Note 10 - Stock-based Compensation

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

( 10 ) STOCK-BASED COMPENSATION

As of

September 30, 2020,

we had unvested restricted stock awards and stock options granted under stock-based compensation plans that are described more fully in Note

12

to the consolidated financial statements in our

2019

Form

10

-K.

As of

September 30, 2020,

total unrecognized compensation expense related to unvested restricted stock awards and stock options was

$1,544.

The weighted average period over which this expense is expected to be recognized is

2.8

years. The following table shows the allocation of the compensation expense we recorded during the

three

months and

nine

months ended

September 30, 2020

and

2019,

respectively, related to stock-based compensation:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cost of revenues	$	-	$	-	$	-	$	-
Selling expense		3		-		9		4
Engineering and product development expense		10		11		31		26
General and administrative expense		72		231		440		608
	$	85	$	242	$	480	$	638

There was

no

stock-based compensation expense capitalized in the

three

months or

nine

months ended

September 30, 2020

or

2019.

Restricted Stock Awards

We record compensation expense for restricted stock awards based on the quoted market price of our stock at the grant date and amortize the expense over the vesting period. Restricted stock awards generally vest over

four

years for employees and over

one

year for our independent directors (

25%

at each of

March 31,

June 30,

September 30,

and

December 31

of the year in which they were granted).

On

August 24, 2020,

our new President and CEO received

two

restricted stock awards totaling

141,610

shares valued at

$650

as of the date of grant, which was also his hire date. Of the total shares awarded,

66,448

shares vest over

4

years (

25%

at each anniversary) and

75,162

vest on the

third

anniversary of the grant date at a vesting percentage that could range from

0%

to

150%

of the number of shares awarded on

August 24, 2020.

The final vesting percentage will be based on the achievement of certain performance metrics, including net revenue compound annual growth rate and diluted earnings per share excluding amortization of intangibles, for specified time periods as determined by the Compensation Committee of our Board of Directors. As of

September 30, 2020,

we have estimated that these shares will vest at

100%

of the original amount awarded and are recording expense based on this estimate on a straight-line basis over the

three

year vesting period. Our estimate of the final expected vesting percentage will be reassessed and adjusted, as needed, at the end of each reporting period.

The following table summarizes the activity related to unvested shares of restricted stock for the

nine

months ended

September 

30,

2020:

	Number of Shares			Weighted Average Grant Date Fair Value
Unvested shares outstanding, January 1, 2020		165,031		$	6.55
Granted		229,110			4.24
Vested		(80,361	)		5.47
Forfeited		(67,125	)		6.03
Unvested shares outstanding, September 30, 2020		246,655			4.89

The total fair value of the shares that vested during the

nine

months ended

September 30, 2020

and

2019

was

$296

and

$370,

respectively, as of the vesting dates of these shares.

Stock Options

We record compensation expense for stock options based on the fair value of the options as of the grant date.

No

option

may

be granted with an exercise period in excess of

ten

years from the date of grant. Generally, stock options will be granted with an exercise price equal to the fair market value of our stock on the date of grant and will vest over

four

years.

The fair value for stock options granted during the

nine

months ended

September 30, 2020

and

2019

was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2020			2019
Risk-free interest rate		0.46	%		2.35	%
Dividend yield		0.00	%		0.00	%
Expected common stock market price volatility factor		.44			.42
Weighted average expected life of stock options (years)		6.25			6.25

The per share weighted average fair value of stock options issued during the

nine

months ended

September 30, 2020

and

2019

was

$1.48

and

$2.75,

respectively.

The following table summarizes the activity related to stock options for the

nine

months ended

September 30, 2020:

	Number of Shares			Weighted Average Grant Date Fair Value
Options outstanding, January 1, 2020 (87,900 exercisable)		506,810		$	6.89
Granted		113,980			3.49
Exercised		-			-
Forfeited		(182,590	)		6.31
Options outstanding, September 30, 2020 (204,630 exercisable)		438,200			6.25