

Note 10 Stockholders Equity

 

Stock-Based Compensation

 

The Company granted options to purchase 562,774 and 1,103,916 shares of the Company’s stock during the three and nine months ended September 30, 2023 , respectively. The full amount of options were granted in the first nine months of 2023.

 

The Company’s stock-based compensation expense, including options and restricted stock by category is as follows:

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Cost of revenue

 $1  $1  $3  $2 

Engineering and product development

  56   37   188   182 

Marketing and sales

  75   133   268   441 

General and administrative

  171   234   655   744 
  $303  $405  $1,114  $1,369 

 

During the three months ended March 31, 2023, the Company recorded incremental stock-based compensation of approximately $0.23 million as a result of modifications of certain stock option awards.  The modifications related to extending the contractual life of certain stock options by five years for four grantees whose awards were scheduled to expire during 2023.  In addition, the amount of time to exercise vested stock options upon termination for one grantee was extended from 90 days to 24 months.   

 

As of September 30, 2023, there was approximately $1.2 million of total unrecognized compensation cost related to unvested options. That cost is expected to be recognized over a weighted average period of 1.70 years.  

 

Options granted under the Company’s stock incentive plans were valued utilizing the Black-Scholes model using the following assumptions and had the following fair values:

 

  

Three Months Ended

  

Nine Months Ended

 
  

September 30,

  

September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Average risk-free interest rate

  4.94%  n/a*   4.30%  1.90%

Expected dividend yield

 

None

  

None

  

None

  

None

 

Expected life (in years)

  2.5   n/a*   2.9   3.5 

Expected volatility

  84.3% - 134.4%   n/a*   72.7% to 134.4%   66.3% to 70.5% 

Weighted average exercise price

 $2.70   n/a*  $1.82  $5.22 

Weighted average fair value

 $1.34   n/a*  $0.97  $2.46 

 

* The Company granted no options during the three months ended September 30, 2022.

 

The Company’s 2023 and 2022 average expected volatility and average expected life is based on the average of the Company’s historical information. The risk-free rate is based on the rate of U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of option grants. The Company has paid no dividends on its common stock in the past and does not anticipate paying any dividends in the future.

 

The Company did not grant any shares of restricted stock during the three-months ended September 30, 2023 or 2022.  The Company’s restricted stock awards typically vest in either one year or three equal annual installments with the first installment vesting one year from the grant date. The grant date fair value for restricted stock awards is based on the quoted market value of Company stock on the grant date.

 

A summary of stock option activity for all stock option plans for the period ended September 30, 2023 is as follows:

 

  

Number of

  

Weighted Average

  

Intrinsic

 
  

Options

  

Exercise Price

  

Value

 

Outstanding as of December 31, 2022

  2,610,992  $7.54  $ 

Granted

  1,179,868  $1.82    

Exercised

  (35,809) $2.24  $2 

Cancelled

  (544,127) $4.98     

Outstanding as of September 30, 2023

  3,210,924  $5.61  $969 

Options Exercisable as of December 31, 2022

  1,619,855  $6.47  $ 

Options Exercisable as of September 30, 2023

  2,042,460  $7.13  $47 

 

Employee Stock Purchase Plan

 

In December 2019, the Company’s Board of Directors adopted, and the stockholders approved the 2019 Employee Stock Purchase Plan (“ESPP”), effective January 1, 2020. The ESPP provides for the issuance of up 950,000 shares of common stock, subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. The ESPP may be terminated or amended by the Board of Directors at any time. Certain amendments to the ESPP require stockholder approval.  In October 2022, the Company suspended the ESPP such that the accumulation period from October 1, 2022 through December 31, 2022 and beyond will not occur.

 

Prior to the Company's suspension of the ESPP, any eligible employee could enroll as of the beginning of a respective quarterly accumulation period. Employees who participated in the ESPP were able to purchase shares by authorizing payroll deductions of up to 15% of their base compensation during an accumulation period. Unless the participating employee withdrew from participation, accumulated payroll deductions were used to purchase shares of common stock on the last business day of the accumulation period (the “Purchase Date”) at a price equal to 85% of the lower of the fair market value on (i) the Purchase Date or (ii) the first day of such accumulation period. Under applicable tax rules, no employee was able to purchase more than $25,000 worth of common stock, valued at the start of the purchase period, under the ESPP in any calendar year.  Substantially all of the Company’s employees whose customary employment is for more than 20 hours a week are eligible to participate in the ESPP. Any employee who owns 5% or more of the voting power or value of the Company’s shares of common stock is not eligible to purchase shares under the ESPP.

 

The Company issued 8,683 and 18,064 shares under the ESPP in the three and nine months ended September 30, 2022, respectively. The Company recorded approximately $12,000 and $22,000 of stock-based compensation expense pursuant to ESPP for the three and nine months ended September 30, 2022, respectively.