STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 4 — STOCK-BASED COMPENSATION

The Company has three equity incentive plans: the 2015 Stock Option Plan, as amended (the “2015 Plan”), the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), and the Non-Employee Director Compensation Plan. The Company has also issued restricted stock as employment inducement awards to its Chief Executive Officer.

As of March 31, 2023, there were options to purchase 2,600,000 shares of the Company’s common stock outstanding to certain executives, key employees and consultants under the 2015 Plan, of which 40,000 were issued during the three months ended March 31, 2023. Additional options may be issued under the 2015 Plan as outstanding options are forfeited, subject to a maximum 6,000,000 available for issuance under the 2015 Plan.

The 2021 Plan provides for the grant of up to 1,000,000 incentive stock options, nonqualified stock options, stock awards, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, consultants and directors. During the three months ended March 31, 2023, there were no awards under the 2021 Plan. As of March 31, 2023, there had been 156,758 shares of common stock issued as directors fees and 475,000 shares issued as executive compensation under the 2021 Plan in total.

Each non-employee director of the Company (other than the Chairman of the Board) is eligible to receive $110,000 annually, to be paid quarterly $12,500 in cash and $15,000 in common stock.  The Chairman of the Board is eligible to receive $140,000 annually, to be paid quarterly $12,500 in cash and $22,500 in common stock. From May 18, 2021 to May 6, 2022, non-employee director compensation was paid pursuant to the 2021 Plan. Since May 6, 2022, non-employee director compensation has been paid pursuant to the Non-Employee Director Compensation Plan. All payments were and are pro-rated for partial service.

2015 STOCK OPTION PLAN, as amended

Time Based Stock Options

The per share weighted average fair value of stock options granted during the three months ended March 31, 2023 and March 31, 2022 was $2.83 and $2.45, respectively.  The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the three months ended March 31, 2023 and March 31, 2022. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options.  The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued. We have recognized tax benefits associated with stock-based compensation of $49,817 and $49,406 for the three months ended March 31, 2023 and 2022, respectively.

	March 31,
	2023		2022
Dividend yield		0.00%		0.00%
Expected Volatility		61.3%		76.1% - 77.5%
Weighted-average volatility		—		—
Expected dividends		—		—
Expected term (in years)		10		10
Risk-free rate		3.53%		1.81% - 1.87%

The following table summarizes the status of the 2015 Plan with respect to time based stock options:

	Three Months Ended March 31,
	2023			2022
	Shares	Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at January 1	2,560,000	$	4.15		3,672,500	$	3.42
Granted	40,000	$	3.91		135,000	$	3.07
Exercised	—	$	—		75,000	$	1.60
Forfeited	—	$	—		93,750	$	1.57
Outstanding at March 31	2,600,000	$	4.15		3,638,750	$	3.49
Options exercisable at March 31	1,010,000	$	4.63		1,358,750	$	2.83
Weighted average fair value of options granted during the period	—	$	2.83		—	$	2.45
Stock-based compensation expense	—	$	475,983		—	$	524,670

Total stock-based compensation expense was $475,983 and $524,670 for the three months ended March 31, 2023, and 2022, respectively. No cash was received from option exercises for the three months ended March 31, 2023, and 2022 .

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2023, and 2022 was $0.1 million and $0.3 million, respectively.  There were no options exercised during the three months ended March 31,2023 and 75,000 options exercised during the three months ended March 31, 2022, respectively.

The following table presents information pertaining to options outstanding at March 31, 2023:

Range of Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$2.25-$9.49	2,600,000	8.6 years	$	4.15	1,010,000	$	4.63

As of March 31, 2023, there was $3,936,268 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan.  That cost is expected to be recognized over a weighted-average period of 45 months.  The total fair value of shares vested as of March 31, 2023, and March 31, 2022, was $3,511,874 and $2,815,943, respectively.

2021 STOCK OPTION PLAN, as amended

Time Based Stock Options

The per share weighted average fair value of stock options granted during the three months ended March 31, 2023 and March 31, 2022 was zero and zero respectively.  The fair value of each award is estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the three months ended March 31, 2023 and March 31, 2022. Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options.  The risk-free interest rate was selected based upon yields of the U.S. Treasury issues with a term equal to the expected life of the option being valued. We have recognized tax benefits associated with stock-based compensation of $12,406 and zero for the three months ended March 31, 2023 and 2022, respectively.

	March 31,
	2023		2022
Dividend yield		0.00%		0.00%
Expected Volatility		0.00%		0.00%
Weighted-average volatility		—		—
Expected dividends		—		—
Expected term (in years)		0		0
Risk-free rate		0.00%		0.00%

The following table summarizes the status of the 2021 Plan with respect to time based stock options:

	Three Months Ended March 31,
	2023			2022
	Shares	Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at January 1	475,000	$	2.67		—	$	—
Granted	—	$	—		—	$	—
Exercised	—	$	—		—	$	—
Forfeited	—	$	—		—	$	—
Outstanding at March 31	475,000	$	2.67		—	$	—
Options exercisable at March 31	—	$	—		—	$	—
Weighted average fair value of options granted during the period	—	$	—		—	$	—
Stock-based compensation expense	—	$	59,076		—	$	—

Total stock-based compensation expense was $59,076 and zero for the three months ended March 31, 2023, and 2022, respectively. There were no options exercised during the three months ended March 31, 2023 and March 31, 2022.

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2023, and 2022 was zero million and zero million, respectively.  There were zero options exercised during the three months ended March 31, 2023, and March 31, 2022.

The following table presents information pertaining to options outstanding at March 31, 2023:

Range of Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price
$2.67	475,000	9.1 years	$	2.67	—	$	—

As of March 31, 2023, there was $728,603 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2021 Plan.  That cost is expected to be recognized over a weighted-average period of 48 months.  The total fair value of shares vested as of March 31, 2023, and March 31, 2022, was zero and zero, respectively.

RESTRICTED STOCK AWARDS

The following table summarizes the activities for our restricted stock awards for the three months ended March 31, 2023, and 2022.

	Three Months Ended March 31,
	2023			2022
	Shares	Weighted Average Grant-Date Fair Value		Shares	Weighted Average Grant-Date Fair Value
Unvested at January 1	950,000	$	3.04	1,000,000	$	3.01
Granted	—	$	—	—	$	—
Vested	50,000	$	3.31	—	$	—
Forfeited/canceled	—	$	—	—	$	—
Unvested at March 31	900,000	$	2.93	1,000,000	$	3.01

As of March 31, 2023, and 2022, there was $1,447,790 and $2,129,339 of unrecognized compensation cost related to unvested employee restricted shares. This amount is expected to be recognized over a weighted-average period of 21 months. We have recognized tax benefits associated with restricted stock award compensation of $35,781 and $35,781 for the three months ended March 31, 2023 and 2022, respectively.