The Company utilizes stock-based compensation plans, as well as discretionary grants, for employees, directors and consultants to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives and to promote the success of the Company’s business.

The 2019 Stock Option Plan (“2019 Plan”) was adopted on June 20, 2019 following approval by the Company’s Board of Directors and shareholders. The 2019 Plan provides for the issuance of non-statutory stock options and restricted stock to employees, directors and consultants. The 2019 Plan also provides for the issuance of incentive stock options only to employees.

The 2019 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or stockholder approval of an increase in the number of shares reserved for issuance under the 2019 Plan. At September 30, 2023, 335,353 shares are available for future issuance.

The 2016 Stock Option Plan (“2016 Plan”) was adopted on April 20, 2017 following approval by the Company’s Board of Directors and shareholders. The 2016 Plan provides for the issuance of non-statutory stock options and restricted stock to employees, directors and consultants. The 2016 Plan also provides for the issuance of incentive stock options only to employees. The 2016 Plan authorizes the issuance of 299,628 common shares. The 2016 Plan will terminate as to future awards 10 years from the later of the effective date or the earlier of the most recent Board or stockholder approval of an increase in the number of shares reserved for issuance under the 2016 Plan. At September 30, 2023, 2,189 shares under 2016 Plan are available for future issuance.

The stock-based incentive awards for both the 2019 Plan and the 2016 Plan (collectively, the “Plans”) are granted at an exercise price not less than the fair market value of the shares on the date of grant, which is based on a Black-Scholes valuation model, in the case of options, or based on the fair value of the stock at the grant date, in the case of restricted

stock. Vesting of the options vary by employee or director and can have a term no more than 10 years, with the options generally having vesting periods ranging from 1 to 5 years. No shares had been granted under the 2016 Plan prior to 2018.

Under both Plans, if an award expires or becomes un-exercisable without having been exercised in full, or is surrendered pursuant to an exchange program, the unpurchased shares that were subject thereto shall become available for future grant or sale under the Plans. However, shares that have actually been issued under the Plans, upon exercise of an award, shall not be returned to the Plans and shall not become available for future distribution under the Plans, except that if unvested shares of restricted stock are repurchased by the Company at their original purchase price, such shares shall become available for future grant under the Plans.

The assumptions for expected life reflected management’s judgment and include consideration of historical experience. Expected volatility is based on data from comparable public companies for the expected option term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. Management believes that the assumptions used in the option-pricing model are highly subjective and represent only one estimate of possible value, as there is no active market for the options granted. The table below summarizes the assumptions used for the options granted during the nine months ended September 30, 2023 and 2022.


	For the Nine Months Ended September 30,
	2023	2022
Risk-free interest rate	3.6% - 4.0%	3.1%
Expected term in years	5.5 – 7.5	5.5 – 6.5
Expected volatility	43.9% – 44.9%	45.8% – 46.7%
Expected dividend yield	—	—


	Stock Options	Weighted Average Exercise Price		Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2022	881,625	$	5.27	7.5	$	3,871,667
Options granted	124,906	8.64		9.6	—
Options exercised	(17,640)	2.45		0	120,229
Options forfeited	(8,903)	9.52		0	11,765
Outstanding at September 30, 2023	979,988	$	5.71	7.1	$	3,268,832
Options vested and exercisable at September 30, 2023	700,557	$	4.75	6.6	$	2,856,141


	Stock Options	Weighted Average Exercise Price		Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at June 30, 2023	981,467	$	5.72	7.4	$	3,546,581
Options exercised	(840)	4.13		0	4,133
Options forfeited	(639)	13.04		0	—
Outstanding at September 30, 2023	979,988	$	5.71	7.1	$	3,268,832
Options vested and exercisable at September 30, 2023	700,557	$	4.75	6.6	$	2,856,141

The weighted average grant-date fair value of options per share granted during the nine months ended September 30, 2023 was $4.12. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2023 was a de minimis amount. During the nine months ended September 30, 2023, the Company received de minimis proceeds from the exercise of stock options and recognized a de minimis tax benefit from the exercise of stock options. Upon exercise of the stock options, the Company will issue new authorized shares.

The weighted average grant-date fair value of options per share granted during the nine months ended September 30, 2022 was $6.26. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2022 was $0.2 million. During the nine months ended September 30, 2022, the Company received de minimis proceeds from the exercise of stock options and recognized a de minimis tax benefit from the exercise of stock options.


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
($ in thousands)	2023		2022		2023		2022
Pre-tax
Stock options	$	129	$	116	$	366	$	209
Restricted shares	370		192		1,183		238
Total	$	499	$	308	$	1,549	$	447
After-tax
Stock options	$	125	$	116	$	343	$	204
Restricted shares	278		192		1,055		238
Total	$	403	$	308	$	1,398	$	442

As of September 30, 2023, the Company had unrecognized stock-based compensation expense related to stock options and restricted stock of approximately $0.6 million and $1.3 million, respectively, which is expected to be recognized over the remaining weighted average recognition period of 1.6 years and 1.5 years.