XML 34 R21.htm IDEA: XBRL DOCUMENT

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

NOTE 14. STOCK-BASED COMPENSATION

The Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $1,605,949 and $1,462,270 for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, the Company had adopted nine separate stock option and restricted stock plans: (i) the 2005 Stock Option and Restricted Stock Plan (the “2005 Plan”), (ii) the 2006 Stock Option and Restricted Stock Plan (the “2006 Plan”), (iii) the 2007 Stock Option and Restricted Stock Plan (the “2007 Plan”), (iv) the 2008 Stock Option and Restricted Stock Plan (the “2008 Plan”), (v) the 2011 Stock Option and Restricted Stock Plan (the “2011 Plan”), (vi) the 2013 Stock Option and Restricted Stock Plan (the “2013 Plan”), (vii) the 2015 Stock Option and Restricted Stock Plan (the “2015 Plan”), (viii) the 2018 Stock Option and Restricted Stock Plan (the “2018 Plan”) and (ix) the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”). The 2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015 Plan, 2018 Plan and 2020 Plan are referred to as the “Plans.”

These Plans permit the grant of stock options or restricted stock to its employees, non-employee directors and others for up to a total of 5,675,000 shares of common stock. The 2005 Plan terminated during 2015 with 22,053 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2005 Plan that remain unexercised and outstanding as of December 31, 2021 total 5,689. The 2006 Plan terminated during 2016 with 39,974 shares not awarded or underlying options, which shares are now unavailable for issuance. Stock options granted under the 2006 Plan that remain unexercised and outstanding as of December 31, 2021 total 25,625. The 2007 Plan terminated during 2017 with 94,651 shares not awarded or underlying options, which shares are now unavailable for issuance. There are no stock options granted under the 2007 Plan that remain unexercised and outstanding as of December 31, 2021. The 2008 Plan terminated during 2018 with 40,499 shares not awarded or underlying options, which shares are now unavailable for issuance. There are no stock options granted under the 2008 Plan that remain unexercised and outstanding as of December 31, 2021.

Our Board of Directors adopted the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”) on June 30, 2020 and the Company’s stockholders approved the 2020 Plan at the Annual Meeting held on September 9, 2020. The Company’s stockholders approved an amendment to the 2020 Plan at the Annual Meeting held on June 22, 2021 which increased the number of shares of Common Stock authorized and reserved for issuance under the 2020 Plan to a total of 2,500,000. A total of 1,584,155 options and restricted stock have been granted under the 2020 Plan to date. The 2020 Plan also authorizes us to grant (i) to the key employees’ incentive stock options to purchase shares of Common Stock and non-qualified stock options to purchase shares of Common Stock and restricted stock awards and (ii) to non-employee directors and consultants non-qualified stock options and restricted stock.

The Company believes that such awards better align the interests of our employees with those of its stockholders. Option awards have been granted with an exercise price equal to the market price of its stock at the date of grant with such option awards generally vesting based on the completion of continuous service and having ten-year contractual terms. These option awards typically provide for accelerated vesting if there is a change in control (as defined in the Plans). The Company has registered all shares of common stock that are issuable under its Plans with the SEC. A total of 915,845 shares remained available for awards under the various Plans as of December 31, 2021.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.

Activity in the various Plans during the years ended December 31, 2021 and 2020 is reflected in the following table:

SUMMARY OF STOCK OPTIONS OUTSTANDING

Options	Number of Shares			Weighted Average Exercise Price
Outstanding at January 1, 2020		589,125		$	3.74
Granted		255,000			2.09
Exercised		(1,875	)		4.16
Forfeited		(3,937	)		(12.14	)
Outstanding at December 31, 2020		838,313		$	3.20
Exercisable at December 31, 2020		725,813		$	3.37

Options	Number of Shares			Weighted Average Exercise Price
Outstanding at January 1, 2021		838,313		$	3.20
Granted		300,000			1.67
Exercised		—			—
Forfeited		(52,250	)		(11.61	)
Outstanding at December 31, 2021		1,086,063		$	2.37
Exercisable at December 31, 2021		936,063		$	2.48

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. The total estimated grant date fair value stock options issued during the year ended December 31, 2021 and 2020 was $466,831 and $415,742, respectively.

The Company has utilized the following assumptions in its Black-Scholes option valuation model to calculate the estimated grant date fair value of the options during the years ended December 31, 2021 and 2020:

	2021			2020
	Assumptions			Assumptions
Volatility – range		113	%		104	%
Risk-free rate		1.30	%		0.28	%
Expected term		10.0 years			5.5 years
Exercise price	$	1.67		$	2.09

The Plans allow for the cashless exercise of stock options. This provision allows the option holder to surrender/cancel options with an intrinsic value equivalent to the purchase/exercise price of other options exercised. There were no shares surrendered pursuant to cashless exercises during the years ended December 31, 2021 and 2020.

At December 31, 2021 and 2020, the aggregate intrinsic value of options outstanding was approximately $-0- and $86,150, respectively, and the aggregate intrinsic value of options exercisable was approximately $-0- and $58,025, respectively.

As of December 31, 2021, the unrecognized portion of stock compensation expense on all existing stock options was $233,415 and will be recognized over the next six months.

The following table summarizes the range of exercise prices and weighted average remaining contractual life for outstanding and exercisable options under the Company’s option plans as of December 31, 2021:

		Outstanding options				Exercisable options
Exercise price range		Number of options		Weighted average remaining contractual life		Number of options		Weighted average remaining contractual life

$	0.01 to $2.49		715,000		8.6 years		565,000		8.3 years
$	2.50 to $3.49		310,313		6.3 years		310,313		6.3 years
$	3.50 to $4.49		45,750		3.1 years		45,750		3.1 years
$	4.50 to $6.99		15,000		0.1 years		15,000		0.1 years

			1,086,063		7.6 years		936,063		7.3 years

Restricted stock grants. The Board of Directors has granted restricted stock awards under the Plans. Restricted stock awards are valued on the date of grant and have no purchase price for the recipient. Restricted stock awards typically vest over one to four years corresponding to anniversaries of the grant date. Under the Plans, unvested shares of restricted stock awards may be forfeited upon the termination of service to or employment with the Company, depending upon the circumstances of termination. Except for restrictions placed on the transferability of restricted stock, holders of unvested restricted stock have full stockholder’s rights, including voting rights and the right to receive cash dividends.

A summary of all restricted stock activity under the equity compensation plans for the years ended December 31, 2021 and 2020 is as follows:

SUMMARY OF RESTRICTED STOCK ACTIVITY

	Number of Restricted shares			Weighted average grant date fair value
Nonvested balance, January 1, 2020		514,875		$	2.97
Granted		846,591			1.02
Vested		(604,591	)		(1.85	)
Forfeited		(36,750	)		(1.84	)
Nonvested balance, December 31, 2020		720,125		$	1.69

	Number of Restricted shares			Weighted average grant date fair value
Nonvested balance, January 1, 2021		720,125		$	1.69
Granted		856,000			2.07
Vested		(511,250	)		(1.94	)
Forfeited		(7,500	)		(1.08	)
Nonvested balance, December 31, 2021		1,057,375		$	1.87

The Company estimated the fair market value of these restricted stock grants based on the closing market price on the date of grant. As of December 31, 2021, there were $1,013,415 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next fifty-seven months in accordance with their respective vesting scale.

The nonvested balance of restricted stock vests as follows:

Years ended	Number of shares

2022		585,375
2023		358,000
2024		54,000
2025		30,000
2026		30,000