Stock-Based Compensation and Other Benefit Plans

12 Months Ended

Dec. 31, 2023

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 an increase in shares during its 2023 Annual meeting to long-term incentive plans created in 2018 (the “2018 Plan”) 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 long-term incentive plans created in 2020 and 2019 (the “2020 Plan” and “2019 Plan,” respectively) and 2018 Plan are 0.5 million, 0.2 million, and 1.9 million, respectively. At December 31, 2023 and 2022, the Company had an aggregate of 0.6 million and 0.7 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, 2023, 0.1 million market-based stock options and 0.1 million performance-based stock options were granted compared to none during the year ended December 31, 2022. The market-based and performance-based options are restricted until criteria defined in the stock option 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 year ended December 31, 2023 no stock options vested compared to 0.1 million for the year ended December 31, 2022. The total fair value of the stock options that vested was $0.3 million for the year ended December 31, 2022.

Stock option activity for the years ended December 31, 2023 and 2022, are as follows:

	Shares	Weighted-Average Exercise Price		Weighted-Average Fair Value
Outstanding as of December 31, 2021	713,650
Granted	—	$	—	$	—
Exercised	—	—		—
Forfeited	—	—		—
Expired	(20,000)	4.32		0.60
Outstanding as of December 31, 2022	693,650
Granted	190,728	3.42		2.57
Exercised	—	—		—
Forfeited	(457,815)	7.10		7.28
Expired	(130,000)	$	7.97	$	5.94
Outstanding as of December 31, 2023	296,563
Vested or expected to vest at December 31, 2023	252,891

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	296,563		10,000		252,891
Weighted-average exercise price	$	4.42	$	4.32	$	4.56
Aggregate intrinsic value ($000’s)	95		—		78
Weighted-average remaining contractual term in years	8.7		1.59		8.55

The following table sets forth significant assumptions used in the Monte Carlo model for performance-based options to determine the fair value of the options awarded in June 2023 at the date of grant for the year ended December 31, 2023.

	June 7, 2023 Awards
Risk-free interest rate	3.79	%
Expected volatility of common stock	110.00	%
Expected life of options in years	10.0
Dividend yield	—	%

The following table sets forth significant assumptions used in the Black-Scholes model for market-based options to determine the fair value of the options awarded in December 2023 at the date of grant for the year ended December 31, 2023.

	December 5, 2023 Awards
Risk-free interest rate	4.13	%
Expected volatility of common stock	90.60	%
Expected life of options in years	6.5
Dividend yield	—	%

At December 31, 2023 and 2022, the unrecognized compensation cost related to stock options was $0.6 million and $2.1 million, respectively.

There were no options granted during the year ended December 31, 2022.

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, 2023 and 2022, 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, 2023 and 2022, are as follows:

Restricted Stock Shares	Shares	Weighted- Average Fair Value at Date of Grant
Non-vested at December 31, 2021	294,485	$	9.86
Granted	256,746	7.89
Vested	(161,292)	10.60
Forfeited	(5,405)	10.16
Non-vested at December 31, 2022	384,534	8.23
Granted	146,204	4.52
Vested	(186,058)	7.81
Forfeited	(95,667)	9.25
Non-vested at December 31, 2023	249,013	$	5.97

The total fair value of restricted stock that vested during the years ended December 31, 2023 and 2022 was $0.9 million and $1.3 million, respectively. The grant-date fair value is the market price of the shares on the date of grant.

At December 31, 2023 and 2022, unrecognized compensation expense related to non-vested restricted stock was $0.9 million and $2.0 million, respectively. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 1.3 years.

Restricted Stock Units

The Company grants time-vesting restricted share units in accordance with terms specified in the Restricted Stock Unit Agreements. Restricted stock units activity for the years ended December 31, 2023 and 2022, are as follows:

Restricted Stock Units	Units	Weighted- Average Fair Value at Date of Grant
RSUs at December 31, 2021	128,348	$	11.45
Vested	(19,000)	11.58
Forfeited	(6,867)	11.52
RSUs at December 31, 2022	102,481	11.42
Granted	230,816	3.82
Vested	(82,730)	10.64
Forfeited	(38,000)	11.58
RSUs at December 31, 2023	212,567	$	3.44

The total fair value of restricted stock that vested during the years ended December 31, 2023 and 2022 was $0.5 million and $0.1 million, respectively. The grant-date fair value is the market price of the shares on the date of grant.

At December 31, 2023 and 2022, unrecognized compensation expense related to restricted stock units was $0.7 million and $0.4 million. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 2.7 years. RSUs outstanding at December 31, 2023 consist of only time-vesting awards.

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. 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 $14 thousand and $10 thousand for the years ended December 31, 2023 and 2022, respectively. The total fair value of the shares purchased under the plan during each of the years ended December 31, 2023 and 2022 was $0.1 million and $0.1 million, respectively. The employee payment associated with participation in the plan occurs through payroll deductions.

Stock-Based Compensation Expense

Stock-based compensation expense related to stock options, restricted stock, restricted stock unit grants and stock purchased under the Company’s ESPP was $(0.3) million and $3.3 million during the years ended December 31, 2023 and 2022, respectively. Stock based compensation expense for the year ended December 31, 2023 included an adjustment for actual forfeitures of $1.6 million that reduced the total stock-compensation expense.

During 2023, the Company settled vested equity awards of a terminated officer through a cash payment. The cash payment was made to the employee in lieu of the equity awards, which were previously granted and vested. The settlement amount was determined based on the fair value of the equity awards at the time of termination. The Company used the Black-Scholes Model to value the vested equity awards. This transaction resulted in a reduction of the Company's equity awards liability and a corresponding outflow of cash for $617 thousand.

The key inputs to the Black-Scholes Model used to estimate the fair value of the vested equity awards, as of the date of the termination were as follows:

	January 19, 2023
Risk-free interest rate	3.79		%
Expected volatility of common stock	90.00		%
Expected life of options in years	6.92
Stock price (pre-Reverse Stock Split basis)	$	1.37
Strike Price	$	1.93

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, 2023 and 2022, compensation expense included $0.3 million and $0.3 million, respectively, related to the Company’s 401(k) match.