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EQUITY
 9 Months Ended
Sep. 30, 2021
Equity [Abstract]  
EQUITY

NOTE 7—EQUITY

 

(a) General

 

At September 30, 2021 the Company had issued and outstanding 39,687,589 shares of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when and if declared by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.

 

The Company is not authorized to issue preferred stock. Accordingly, no preferred stock is issued or outstanding.

 

 

(b) Summary Employee Option Information

 

The Company’s stock option plans provide for the grant to officers, directors and employees of options to purchase shares of common stock. The purchase price may be paid in cash or, if the option is “in-the-money” at the end of the option term, it is automatically exercised “net”. In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the optionee but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable for one share of the Company’s common stock. Most options expire within five to ten years from the date of the grant, and generally vest over a three-year period from the date of the grant.

 

At September 30, 2021, 1,563,121 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. During the three months ended September 30, 2021, 67,770 options were issued to employees of the Company. During the nine months ended September 30, 2021, 30,000 options were issued to directors, 35,000 options were issued to the Company’s CEO, 100,000 options were issued to the Company’s CFO and 67,770 options were issued to other employees. In the nine and three months ended September 30, 2021, there were no grants to non-employees. The fair value of the options issued was approximately $89,000.

 

No options were exercised in the nine and three months ended September 30, 2021. The intrinsic value of options outstanding and of options exercisable at September 30, 2021 was approximately $212,000 and $170,000, respectively.

 

The Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the respective years (all in weighted averages):

 

  

Number

of Options

(in shares)

  

Weighted

Average

Exercise

Price Per

Share

  

Weighted

Average

Remaining

Contractual Life

  

Aggregate

Intrinsic

Value

 
Outstanding at December 31, 2020   722,501   $0.62    4.4 years   $29,000 
Granted   232,770    0.54           
Exercised   —    —          
Forfeited or expired   (104,752)   2.15           
Outstanding at September 30, 2021   850,519   $0.41    4.9 years   $212,000 
Exercisable at September 30, 2021   558,491   $0.36    4.2 years   $170,000 

 

The fair value of the options granted of approximately $89,000 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

 

     
Risk-free interest rate   .53%
Expected term of options   4.0 years 
Expected annual volatility   99.7%
Expected dividend yield   —%

 

(c) Stock-based Compensation Expense

 

Stock-based compensation expense included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations was approximately $58,000 and $27,000 for the nine-month periods ended September 30, 2021 and 2020, respectively and approximately $22,000 and $8,000 for the three-month periods ended September 30, 2021 and 2020, respectively.

 

 

The total compensation cost related to non-vested awards not yet recognized was approximately $76,000 as of September 30, 2021.

 

(d) Warrants

 

The Company previously issued warrants at exercise prices equal to or greater than market value of the Company’s common stock at the date of issuance. A summary of warrant activity follows:

 

  

Number

of Warrants

(in shares)

  

Weighted

Average

Exercise

Price Per

Share

  

Weighted

Average

Remaining

Contractual

Life

 
Outstanding at December 31, 2020   35,000   $0.13    2.2 years 
Granted   —    —     
Exercised   —    —      
Forfeited or expired   —    —      
Outstanding at September 30, 2021   35,000   $0.13    1.4 years