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Stock Options and Restricted Shares

9 Months Ended

Sep. 30, 2021

5. Stock Options and Restricted Shares

A summary of stock option activity under the Innodata Inc. 2013 Stock Plan, as amended and restated effective June 7, 2016 (the “Plan”), as of September 30, 2021, and changes during the nine months then ended, are presented below:


		Weighted -		Weighted-Average
	Number of	Average Exercise		Remaining Contractual	Aggregate
	Options	Price		Term (years)	Intrinsic Value
Outstanding at January 1, 2021	5,906,884	$	1.61
Granted	750,000		6.76
Exercised	(1,546,288)		2.01
Forfeited/Expired	(20,000)		1.38
Outstanding at September 30, 2021	5,090,596	$	2.05	7.49	$	37,037,015

Exercisable at September 30, 2021	3,468,912	$	1.73	7.03	$	27,069,483

Vested and Expected to Vest at September 30, 2021	5,090,596	$	2.05	7.49	$	37,037,015

During the nine months ended September 30, 2021, a total of 1,546,288 options were exercised at an average price of $2.01 for net proceeds of $2.2 million.

The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The weighted-average fair value of the options granted, and weighted-average assumptions were as follows:


	For the Nine Months Ended September 30,
	2021			2020
Weighted average fair value of options granted	$	3.56		$	0.61
Risk-free interest rate		0.22% - 0.82	%		0.29% - 0.56	%
Expected term (years)		3-6			5-6
Expected volatility factor		58% - 68	%		47% - 50	%
Expected dividends		None			None

A summary of outstanding restricted shares issued under the Plan as of September 30, 2021 are presented below:


		Weighted-Average Grant
	Number of Shares	Date Fair Value
Unvested at December 31, 2020	50,000		-
Granted	-		-
Vested	(25,000)		-
Forfeited/Expired	-		-
Unvested at September 30, 2021	25,000	$	1.38

The compensation cost related to non-vested stock options and restricted stock awards not yet recognized as of September 30, 2021 totaled approximately $2.7 million. The weighted-average period over which these costs will be recognized is twenty-six months.

The stock-based compensation expense related to the Company’s various stock awards was allocated as follows (in thousands):


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Direct operating costs	$	21	$	40	$	96	$	119
Selling and administrative expenses		482		192		1,021		581
Total stock-based compensation	$	503	$	232	$	1,117	$	700