Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

v3.23.2
STOCK-BASED COMPENSATION
6 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

NOTE 3 — STOCK-BASED COMPENSATION

 

The Company has three equity incentive plans: the 2015 Stock Option Plan, as amended (the “2015 Plan”), the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), and the Non-Employee Director Compensation Plan. The Company has also issued restricted stock as employment inducement awards to its Chief Executive Officer.

 

As of June 30, 2023, there were options to purchase 2,600,000 shares of the Company’s common stock outstanding to certain executives, key employees and consultants under the 2015 Plan, of which zero were issued during the three months ended June 30, 2023 and 40,000 were issued during the six months ended June 30, 2023. Additional options may be issued under the 2015 Plan as outstanding options are forfeited, subject to a maximum 59,250 available for issuance under the 2015 Plan as of June 30, 2023.

 

The 2021 Plan provides for the grant of up to 1,000,000 incentive stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, consultants and directors. During the three months ended June 30, 2023, there were 45,000 option awards issued under the 2021 Plan. As of June 30, 2023, there had been 156,758 shares of common stock issued as directors fees, 21,100 executive bonus shares and 520,000 shares issued as executive and key employee compensation under the 2021 Plan in total. Additional options may be issued under the 2021 Plan as outstanding options are forfeited, subject to a maximum 302,142 available for issuance under the 2021 Plan as of June 30, 2023.

 

Each non-employee director of the Company (other than the Chairman of the Board) is eligible to receive $110,000 annually, to be paid quarterly $12,500 in cash and $15,000 in common stock.  The Chairman of the Board is eligible to receive $140,000 annually, to be paid quarterly $12,500 in cash and $22,500 in common stock. From May 18, 2021 to May 6, 2022, non-employee director compensation was paid pursuant to the 2021 Plan. Since May 6, 2022, non-employee director compensation has been paid pursuant to the Non-Employee Director Compensation Plan. All payments were and are pro-rated for partial service.

 

The per share weighted average fair value of stock options granted during the six months ended June 30, 2023 and June 30, 2022 was $2.78 and $2.03, respectively.  The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the six months ended June 30, 2023 and June 30, 2022. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options.  The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued. We have recognized tax benefits associated with stock-based compensation of $125,504 and $107,855 for the six months ended June 30, 2023 and 2022, respectively.

 

The following table summarizes the activities for our stock option plans for the six months ended June 30, 2023, and 2022.

 

    June 30,  
    2023   2022  
               
Dividend yield     0.00%     0.00%  
Expected Volatility     56.8% - 61.3%     65.9% - 77.5%  
Weighted-average volatility          
Expected dividends          
Expected term (in years)     10     10  
Risk-free rate     3.50% - 3.53%     1.81% - 2.99%  

 

The following table summarizes the status of the time based stock options:

 

    Six Months Ended June 30,  
    2023   2022  
    Shares   Weighted
Average
Exercise
Price
  Shares   Weighted
Average
Exercise
Price
 
                   
Outstanding at January 1   3,035,000   $ 3.92     3,672,500   $ 3.42  
Granted   85,000   $ 3.94     770,000   $ 2.68  
Exercised     $     618,750   $ 1.57  
Forfeited     $     411,250   $ 2.94  
Outstanding at June 30   3,120,000   $ 3.92     3,412,500   $ 3.64  
Options exercisable at June 30   1,158,750   $ 4.37     837,500   $ 3.47  
Weighted average fair value of options granted during the period     $ 2.78       $ 2.03  
Stock-based compensation expense     $ 1,075,158       $ 1,052,405  

 

Total stock-based compensation expense was $1,075,158 and $1,052,405 for the six months ended June 30, 2023, and 2022, respectively. No cash was received from option exercises for the six months ended June 30, 2023, and 2022.

 

The weighted-average grant-date fair value of options granted during the six months ended June 30, 2023, and 2022 was $0.2 million and $1.6 million, respectively.  There were no options exercised during the six months ended June 30, 2023 and 618,750 options exercised during the six months ended June 30, 2022.

 

The following table presents information pertaining to options outstanding at June 30, 2023:

 

Range of Exercise Price   Number
Outstanding
  Weighted
Average
Remaining
Contractual
Life
  Weighted
Average
Exercise
Price
  Number
Exercisable
  Weighted
Average
Exercise
Price
 
                           
$2.25-$9.49   3,120,000   8.5 years   $ 3.92   1,158,750   $ 4.37  

 

As of June 30, 2023, there was $4,248,300 of total unrecognized compensation cost 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 46 months.  The total fair value of shares vested as of June 30, 2023, and June 30, 2022, was $3,798,884 and $2,149,858, respectively.

 

As of June 30, 2023, an aggregate of 361,392 shares remain for future stock grants under the Company’s stock option plans.

 

RESTRICTED STOCK AWARDS

 

The following table summarizes the activities for our restricted stock awards for the six months ended June 30, 2023, and 2022.

 

    Six Months Ended June 30,  
    2023   2022  
    Shares   Weighted
Average
Grant-Date Fair Value
  Shares   Weighted
Average
Grant-Date Fair Value
 
                   
Unvested at January 1   950,000   $ 3.04   1,000,000   $ 3.01  
Granted   54,496   $ 3.68     $  
Vested   100,000   $ 3.31   50,000   $ 3.31  
Forfeited/canceled     $     $  
Unvested at June 30   904,496   $ 2.97   950,000   $ 2.99  

 

As of June 30, 2023, and 2022, there was $1,477,730 and $1,958,952 of unrecognized compensation cost related to unvested employee restricted stock units. This amount is expected to be recognized over a weighted-average period of 21 months. We have recognized tax benefits associated with restricted stock award compensation of $71,563 and $71,563 for the six months ended June 30, 2023 and 2022, respectively.