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Note 8 - Stock-based Compensation Expense

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Text Block]

NOTE 8: STOCK-BASED COMPENSATION EXPENSE

The Company recorded, as part of general and administrative expense, $81,000 and $193,000 during the three and nine months ended September 30, 2021, respectively, and during the three and nine months ended September 30, 2020, $65,000 and $206,000, respectively, for the cost of employee and director services received in exchange for equity instruments based on the grant-date fair value of those instruments.

A summary of the stock option activity related to the 2001 Stock Option Plans, the 2007 Share Incentive Plan and the 2016 Share Incentive Plan for the period from January 1, 2021 through September 30, 2021 are as follows:

2001 Non-Qualified Stock Option Plan
	Beginning		Granted		Exercised		Canceled			Ending
	Balance		During		During		During			Balance
	Outstanding		Period		Period		Period			Outstanding		Exercisable

Number of shares		7,000		-		-		(7,000	)		-		-
Weighted average exercise price per share	$	7.90		-		-	$	7.90			-		-

2007 Share Incentive Plan
	*Beginning*		*Granted*		*Exercised*		*Canceled*			*Ending*
	*Balance*		*During*		*During*		*During*			*Balance*
	*Outstanding*		*Period*		*Period*		*Period*			*Outstanding*		*Exercisable*

Number of shares		345,000		-		-		-			345,000		325,000
Weighted average exercise price per share	$	12.33		-		-		-		$	12.33	$	12.46

2016 Share Incentive Plan
	*Beginning*		*Granted*		*Exercised*		*Canceled*			*Ending*
	*Balance*		*During*		*During*		*During*			*Balance*
	*Outstanding*		*Period*		*Period*		*Period*			*Outstanding*		*Exercisable*

Number of shares		65,000		328,500		-		-			393,500		65,000
Weighted average exercise price per share	$	5.94	$	4.13		-		-		$	4.43	$	5.94

For the nine months ended September 30, 2021, the Company granted 328,500 stock options, vesting 25% per year over four years, with a ten-year life. The Company determined the fair value of stock options granted during the nine months ended September 30, 2021 is based upon assumptions as provided below.

	June 2021 Grant			3^rd quarter 2021 Grant
	150,000 Stock Options			178,500 Stock Options
Stock Price	$	4.26		$	4.01
Exercise Price	$	4.26		$	4.01
Dividend yield		0	%		0	%
Expected volatility		67	%		67	%
Risk-Free interest rate		1.35	%		1.35	%
Expected life (in years)		6.00			6.00

The Company has a total of 738,500 outstanding stock options, of which 390,000 were exercisable under the three plans at September 30, 2021.

The following table summarizes information about the outstanding and exercisable options at September 30, 2021.

				Options Outstanding								Options Exercisable
						Weighted		Weighted						Weighted
						Average		Average						Average
*Exercise*				*Number*		*Remaining*		*Exercise*		*Intrinsic*		*Number*		*Exercise*		*Intrinsic*
*Price Range*				*Outstanding*		*Contractual*		*Price*		*Value*		*Exercisable*		*Price*		*Value*
$	4.00	-	7.00		373,500		9.6	$	4.13	$	149,000		45,000	$	5.00	$	0
$	7.01	-	10.00		20,000		6.6	$	8.07	$	0		20,000	$	8.07	$	0
$	10.01	-	12.00		220,000		2.1	$	10.81	$	0		200,000	$	10.87	$	0
$	12.01	-	15.00		125,000		.7	$	15.00	$	0		125,000	$	15.00	$	0

No options were exercised during the nine months ended September 30, 2021. As of September 30, 2021, there was $772,000 of unrecognized compensation costs related to stock options expected to be recognized over a weighted average period of 3.6 years.

Restricted Stock Awards

The following table summarizes restricted stock awards for the nine months ended September 30, 2021:

	Shares of Restricted Stock			Weighted Average Grant Date Fair Value
Unvested outstanding at December 31, 2020		-			-
Granted		42,800		$	4.65
Vested		-			-
Forfeited/Cancelled		(7,646	)	$	4.90
Unvested outstanding at September 30, 2021		35,154		$	4.59

The fair value of the outstanding restricted stock awards will be recorded as stock compensation expense over the vesting period. As of September 30, 2021, there was $37,000 of total unrecognized compensation costs related to restricted stock awards, which is expected to be recognized over a weighted-average period of .25 years.

Restricted Stock Units

The following table summarizes activity related to outstanding restricted stock units for the nine months ended September 30, 2021:

				Weighted
	Shares of			Average Grant
	Restricted			Date Fair
	Stock Units			Value
Unvested outstanding at December 31, 2020		8,750		$	5.00
Granted		2,333		$	5.36
Vested		(5,583	)	$	5.32
Forfeited/Cancelled		-		$	- -

Unvested outstanding at September 30, 2021		5,500		$	4.83

The total fair value of vested restricted stock units was $29,700 for the nine months ended September 30, 2021.

The fair value of the outstanding restricted stock units will be recorded as stock compensation expense over the vesting period. As of September 30, 2021, there was $10,000 of total unrecognized compensation costs related to restricted stock units, which is expected to be recognized over a weighted-average period of .4 years.