Quarterly report pursuant to Section 13 or 15(d)

Stockholders??? Equity

v3.23.1
Stockholders’ Equity
 3 Months Ended
Mar. 31, 2023
Equity [Abstract]  
Stockholders’ Equity Stockholders’ Equity
Our authorized capital stock consists of 50 million shares of common stock, $0.0005 par value, and one million shares of preferred stock, $0.0005 par value.
Preferred Stock
The preferred stock authorized under our certificate of incorporation may be issued from time to time in one or more series. As of March 31, 2023 and December 31, 2022, no shares of preferred stock have been issued.
Common Stock Dividends
No dividends have been declared during the three months ended March 31, 2023.
On February 14, 2022, the board of directors of the Company declared a special cash dividend of $0.30 per share on the Company’s common stock, paid on March 10, 2022, in the amount of $4.6 million to holders of record of the Company’s common stock on March 1, 2022.
Common Stock
Stock Repurchase Program
On March 15, 2023, the Company announced that its board of directors had approved a new stock repurchase program. Under the stock repurchase program, the Company is authorized to repurchase up to $6.0 million of its outstanding shares of common stock from time to time, over a six-month period. The number of shares to be repurchased and the timing of the repurchases, if any, will depend on a number of factors, including, but not limited to, price, trading volume and general market conditions, along with the Company’s working capital requirements and general business conditions. The board of directors will re-evaluate the program from time to time and may authorize adjustments to its terms.
Following the Commencement Date (as defined in the stock repurchase agreement), and for a period of six months thereafter, repurchases may be made through open market transactions (based on prevailing market prices), privately negotiated transactions, block trades, or any combination thereof, in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.
There were 63,616 shares repurchased under this new program during the three months ended March 31, 2023.
On September 8, 2021, the board of directors (the “Board”) approved a stock repurchase program under which the Company was authorized to repurchase up to $6.0 million of its outstanding shares of common stock from time to time, over a six-month period. This stock repurchase program expired on March 30, 2022. During the three months ended March 31, 2022, the Company did not make any common shares repurchase under this stock repurchase program.
The 2022 Directors’ Equity Compensation Plan
On May 19, 2022, the stockholders of the Company approved the 2022 Directors’ Equity Compensation Plan (the “2022 Directors’ Plan”) at the 2022 Annual Meeting of Stockholders of the Company (the “2022 Annual Meeting”). The 2022 Directors’ Plan amended and restated the Company’s Amended and Restated 2010 Directors’ Equity Compensation Plan and provided for an increase in the number of shares reserved for issuance under the plan by 300,000 shares and for the adjustment of the per share exercise price of stock options granted under the 2022 Plan in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends).
As of March 31, 2023, there were 180,000 shares of common stock available to be issued under the 2022 Directors’ Plan. There were no options issued under this plan during the three months ended March 31, 2023.
The 2010 Directors’ Equity Compensation Plan
On May 20, 2021, the stockholders of the Company approved the Amended and Restated 2010 Directors’ Equity Compensation Plan (the “Amended 2010 Directors’ Plan”) at the 2021 Annual Meeting of Stockholders of the Company (the “2021 Annual Meeting”). The Amended 2010 Directors’ Plan authorized the issuance of up to 775,000 shares of common stock. This plan was amended and restated on April 11, 2022 (to become the 2022 Directors' Plan), subject to stockholder approval, which was obtained at the 2022 Annual Meeting.
During the three months ended March 31, 2022, there were no stock options issued under the Amended 2010 Directors’ Plan.
The 2022 Equity Compensation Plan
On May 19, 2022, the stockholders of the Company approved the 2022 Equity Compensation Plan (the “2022 Plan”) at the 2022 Annual Meeting. The 2022 Plan amended and restated the Company’s Amended and Restated 2010 Equity Compensation Plan and provided for an increase in the number of shares reserved for issuance under the plan by 1,000,000 shares and for the adjustment of the per share exercise price of stock options granted under the 2022 Plan in the event of any change in the outstanding shares of common stock of the Company as a result of, among other things, any distribution or special dividend to stockholders of shares, cash or other property (other than regular cash dividends).
As of March 31, 2023, there were 803,285 shares of common stock available to be issued under the 2022 Plan. During the three months ended March 31, 2023, there were 205,000 issued under the 2022 Plan.
The 2010 Equity Compensation Plan
On May 20, 2021, the stockholders of the Company approved the Amended and Restated 2010 Equity Compensation Plan (the “Amended 2010 Plan”) at the 2021 Annual Meeting. The Amended 2010 Plan authorized the issuance of up to 4,900,000 shares of common stock. This plan was amended and restated on April 11, 2022 (to become the 2022 Plan), subject to stockholder approval, which was obtained at the 2022 Annual Meeting.
During the three months ended March 31, 2022, there were no stock options issued under the Amended 2010 Plan.
The 2018 Stock Incentive Plan
On April 12, 2018, the Company's stockholders approved the 2018 Stock Incentive Plan (the “2018 Stock Plan”). The 2018 Stock Plan provides for the grant of incentive stock options to eligible employees of the Company, and for the grant of non-statutory stock options to eligible employees, directors and consultants. The 2018 Stock Plan provides that the total number of shares that may be issued pursuant to the 2018 Stock Plan is 2,300,000 shares. At April 12, 2018, all
2,300,000 shares had been granted in the form of stock options to Ted Karkus (the “CEO Option”), our Chief Executive Officer.
The 2018 Stock Plan required certain proportionate adjustments to be made to the stock options granted under the 2018 Stock Plan upon the occurrence of certain events, including a special distribution (whether in the form of cash, shares, other securities, or other property) in order to maintain parity. Accordingly, the Compensation Committee of the board of directors, as required by the terms of the 2018 Stock Plan, adjusted the exercise price of the CEO Option in connection with each special cash dividend paid by the Company proportionately to the amount of the dividend paid. The final exercise price of the CEO Option was $0.60 per share after the latest special cash dividend paid on June 3, 2022.
During the three months ended March 31, 2023 and 2022, 1,100,000 and 0 stock options were exercised under the 2018 Stock Plan. No share based compensation expense will be recognized in forward periods related to the 2018 Stock Plan.
Inducement Option Awards
There were no issuances of inducements awards during the three months ended March 31, 2023 and 2022.
All inducement awards have been granted outside of the Company’s equity compensation plans.

Summary of all option grants
During the three months ended March 31, 2023, the Company granted options to purchase 205,000 shares of the Company’s common stock to various employees and consultants. The options grant date fair value was valued at $0.9 million, using the Black-Scholes option pricing model to calculate the grant-date fair value of the options with the following assumptions: no dividend yield, expected volatility of 80.9%, risk free interest rate of 3.78% and expected warrant life of 4.25 years. The fair value of stock options for employees are expensed over the vesting term in accordance with the terms of the related stock option agreements and are expensed over the terms of the consulting agreement for consultants.
The following table summarizes stock option activity during the three months ended March 31, 2023, (in thousands, except per share data).
Number
of Shares		 Weighted
Average
Exercise Price		 Weighted
Average
Remaining
Contractual Life
(in years)		 Total
Intrinsic Value
Outstanding as of January 1, 2023 3,952 $ 5.36  4.0 $ 20,379 
Granted 205 6.84  7.0 — 
Cashless exercised (1,348) 0.99  — — 
Forfeited (38) 2.64  — — 
Outstanding as of March 31, 2023 2,771 $ 7.49  5.2 $ 3,939 
Options vested and exercisable 1,661 $ 6.84  4.9 $ 3,172 
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing stock price of $7.62 for the Company’s common stock on March 31, 2023.
During the three months ended March 31, 2023 certain holders of stock options elected to exercise their stock options pursuant to a cashless exercise provision resulting in the net issuance of 603,881 shares of common stock and the return of 744,369 shares to the Company. The Company also made a cash payment of approximately $5.4 million to
repurchase 603,881 shares of treasury stock to satisfy tax withholding obligations related to the cashless exercise of these stock options.
Stock Warrants
On January 12, 2023, the Company issued warrants to an advisory firm to purchase 50,000 shares of the Company's common stock at an exercise price of $10.00 for a term of 5 years, vesting immediately. The warrants were valued at 0.3 million fair value,using the Black-Scholes option pricing model to calculate the grant date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 80.9%, risk free interest rate of 3.53% and expected warrant life of 5 years. These warrants will be expensed over the 1 year term of the engagement which ends on December 31, 2023.
On January 27, 2023, the Company issued five year warrants to purchase 76,000 shares of the Company's common stock with the unsecured promissory note (see Note 5).
The following table summarizes warrant activity during the three months ended March 31, 2023 (in thousands, except per share data):
Number of Shares Weighted Average Exercise
Price		 Weighted Average
Remaining Contractual Life
 (in years)
Outstanding as of January 1, 2023 855 $ 8.23  1.9
Granted 126 9.39 4.8
Outstanding as of March 31, 2023 981 $ 8.38  1.2
Warrants vested and exercisable 981 $ 8.38  1.2
We recognized $0.9 million and $0.5 million of share-based compensation expense during the three months ended March 31, 2023 and 2022, respectively. We will recognize an aggregate of approximately $4.7 million of remaining share-based compensation expense related to outstanding stock options over a weighted average period of 3.9 years.