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Capital Stock, Stock Plans and Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2022
Share-Based Payment Arrangement [Abstract] |
Capital Stock, Stock Plans and Stock-Based Compensation | 6. Capital Stock, Stock Plans and Stock-Based Compensation The Company has certain stock option plans under which it may award incentive stock options (“ISOs”) and/or non-qualified stock options (“NQSOs”) to employees, officers, outside directors, and outside consultants. On July 21, 2022, the Company issued a NQSO to each of the Company’s seven reelected outside directors for the purchase, under the Company’s 2003 Outside Directors Stock Plan (the “2003 Plan”), of up to 10,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). Dr. Louis Centofanti, the Company’s Executive Vice President (“EVP”) of Strategic Initiatives and also a member of the Company’s Board of Directors (the “Board”), was not eligible to receive an option under the 2003 Plan as an employee of the Company. Each NQSO granted is for a contractual term of ten years with one-fourth vesting annually over a four-year period. The exercise price of the NQSO is $5.15 per share, which was equal to the fair market value of the Company’s Common Stock the day preceding the grant date, pursuant to the 2003 Plan. On July 21, 2022, the Company granted ISOs to certain employees for purchase under the Company’s 2017 Stock Option Plan, as amended (the “2017 Plan”), of up to an aggregate of 24,000 shares of the Common Stock. Each ISO granted is for a contractual term of six years with one-fifth vesting annually over a five-year period. The exercise price of the ISO was $5.34 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant. The Company granted a NQSO to Robert Ferguson on July 27, 2017 from the Company’s 2017 Stock Option Plan (“2017 Plan”) for the purchase of up to 100,000 shares of the Company’s Common Stock (“Ferguson Stock Option”) in connection with his work as a consultant to the Company’s Test Bed Initiative (“TBI”) at our Perma-Fix Northwest Richland, Inc. (“PFNWR”) facility at an exercise price of $3.65 per share, which was the fair market value of the Company’s Common Stock on the date of grant. The term of the Ferguson Stock Option is seven years from the grant date. The vesting of the Ferguson Stock Option is subject to the achievement of three separate milestones by certain dates. The first milestone was met and the 10,000 shares under the first milestone were issued to Robert Ferguson in May 2018. The Company had previously entered into amendments whereby the vesting dates for the second and third milestones for the purchase of up to 30,000 and 60,000 shares of the Company’s Common Stock were extended to December 31, 2021 and December 31, 2022, respectively. On January 20, 2022, the Company’s Compensation and Stock Option Committee (“Compensation Committee”) and the Board further amended the vesting dates of the second and third milestones to December 31, 2022 and December 31, 2023, respectively. This amendment was approved by the Compensation Committee and the Board to take effect December 31, 2021. The Company has not recognized compensation costs (fair value of approximately $289,000 at September 30, 2022) for the remaining 90,000 Ferguson Stock Option under the remaining two milestones since achievement of the performance obligation under each of the two remaining milestones is uncertain at September 30, 2022. All other terms of the Ferguson Stock Option remain unchanged. Upon Mr. Ferguson’s death, the remaining Ferguson Stock Options are now held by Mr. Ferguson’s estate. The Company estimates fair value of stock options using the Black-Scholes valuation model. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The fair value of the options granted as discussed above and the related assumptions used in the Black-Scholes option model used to value the options granted for the nine months ended September 30, 2022 were as follows: Schedule of Stock Options Valuation Assumptions
|  | Outside Director Stock Option Granted |  |  | Employee Stock Option Granted |
|  | Nine Months Ended September 30, 2022 |
Weighted-average fair value per share |  | $ | 3.61 |  |  | $ | 2.71 |
Risk-free interest rate (1) |  |  | 2.91 | % |  |  | 3.00 | %
Expected volatility of stock (2) |  |  | 55.04 | % |  |  | 55.72 | %
Dividend yield |  |  | None |  |  |  | None |
Expected option life (3) |  |  | 10.0 years |  |  |  | 5.0 years |
(1) | The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option.
(2) | The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.
(3) | The expected option life is based on historical exercises and post-vesting data.
The following table summarizes stock-based compensation recognized for the three and nine months ended September 30, 2022 and 2021 for our employee and director stock options. Schedule of Share-based Compensation, Allocation of Recognized Period Costs
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
|  | Three Months Ended |  |  | Nine Months Ended |
Stock Options |  | September 30, |  |  | September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Employee Stock Options |  | $ | 76,000 |  |  | $ | 34,000 |  |  | $ | 248,000 |  |  | $ | 100,000 |
Director Stock Options |  |  | 29,000 |  |  |  | 28,000 |  |  |  | 62,000 |  |  |  | 49,000 |
Total |  | $ | 105,000 |  |  | $ | 62,000 |  |  | $ | 310,000 |  |  | $ | 149,000 |
At September 30, 2022, the Company has approximately $1,396,000 of total unrecognized compensation costs related to unvested options for employee and directors. The weighted average period over which the unrecognized compensation costs are expected to be recognized is approximately 3.8 years. The summary of the Company’s total stock option plans as of September 30, 2022 and September 30, 2021, and changes during the periods then ended, are presented below. The Company’s plans consist/consisted of the 2010 Stock Option Plan, the 2017 Plan and the 2003 Plan: Schedule of Stock Options Roll Forward
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value (3) |
Options outstanding January 1, 2022 |  |  | 1,019,400 |  |  | $ | 4.91 |  |  |  |  |  |  |  | - |
Granted |  |  | 94,000 |  |  | $ | 5.20 |  |  |  |  |  |  |  |  |
Exercised |  |  | (52,400 | ) |  | $ | 4.04 |  |  |  |  |  |  | $ | 97,856 |
Forfeited/expired |  |  | (9,600 | ) |  | $ | 5.50 |  |  |  |  |  |  |  |  |
Options outstanding end of period (1) |  |  | 1,051,400 |  |  | $ | 4.98 |  |  |  | 4.0 |  |  | $ | 492,939 |
Options exercisable at September 30, 2022(1) |  |  | 453,900 |  |  | $ | 3.93 |  |  |  | 2.4 |  |  | $ | 354,709 |
|  | Shares |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value (3) |
Options outstanding January 1, 2021 |  |  | 658,400 |  |  | $ | 3.87 |  |  |  |  |  |  |  | - |
Granted |  |  | 76,000 |  |  | $ | 6.05 |  |  |  |  |  |  |  |  |
Exercised |  |  | (500 | ) |  | $ | 3.15 |  |  |  |  |  |  | $ | 2,175 |
Forfeited/expired |  |  | (19,500 | ) |  | $ | 6.75 |  |  |  |  |  |  |  |  |
Options outstanding end of period (1) |  |  | 714,400 |  |  | $ | 4.02 |  |  |  | 3.6 |  |  | $ | 1,888,695 |
Options exercisable at September 30, 2021 (2) |  |  | 416,400 |  |  | $ | 3.91 |  |  |  | 2.9 |  |  | $ | 1,146,320 |
(1) | Options with exercise prices ranging from $2.79 to $7.50
(2) | Options with exercise prices ranging from $2.79 to $7.29
(3) | The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price.
During the nine months ended September 30, 2022, the Company issued a total of 64,272 shares of its Common Stock under the 2003 Plan to its outside directors as compensation for serving on our Board. The Company has recorded approximately $359,000 in compensation expenses (included in selling, general and administration (“SG&A”) expenses) in connection with the issuance of shares of its Common Stock to outside directors. During the nine months ended September 30, 2022, the Company issued 16,526 shares of its Common Stock from a cashless exercise of an option for the purchase of 50,000 shares of the Company’s Common Stock at $3.97 per share. Additionally, the Company issued 2,400 shares of its Common Stock from the exercise of an option for the purchase of 2,400 shares of the Company’s Common Stock at $5.50 per share resulting in proceeds of approximately $13,000. In connection with a $2,500,000 loan that the Company entered into with Mr. Robert Ferguson (the “Ferguson Loan”) on April 1, 2019, the Company issued a warrant to Mr. Ferguson for the purchase of up to 60,000 shares of our Common Stock at an exercise price of $3.51 per share. The warrant expires on April 1, 2024 and remains outstanding at September 30, 2022. Upon Mr. Ferguson’s death, the warrant is now held by Mr. Ferguson’s estate. The Ferguson Loan was paid-in-full in December 2020.

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