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, together with the 2015 Plan, our “Plans”), 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 September 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 September 30, 2023 and 40,000 were issued during the nine months ended September 30, 2023. Additional options may be issued under the 2015 Plan as outstanding options are forfeited, subject to a maximum 124,250 available for issuance under the 2015 Plan as of September 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 September 30, 2023, there were 100,000 option awards issued under the 2021 Plan. As of September 30, 2023, there had been 196,236 shares of common stock issued as directors fees, 21,100 executive bonus shares and 620,000 shares issued as executive and key employee compensation, and 54,496 in PSUs to an executive under the 2021 Plan in total. Additional equity incentive awards may be issued under the 2021 Plan as outstanding awards are forfeited, subject to a maximum 120,398 shares available for issuance under the 2021 Plan as of September 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 nine months ended September 30, 2023 and September 30, 2022 was $2.23 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 nine months ended September 30, 2023 and September 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 $191,126 and $172,413 for the nine months ended September 30, 2023 and 2022, respectively.

The following table summarizes the activities for our Plans for the nine months ended September 30, 2023, and 2022.

 Schedule of time based stock options

The following table summarizes the status of the stock options:

 Schedule of status of time based stock options

Total stock-based compensation expense was $1,626,408 and $1,564,027 for the nine months ended September 30, 2023, and 2022, respectively. No cash was received from option exercises for the nine months ended September 30, 2023, and $314,000 for 2022.

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2023, and 2022 was $0.4 million and $1.6 million, respectively.  There were no options exercised during the nine months ended September 30, 2023 and 831,250 options exercised during the nine months ended September 30, 2022.

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

 Schedule of information pertaining to options outstanding

As of September 30, 2023, there was $3,871,986 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plans.  That cost is expected to be recognized over a weighted-average period of 46 months.  The total fair value of shares vested as of September 30, 2023, and September 30, 2022, was $4,536,052 and $2,679,152, respectively.

RESTRICTED STOCK AWARDS AND PSUs

The following table summarizes the activities for our restricted stock awards and PSUs for the nine months ended September 30, 2023, and 2022.

Total stock-based compensation expense was $404,386 and $572,284 for the nine months ended September 30, 2023, and 2022, respectively.

As of September 30, 2023, and 2022, there was $1,215,518 and $1,788,565 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 $84,921 and $107,344 for the nine months ended September 30, 2023 and 2022, respectively.