Note 14 – Stock-Based Compensation and Warrants

Stock-Based Compensation

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As of September 30, 2024, the Company had 2,862,779 shares available for issuance under the Equity Incentive Plan.

Stock-based compensation cost was $1.6 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively, and $4.4 million and $3.8 million for the nine months ended September 30, 2024 and 2023, respectively. Stock-based compensation is included in general and administrative expenses in the condensed consolidated statements of operations. Included in stock-based compensation cost was $0.2 million and $0.5 million of stock granted to directors for the three and nine months ended September 30, 2024, respectively, compared to $0.1 million and $0.4 million for the three and nine months ended September 30, 2023, respectively. Such grants were awarded consistent with the Board of Director’s compensation practices. Stock-based compensation for the three and nine months ended September 30, 2024 included $0.2 million and $0.6 million, respectively, of compensation costs for performance stock units that contain both a market condition and time element (“PSUs”) compared to $0.2 million and $0.6 million for the three and nine months ended September 30, 2023.

Stock Option Activity

Stock options in the table below include both time-based and market condition-based awards. Changes in stock options during the nine months ended September 30, 2024 were as follows:

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Stock options granted during the nine months ended September 30, 2024 were valued using the Black-Scholes method and included the following assumptions: a) expected term of 5.5 years, calculated using the simplified method, b) risk-free rate of 4.4% and c) volatility of 71.3%. The Company recognized $0.2 million and $0.5 million in compensation costs for stock options during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, the Company had $0.5 million of unrecognized compensation costs related to 260,420 unvested stock options, which will be recognized over a weighted average period of 0.5 years. There were no unvested stock options as of December 31, 2023.

Restricted Stock Unit Activity

The Company issues restricted stock units (“RSUs”) under the 2019 Equity Plan. RSUs in the table below include time-based awards. The fair value of time-based RSUs is determined based upon the closing market value of the Company’s common stock on the grant date.

A summary of the status of RSUs and changes during the nine months ended September 30, 2024 is presented below:

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As of September 30, 2024, the Company had approximately $5.5 million of unrecognized compensation costs related to RSUs, which will be recognized over a weighted average period of 1.9 years.

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Performance Stock Unit Activity

The Company issues performance stock units (“PSUs”) under the 2019 Equity Plan. PSUs in the table below includes both time based and market condition-based awards and are valued using the Monte Carlo Simulation.

A summary of the status of PSUs and changes during the nine months ended September 30, 2024 is presented below:

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As of September 30, 2024, the Company has approximately $1.4 million of unrecognized compensation costs related to PSUs, which will be recognized over a weighted average period of 1.9 years.

Warrants

In connection with the Benihana Acquisition, on May 1, 2024, the Company issued both market and penny warrants to the following holders of the Series A Preferred Stock. The holders of the penny warrants are entitled to receive any dividends issued to common stockholders. The Company has the following warrants to purchase shares of common stock outstanding as of September 30, 2024 and 2023.

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During the three months ended June 30, 2023, warrants to purchase 125,000 shares of common stock at an exercise price of $1.63 per share were exercised. There were no warrants outstanding as of September 30, 2023.