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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

Note 11 – Stock-Based Compensation

 

In addition to cash compensation, the Company may compensate certain service providers, including employees, directors, consultants, and other advisors, with equity-based compensation in the form of stock options and restricted stock awards and stock awards. The Company recognizes all equity-based compensation as stock-based compensation expense based on the fair value of the compensation measured at the grant date. For stock options, fair value is calculated at the date of grant using the Black-Scholes-Merton option-pricing model. For restricted stock awards and stock awards, fair value is the closing stock price for the Company’s common stock on the grant date. The expense is recognized over the vesting period of the grant. For the periods presented, all stock-based compensation expense was classified as a component within selling, general and administrative expense in the Company’s consolidated statements of income.

 

The amount of stock-based compensation expense is as follows (in thousands):

 

   2022   2021 
   Year ended December 31, 
   2022   2021 
Stock options  $98   $132 
Stock awards   56    158 
Restricted stock awards   -    1 
Total  $154   $291 

 

As of December 31, 2022, the estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (in thousands):

 

 

Years ended December 31st:  Unvested stock options   Unvested restricted stock awards   Total unrecognized compensation expense 
2023  $40   $-   $40 
2024   11    -    11 
2025   -    -    - 
2026   -    -    - 
   $51   $-   $51 

 

The Company estimated the fair value of stock options using the Black-Scholes-Merton option-pricing model with the following assumptions:

 

   Year ended December 31, 
   2022   2021 
Number of options awarded to purchase common shares   N/A    17,000 
Risk-free interest rate   N/A    0.82%
Expected volatility   N/A    70.1%
Assumed dividend yield   N/A    N/A 
Expected life of options from the date of grant   N/A    9.8 years 

 

 

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

 

Equity Incentive Plans

 

Our 2006 Equity Incentive Plan (the “2006 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan,” and together with the 2006 Plan, the “Plans”) provide for the issuance of stock-based awards to employees, officers, directors and consultants. The Plans permit the granting of stock awards and stock options. The vesting of stock-based awards is generally subject to the passage of time and continued employment through the vesting period.

 

Our 2006 Plan provided for the issuance of a maximum of 3.0 million shares of our common stock. The 2006 Plan terminated in September 2016. As of December 31, 2022, the 2006 Plan had 13,128 awards outstanding.

 

Our 2016 Plan was ratified by our shareholders in May 2016 and provides for the issuance of a maximum of 5.0 million shares of our common stock, of which 4.9 million shares were still available for issuance as of December 31, 2022.

 

Stock Option Activity

 

The Company generally grants stock options to directors, eligible employees and officers as a part of its equity incentive plan. Restrictions and vesting periods for the stock option grants are set forth in the award agreements. A stock option grant represents an option to purchase a defined number of shares of the Company’s common stock to be released from restrictions upon completion of the vesting period. The awards typically vest in equal increments over one to three years. Stock option activity during 2022 and 2021 is summarized as follows:

 

               Weighted avg.     
       Weighted avg.   Weighted avg.   remaining     
   Number of   exercise price   grant date fair   contractual life   Aggregate 
   awards   per share   value per share   (in years)   intrinsic value 
                     
Outstanding, January 1, 2021   105,086   $6.25   $6.06    5.38   $814,090 
Granted   17,000    14.77    10.90    9.50      
Exercised   (19,295)   2.51    3.08    1.58      
Expired/Forfeited   (2,556)   7.18    6.88    -      
Outstanding, December 31, 2021   100,235   $8.36   $7.53    5.88   $620,445 
Granted   -    -    -    -      
Exercised   (7,750)   4.69    6.06    2.45      
Expired/Forfeited   (138)   7.20    7.08    -      
Outstanding, December 31, 2022   92,347   $8.67   $7.77    5.31   $502,688 
Exercisable, December 31, 2022                       488,645 
Unvested, December 31, 2022                       14,042 

 

The aggregate intrinsic value of stock options represents the total pre-tax intrinsic value (the aggregate difference between the closing stock price of our common stock on December 31, 2022 and the exercise price for in-the-money options) that would have been received by the option holders if all in-the-money options had been exercised on December 31, 2022.

 

During the year ended December 31, 2022, a total of 138 options were forfeited, of which all were vested. The options were forfeited upon the employees’ termination from the Company. During the year ended December 31, 2021, a total of 2,556 options were forfeited, 1,687 of which were unvested.

 

 

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

 

Stock Activity

 

The Company grants shares of stock to directors, eligible employees and officers as a part of its equity incentive plan. Any restrictions and vesting periods for the awards are set forth in the award agreements. Each share of stock represents one share of the Company’s common stock. Shares of stock are valued at the closing price of the Company’s common stock on the grant date and are recognized as selling, general and administrative expense over the vesting period of the award.

 

During 2022, the Company awarded 1,500 shares of the Company’s common stock at a fair market value price of $13.45 per share to an employee of the Company, with immediate vesting. The Company awarded 2,500 shares of the Company’s stock at a fair market value price of $14.40 to members of the board of directors, with immediate vesting.

 

During 2021, the Company awarded 10,000 shares of the Company’s common stock at a fair market value price of $12.62 per share to an employee of the Company, with immediate vesting. The Company awarded 2,500 shares of the Company’s stock at a fair market value price of $12.75 to members of the board of directors, with immediate vesting.