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SHARE BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

SHARE BASED COMPENSATION

SHARE-BASED COMPENSATION

NOTE 10 – SHARE-BASED COMPENSATION

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award over the vesting period.

Common Stock

On January 23, 2023, an aggregate of 1,250,000 shares of restricted common stock were granted to officers of the Company under the Company’s 2021 Equity Incentive Plan. The grant of the 1,250,000 shares of restricted common stock vest as follows: 33.3% vest each subsequent year from the date of grant, contingent upon the recipient’s continued service with the Company. These shares had a total fair value of $1,363,000 based on the market price on the issuance date.

On August 31, 2023, an aggregate of 210,000 restricted stock awards were granted to two board members under the Company’s 2021 Equity Incentive Plan. The grant of the 210,000 shares of restricted common stock vest as follows: 100% of 125,000 shares and 100% of 85,000 shares vesting on July 12, 2024 and September 27, 2024, respectively, contingent upon each recipient’s continued service with the Company. These shares have a total fair value of $200,000, based on the market price on the grant date.

Stock-based compensation expense recorded related to the vesting of restricted stock for the nine months ended September 30, 2023, was $1,229,000. The remaining unamortized stock-based compensation expense at September 30, 2023 related to restricted stock was $1,211,000.

Options

On January 23, 2023, the Company granted options to purchase an aggregate of 540,000 shares of common stock to various Company employees at an exercise price of $1.09 per share under the Company’s 2021 Equity Incentive Plan. The options have a term of five years and fully vest in January 2026. 33.3% vest each subsequent year from the date of grant, contingent upon the recipient’s continued service with the Company. The aggregate fair value of the options on the date of grant, using the Black-Scholes model, was $429,000. Variables used in the Black-Scholes option-pricing model for the options issued include: (1) a discount rate of 3.61% based on the applicable US Treasury bill rate, (2) expected term of 3.5 years, (3) expected volatility of 113% based on the trading history of the Company, and (4) zero expected dividends.

During the nine months ended September 30, 2023, the Company recognized stock option expense of $317,000. The remaining amount of unamortized stock options expense at September 30, 2023 was $316,000.

The intrinsic value of outstanding and exercisable options at September 30, 2023 was $-0-.

Option activity during the nine months ended September 30, 2023 was:

		Number of Options				Weighted Average Exercise Price				Weighted Average Remaining Contract Term (Years)
Outstanding at December 31, 2022			1,407,667			$	1.51				2.7
Granted			540,000			$	1.09
Expired/Canceled			(241,666	)		$	2.14
Outstanding at September 30, 2023			1,706,001			$	1.29				3.0
Exercisable at September 30, 2023			739,334			$	1.46				1.9