Note 6 - Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Equity [Text Block]

6. Stockholders’ Equity –

Stock Compensation

On March 8, 2021, the Company awarded 15,200 Restricted Stock shares to employees out of treasury stock. These shares were subject to a two year vesting period.  Grant date fair value of $45,300 was recognized over the vesting period as stock compensation expense as a component of selling, general and administrative expense.

On  May 14, 2021, the Board of Directors of Table Trac, Inc. approved the 2021 Stock Incentive Plan (the "Plan").  The Plan provides for the issuance of incentive and other equity-based awards to its employees. Options issued under the Plan are exercisable for periods not to exceed ten years, and vest and contain such other terms and conditions as specified in the applicable award document. Options to buy common stock are issued under the Plan, with exercise prices equal to the closing price of shares of the Company’s common stock on the OTCQX Exchange at closing on the trading day of the date of award. The Company had 500,000 shares initially available for grant.

On  May 14, 2021, the Board of Directors of Table Trac, Inc. awarded 70,000 stock options as follows:  20,000 to Chad Hoehne; 20,000 to Robert Siqveland and 30,000 to Randy Gilbert. These shares are subject to a vesting schedule as follows: 25% immediately and 25% in each subsequent year. Grant date fair value of $128,726 will be recognized over the vesting period as stock compensation expense as a component of selling, general and administration expense.

On  December 17, 2021, management of Table Trac, Inc. awarded 15,000 options to be distributed to most of its current employees.  These options vested immediately. Grant date fair value of $22,919 was recognized during 2021 as stock compensation expense as a component of selling, general and administration expense.

On  March 25, 2022, the Board of Directors of Table Trac, Inc. awarded Randy Gilbert 87,500 Restricted Stock shares and Robert Siqveland 12,500 Restricted Stock shares. These shares are subject to a five-year vesting schedule as follows: 20,000 shares vest annually beginning on  March 25, 2023.  Grant date fair value of $349,000 will be recognized ratably over the vesting period as stock compensation expense as a component of selling, general and administration expense.

On  December 15, 2022, Robert Siqveland agreed to and accepted a separation agreement from the Company. Included in this agreement were terms which immediately vested the remaining unvested 12,500 Restricted Stock shares from the  March 25, 2022 grant and the unvested stock options to purchase 20,000 shares that were awarded to him on  May 14, 2021.  In addition, this agreement modified the exercise period of the stock options which now expire on  March 31, 2024.  This was determined to be a modification under ASC 718 and the incremental compensation costs of $39,000 and $37,000, respectively, for the restricted stock and options were recognized immediately in 2022 as a component of SG&A.  Lastly, Mr. Siqveland will receive twelve months of severance in two payments.  $100,500 on  April 15, 2023 and $33,500 on  January 15, 2024.  An accrual for these payments including the employer's payroll taxes totaling $141,500 was recorded as a component of SG&A as of March 31, 2023 and December 31, 2022, respectively.

On  December 16, 2022, management of Table Trac, Inc. awarded 16,500 stock options to be distributed to most of its current employees.  These options vested immediately. Grant date fair value of $37,969 was recognized during 2022 as stock compensation expense as a component of selling, general and administration expense.

On March 12, 2023, the Company awarded 10,000 Restricted Stock shares to an employee out of treasury stock. These shares are subject to a three year vesting period.  Grant date fair value of $50,500 will be recognized over the vesting period as stock compensation expense as a component of selling, general and administrative expense.

The Company has 80,000 shares of restricted stock outstanding as of  March 31, 2023.  There were 115,200 shares of restricted stock outstanding at  March 31, 2022.  

For the three months ending  March 31, 2023 and 2022, the Company recorded compensation expense related to restricted stock granted of $19,477 and $5,662, respectively as a component of selling, general and administrative expenses.  

For the three months ending  March 31, 2023 and 2022, the Company recorded compensation expense related to stock options granted of $5,747 and $8,045, respectively as a component of selling, general and administrative expenses.  

The fair value of the Company’s stock options issued was estimated using a Black-Scholes option pricing model with the following weighted-average assumptions:

No options were exercised during the period.

The unvested stock compensation expense is expected to be recognized over a weighted average period of approximately three years. As of  March 31, 2023 and 2022, the remaining unrecognized stock compensation expense for stock options and restricted stock was approximately $319,000 and $366,000, respectively.

The following table summarizes additional information about stock options outstanding and exercisable at March 31, 2023:

Options Outstanding							Options Exercisable
Options Outstanding	Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value		Options Exercisable		Weighted Average Exercise Price		Aggregate Intrinsic Value
101,500		5.56	$	2.97	$	151,800		76,500	$	3.15	$	104,500

The following table summarizes the activity of all stock options outstanding for the three months ending  March 31, 2023 and 2022.

	2023				2022
	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Options outstanding at beginning of Quarter		101,500	$	2.97		85,000	$	2.52
Granted		0		0		0		0
Exercised		0		0		0		0
Forfeited		0		0		0		0
Balance at March 31:		101,500	$	2.97		85,000	$	2.52
Options Exercisable at March 31:		76,500	$	3.15		32,500	$	2.52