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EQUITY
 3 Months Ended
Mar. 31, 2023
Equity [Abstract]  
EQUITY

NOTE 8—EQUITY

 

(a) General

 

At March 31, 2023 the Company had issued and outstanding 39,757,589 shares of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when, as 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 March 31, 2023, 1,343,684 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 March 31, 2023, 55,000 options were issued to directors, 35,000 options were issued to the Company’s CEO and 15,000 options were issued to employees of the Company. In the three months ended March 31, 2023, there were no grants to non-employees (other than the non-employee directors and CEO). The fair value of the options issued was $25,000.

 

On May 1, 2023, 10,000 options in the aggregate were issued to the Director of Software Development and Technology with an exercise price of $0.35 vesting in equal increments over three years on the anniversary date of the grant, valued at $3,000 in the aggregate.

 

No options were exercised in the three months ended March 31, 2023. The intrinsic value of options outstanding and of options exercisable at March 31, 2023 was $27,000 and $24,000, 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, 2022   943,790   $0.42    4.3 years   $16,000 
Granted   105,000    0.34           
Exercised        —           
Forfeited or expired   (13,834)   0.40           
Outstanding at March 31, 2023   1,034,956   $0.41    4.4 years   $27,000 
Exercisable at March 31, 2023   858,008   $0.41    3.9 years   $24,000 

 

The fair value of the options granted of $25,000 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

 

Risk-free interest rate   3.90%
Expected term of options   5.0 years 
Expected annual volatility   95.0%
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 $17,000 and $31,000 for the three-month periods ended March 31, 2023 and 2022, respectively.

 

The total compensation cost related to non-vested awards not yet recognized was $40,000 as of March 31, 2023.

 

 

(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, 2022   35,000   $0.13    2.5 months 
Granted   —    —      
Exercised   (35,000)   0.13      
Forfeited or expired   —    —      
Outstanding at March 31, 2023   —   $—    —