STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

Under the Company's stock option plans, the Board of Directors may grant restricted stock and options to purchase common shares to the Company's employees, officers, directors and consultants. The Company accounts for stock options in accordance with FASB ASC Topic 718, Compensation - Stock Compensation, with stock-based compensation expense recognized over the vesting period based on the grant date fair value utilizing the Black Scholes model, which includes a number of estimates that affect the grant date fair value and the amount of expense to recognize.

The Company recognized approximately $1,367,000 in stock-based compensation expense for the three months ended March 31, 2023, as compared with $1,650,000 for the three months ended March 31, 2022.

Stock option activity is summarized as follows:

	Number of options	Weighted average exercise price
Outstanding at December 31, 2022	6,520,444	$	7.12
Granted	1,408,865	2.50
Exercised	—	—
Canceled and forfeited	(146,164)	8.08
Outstanding at March 31, 2023	7,783,145	$	6.27

The Company allows stock option holders to exercise stock-based awards by surrendering stock-based awards with an intrinsic value equal to the cumulative exercise price of the stock-based awards being exercised, referred to as net settlements. These surrenders are included in stock options exercised in the options rollforward above. For the three months ended March 31, 2022, we received 22,654 options as payment in the exercise of 19,013 options. There were no such exercises for the three months ended March 31, 2023.

Common shares required to be issued upon the exercise of stock options would be issued from authorized and unissued shares. The Company calculated the grant date fair value of options granted in 2023 (“2023 Grants”) utilizing a Black Scholes model.

	2023 Grants
Strike price	$2.50
Risk-free rate	3.6%
Expected dividend yield	—
Expected volatility	85.8%
Expected term (in years)	6