STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Under the Company's stock option plans, the Board of Directors may grant restricted stock and options to purchase common shares to the Company's employees, officers, directors and consultants. The Company accounts for stock options in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, with stock-based compensation expense recognized over the vesting period based on the fair value on the grant date utilizing the Black Scholes model, which includes a number of estimates that affect the grant date fair value and the amount of expense to recognize.

The Company recognized approximately $1,184,000 and $3,747,000, respectively, in stock-based compensation expense during the three and nine months ended September 30, 2021, as compared with $1,063,000 and $3,209,000, respectively, for the three and nine months ended September 30, 2020.

Stock option activity is summarized as follows:


	Number of options	Weighted average exercise price




Outstanding at December 31, 2020	4,938,943	$	5.46
Granted	894,980	9.37
Exercised	(109,415)	6.26
Canceled and forfeited	(190,793)	8.22
Outstanding at September 30, 2021	5,533,715	$	5.98

The Company allows stock option holders to exercise stock-based awards by surrendering stock-based awards with an intrinsic value equal to the cumulative exercise price of the stock-based awards being exercised, referred to as net settlements. These surrenders are included in stock options exercised in the options rollforward above. For the three months ended September 30, 2021 and 2020, respectively, we received 37,049 and 16,140 options as payment in the exercise of 13,285 and 10,610 options. For the nine months ended September 30, 2021 and 2020, respectively, we received 59,104 and 29,149 options as payment in the exercise of 39,312 and 32,637 options.

Common shares required to be issued upon the exercise of stock options would be issued from authorized and unissued shares. The Company calculated the grant date fair value of options granted in 2021 ("2021 Grants") utilizing a Black Scholes model.


	2021 Grants
Strike price	$9.29	-	$11.51
Risk-free rate	0.6%	-	0.8%
Expected dividend yield	—
Expected volatility	68.9%	-	70.8%
Expected term (in years)	4.5	-	6