NOTE 11 – SHARE-BASED COMPENSATION

Global Stock Incentive Plan

On May 31, 2023, the shareholders of the Company approved the Company’s Board of Directors proposal to increase the Company’s 2020 Global Incentive Plan (the “2020 Plan”) by an additional 500,000 shares, thus bringing the total number of stock options, restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) that may be issued pursuant to the Plan to 2,450,855.

Under the term of the 2020 Plan, on the grant date, the Board of Directors determines the vesting schedule of each stock option and RSUs on an individual basis. All stock options expire ten (10) years from the date of the grant. Vested options expire 90 days after the termination of employment of the grantee.

On May 6, 2024, the shareholders of the Company approved the Company’s 2024 Global Incentive Plan (the “2024 Plan”) with 2,227,910 shares of common stock initially issuable under the 2024 Plan.

Under the terms of the 2024 Plan, on the grant date, the Board of Directors determines the vesting schedule of each stock option and RSUs on an individual basis. All stock options expire ten (10) years from the date of the grant. Vested options expire 90 days after the termination of employment of the grantee.

Stock Options

There were no options granted for the six months ended June 30, 2024. The fair value of options granted under the 2020 Plan during the six months ended June 30, 2023 was estimated at the date of grant using the Black-Scholes option pricing model and the following assumptions for grants:

The following table summarizes the stock option activity for the six months ended June 30, 2024:

(in thousands except share and per share data)

The following table summarizes the Company’s non-vested stock options:

For the six months ended June 30, 2024 and 2023, the Company recognized $215 thousand and $388 thousand of stock compensation expense relating to stock options, respectively. For the three months ended June 30, 2024 and 2023, the Company recognized $94 thousand and $172 thousand of stock compensation expense relating to stock options, respectively. As of June 30, 2024, there was $561 thousand of unrecognized stock compensation expense related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of approximately 2.3 years.

Restricted Stock Awards

In July 2019, the Board of Directors of the Company authorized grants of RSAs through a restricted stock award purchase agreement to certain founders, consultants, and advisors of the Company. Certain grants to the Company’s founders were fully vested at the date of incorporation, other grants vest over a four-year period on each anniversary of the grant date, based on continued employment, and other grants vest based on various milestones. The shares of common stock underlying the RSAs were issued upon grant.

For the six months ended June 30, 2024 and 2023, the Company recognized $0 and $242 thousand of stock compensation expense relating to RSAs, respectively. For the three months ended June 30, 2024 and 2023, the Company recognized $0 and $121 thousand of stock compensation expense relating to RSAs, respectively. As of June 30, 2024, there was $0 of unrecognized compensation expense related to unvested restricted share awards.

Restricted Stock Units

On May 23, 2024, the Company approved a special one-time grant of 100,000 RSUs each to three executive team members, which will vest immediately once the Company achieves year-end unadjusted EBITDA of $5.0 million. The EBITDA metric is currently not probable and no shared-based compensation expense was recognized for the periods presented. The probability will be evaluated each reporting period. Since these RSUs only vest upon the achievement of the EBITDA metric, the Company is unable to determine the weighted-average period over which the unrecognized cost will be recognized.

On June 18, 2024, the Company approved a special one-time grant of 100,000 RSUs to a director for a special project to get the Company uplisted to a national securities exchange. 50,000 RSUs will vest December 31, 2024 and the remaining 50,000 RSUs will vest upon the successful uplisting of the Company. The successful uplisting is currently not probable and no share-based compensation expense was recognized for the periods presented for the remaining 50,000 units.

The following table summarizes the restricted stock units activity for the six months ended June 30, 2024:

For the six months ended June 30, 2024 and 2023, the Company recognized $1.5 million and $358 thousand of stock compensation expense relating to RSUs, respectively. For the three months ended June 30, 2024 and 2023, the Company recognized $1.1 million and $72 thousand of stock compensation expense relating to RSUs, respectively. As of June 30, 2024, there was $1.6 million of unrecognized compensation expense remaining related to unvested time-vested restricted share units.