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STOCK-BASED COMPENSATION
 6 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

NOTE 13. STOCK-BASED COMPENSATION

 

The Company recorded pre-tax compensation expense related to the grant of stock options and restricted stock issued of $179,482 and $294,331 for the three months ended June 30, 2023 and 2022, and $321,779 and $776,350 for the six months ended June 30, 2023 and 2022, respectively.

 

As of June 30, 2023, the Company had adopted ten 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”), (ix) the 2020 Stock Option and Restricted Stock Plan (the “2020 Plan”), and (x) the 2022 Stock Option and Restricted Stock Plan (the “2022 Plan”). The 2005 Plan, 2006 Plan, 2007 Plan, 2008 Plan, 2011 Plan, 2013 Plan, 2015 Plan, 2018 Plan, 2020 Plan and 2022 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 333,750 shares of Common Stock. The 2005 Plan terminated during 2015 with 1,078 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 June 30, 2023 total 284. The 2006 Plan terminated during 2016 with 2,739 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 June 30, 2023 total 531. The 2007 Plan terminated during 2017 with 4,733 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 June 30, 2023. The 2008 Plan terminated during 2018 with 2,025 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 June 30, 2023.

 

Stock option grants. 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 137,042 shares remained available for awards under the various Plans as of June 30, 2023.

 

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

 

 

A summary of all stock option activity under the Plans for the six months ended June 30, 2023 is as follows:

 

Options 

Number of

Shares

  

Weighted

Average

Exercise Price

 
Outstanding at December 31, 2022   53,950   $45.80 
Granted   —    — 
Exercised   —    — 
Forfeited   (350)   (83.20)
Outstanding at June 30, 2023   53,600   $45.55 
Exercisable at June 30, 2023   53,600   $45.55 

 

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 six months ended June 30, 2023 and 2022.

 

The aggregate intrinsic value of options outstanding was $-0- and $-0-, at June 30, 2023 and December 31, 2022, respectively. The aggregate intrinsic value of options exercisable was $-0- and $-0-, at June 30, 2023 and December 31, 2022, respectively.

 

As of June 30, 2023, the unrecognized portion of stock compensation expense on all existing stock options was $-0-.

 

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 June 30, 2023:

 

     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 $49.99     37,000    7.1 years     37,000    7.1 years 
$ 50.00 to $69.99     15,100    5.0 years     15,100    5.0 years 
$70.00 to $89.99     1,500    2.9 years     1,500    2.9 years 
                       
      53,600    6.4 years     53,600    6.4 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 five 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 Plans for the six months ended June 30, 2023 is as follows:

 

  

Number of Restricted

shares

  

Weighted

average

grant date
fair value

 
Nonvested balance, December 31, 2022   79,125   $21.73 
Granted   35,000    5.00 
Vested   (26,375)   (35.83)
Forfeited   (3,625)   (22.41)
Nonvested balance, June 30, 2023   84,125   $10.33 

 

 

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 June 30, 2023, there were $298,313 of total unrecognized compensation costs related to all remaining non-vested restricted stock grants, which will be amortized over the next fifty-two months in accordance with their respective vesting scale.

 

The nonvested balance of restricted stock vests as follows:

 

Years ended 

Number of shares

 
     
2023 (July 1, 2023 through December 31, 2023)   30,250 
2024   27,750 
2025   19,000 
2026   4,125 
2027   2,000 
2028   1,000