Stock-Based Compensation and Other Benefit Plans

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation and Other Benefit Plans

Stock-Based Compensation and Other Benefit Plans

Stock-Based Incentive Plans

Stockholders approved long-term incentive plans in 2020, 2019 and 2018 (the “2020 Plan”, the “2019 Plan,” and the “2018 Plan,”, respectively) under which the Company may grant equity awards to officers, key employees, non-employee directors and service providers in the form of stock options, restricted stock, restricted stock units, and certain other incentive awards. The maximum number of shares that may be issued under the 2020 Plan, 2019 Plan and 2018 Plan are 3 million, 1.0 million, and 8.5 million, respectively. At December 31, 2022 and 2021, the Company had a total of 2.8 million and 4.2 million shares remaining, respectively, to be granted under the 2020 Plan, 2019 Plan and 2018 Plan.

Stock Options

All stock options are granted with an exercise price equal to the market value of the Company’s common stock on the date of grant. During the year ended December 31, 2022 no market-based stock options were granted compared to 1.4 million during the year ended December 31, 2021. The market-based options are restricted until criteria defined in the agreements are met. Proceeds received from stock option exercises are credited to common stock and additional paid-in capital, as appropriate. The Company uses historical data to estimate pre-vesting option forfeitures. Estimates are adjusted when actual forfeitures differ from the estimate. Stock-based compensation expense is recorded for all equity awards expected to vest. During the years ended December 31, 2022 and 2021, 0.5 million and 0.2 million stock options vested, respectively. During the year ended December 31, 2022, no stock options were forfeited compared to 0.8 million for the year ended December 31, 2021. The total fair value of the stock options that vested was $0.3 million and $0.2 million for the years ended December 31, 2022 and 2021, respectively.

Stock option activity for the years ended December 31, 2022 and 2021, are as follows:

	Shares	Weighted-Average Exercise Price		Weighted-Average Fair Value
Outstanding as of December 31, 2020	3,660,000
Granted	1,448,959	$	1.07	$	0.88
Forfeited	(777,084)	1.02		0.52
Expired	(50,000)	0.52		0.52
Outstanding as of December 31, 2021	4,281,875
Expired	(120,000)	$	0.72	$	0.10
Outstanding as of December 31, 2022	4,161,875
Vested or expected to vest at December 31, 2022	3,889,147

.

The below table shows the aggregate intrinsic value and weighted average remaining contractual term of share options outstanding, currently exercisable and vested or expected to vest.

	Share Options Outstanding		Share Options Currently Exercisable		Share Options Vested or Expected to Vest
Number	4,161,875		840,000		3,889,147
Weighted-average exercise price	$	1.19	$	1.28	$	1.19
Aggregate intrinsic value ($000’s)	121		24		114
Weighted-average remaining contractual term in years	3.41		2.15		3.43

The following table sets forth significant assumptions used in the Monte Carlo model for market-based options to determine the fair value of the options at the date of grant for the year ended December 31, 2021. There were no options granted during the year ended December 31, 2022.

	Year Ended December 31, 2021
Risk-free interest rate	1.61	%
Expected volatility of common stock	90.00	%
Expected life of options in years	10
Dividend yield	—	%

At December 31, 2022 and 2021, the unrecognized compensation cost related to stock options was $2.1 million and $3.3 million, respectively. Upon the departure of the Company’s Chief Executive Officer and President effective January 19, 2023, 3,000,000 of the outstanding stock options were forfeited (see Note 20, “Subsequent Events”). The unrecognized compensation expense related to these forfeited options was $1.8 million.

Restricted Stock

The Company grants employees and directors either time-vesting or market-based restricted shares in accordance with terms specified in the Restricted Stock Agreements. During the years ended December 31, 2022 and 2021, all of the restricted stock granted were time-vesting restricted shares. Grantees of restricted shares retain voting rights for the granted shares.

•Time-vesting restricted shares vest after a stipulated period has elapsed after the date of grant, generally three years. Certain time-vested shares have also been issued with a portion of the shares granted vesting immediately.

•Market-based restricted shares are issued with criteria defined over a designated period and vest only when, and if, the outlined criteria are met.

Restricted stock share activity for the years ended December 31, 2022 and 2021, are as follows:

Restricted Stock Shares	Shares	Weighted- Average Fair Value at Date of Grant
Non-vested at December 31, 2020	2,795,100	$	1.00
Granted	1,702,289	1.73
Vested	(1,453,854)	1.24
Forfeited	(1,275,172)	1.36
Non-vested at December 31, 2021	1,768,363	1.61
Granted	1,532,926	1.32
Vested	(967,684)	1.77
Forfeited	(33,926)	1.69
Non-vested at December 31, 2022	2,299,679	$	1.37

The total fair value of restricted stock that vested during the years ended December 31, 2022 and 2021 was $1.3 million and $2.5 million, respectively.

At December 31, 2022 and 2021, unrecognized compensation expense related to non-vested restricted stock was $2.0 million and $1.9 million, respectively. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 1.7 years.

Restricted Stock Units

No RSU’s were granted during the years ended December 31, 2022 and 2021.

Restricted stock units activity for the years ended December 31, 2022 and 2021, are as follows:

Restricted Stock Units	Units		Weighted- Average Fair Value at Date of Grant
RSUs at December 31, 2020	1,141,144		$	2.30
Vested	(186,901)		—
Forfeited	(184,173)		2.61
RSUs at December 31, 2021	770,070		1.91
Vested	(500,868)		1.90
Forfeited	$	(41,202)	1.92
RSUs at December 31, 2022	228,000		$	1.93

At December 31, 2022 and 2021, unrecognized compensation expense related to restricted stock units was $0.4 million and $1.0 million. Upon the departure of the Company’s Chief Executive Officer and President effective January 19, 2023, all the unvested restricted stock units outstanding as of December 31, 2022 were forfeited (see Note 20, “Subsequent Events”).

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (“ESPP”) was approved by stockholders in 2012. The Company registered 500,000 shares of its common stock, currently held as treasury shares, for issuance under the ESPP. The purpose of the ESPP is to provide employees with an opportunity to purchase shares of the Company’s common stock through accumulated payroll deductions. The ESPP allows participants to purchase common stock at a purchase price equal to 85% of the fair market value of the common stock on the last business day of a three-month offering period which coincides with calendar quarters. Payroll deductions may not exceed 10% of an employee’s compensation and participants may not purchase more than 1,000 shares in any one offering period. In addition, for each calendar year, an employee may not be granted purchase rights valued over $25,000, as determined at the time such purchase right is granted. The fair value of the discount associated with shares purchased under the plan is recognized as stock-based compensation expense and was $10.2 thousand and $23.6 thousand for the years ended December 31, 2022 and 2021, respectively. The total fair value of the shares purchased under the plan during each of the years ended December 31, 2022 and 2021 was $0.1 million and $0.2 million, respectively. The employee payment associated with participation in the plan occurs through payroll deductions.

Stock-Based Compensation Expense

Non-cash stock-based compensation expense related to stock options, restricted stock, restricted stock unit grants and stock purchased under the Company’s ESPP was $3.3 million and $3.8 million during the years ended December 31, 2022 and 2021, respectively.

401(k) Retirement Plan

The Company maintains a 401(k) retirement plan for the benefit of eligible employees in the U.S. All employees are eligible to participate in the plan upon employment. The Company currently matches contributions at 100% of up to 2% of an employee’s compensation.

During the years ended December 31, 2022 and 2021, compensation expense included $0.3 million and $0.2 million, respectively, related to the Company’s 401(k) match.