3. Accounting for Stock-based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Accounting for Stock-Based Compensation

3. Accounting for Stock-Based Compensation

During the three-month period ended March 31, 2021, the Company granted 65,000 stock options to employees. For the three-month period ended March 31, 2020, the Company did not grant any stock options to employees or directors. The Company recognized $204,000 and $19,000, respectively, in stock-based compensation expense for the three-month periods ended March 31, 2021 and 2020.

During the three-month period ended March 31, 2021, 197,227 options were exercised under the 2005 Plan compared to 157,600 in the previous year comparative quarter. During the three-month period ending March 31, 2021, no options were exercised under the 2015 Plan compared to 15,000 in the previous year comparative quarter.

Valuation Assumptions

The fair values of employee and director option awards were estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

	For Three Months Ended March 31, 2021			For Three Months Ended March 31, 2020
Weighted average grant date fair value	$	13.88			–
Weighted average assumptions used:
Expected dividend yield		0.0	%		–
Risk-free interest rate		0.67	%		–
Expected volatility		73.00	%		–
Expected life (in years)		5.0			–

Expected volatility is based on historical volatility and in part on implied volatility. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for U.S. Treasury instruments with maturities matching the relevant expected term of the award. Options granted to non-employees are valued using the fair market value on each measurement date of the option.