StockBased Compensation

6 Months Ended

Jun. 30, 2023

StockBased Compensation

Stock-Based Compensation

Note 10 – Stock-Based Compensation

We maintain a stock-based compensation program intended to attract, retain and provide incentives for talented employees and directors and align stockholder and employee interests. During the 2023 and 2022 periods, we granted restricted stock units ("RSUs") from the 2017 Equity Compensation Plan, as amended (“2017 ECP”). RSU vesting periods are generally up to three years and/or based upon achieving certain financial targets.

On January 1, 2022, in accordance with the plan provisions, the number of shares available for issuance under the 2017 ECP was increased by 150,000 shares. On June 16, 2022, our stockholders approved an amendment to the 2017 ECP increasing the number of shares of our common stock reserved for issuance by 15,000,000 shares. As of June 30, 2023, the total number of authorized shares of our common stock under the 2017 ECP was 24,550,000.

Compensation Expense

For the six months ended June 30, 2023 and June 30, 2022, we recorded stock-based compensation expense for all equity incentive plans of $935,145 and $1,355,534 respectively. Total compensation cost not yet recognized at June 30, 2023 was $2,588,400, which will be recognized over a weighted-average recognition period of approximately three years.

The following table summarizes the stock grants outstanding under 2017 ECP for the three months ended June 30, 2023:

	Options Outstanding		RSUs Outstanding		Options and RSUs Exercised		Available Shares		Total Awards Authorized
Total		—		6,893,349		6,600,788		11,055,863		24,550,000

The fair value of restricted stock units is determined using market value of the common stock on the date of the grant. The fair value of stock options is determined using the Black-Scholes-Merton valuation model. The use of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense and include the expected life of the option, stock price volatility, risk-free interest rate, dividend yield, exercise price, and forfeiture rate.

Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. The forfeiture rate, which is estimated at a weighted average of 0% of unvested options outstanding, is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

The following table summarizes the activity of stock option awards for the six months ended June 30, 2023:

	Shares Subject to Options Outstanding
	Number of Shares			Weighted Average Exercise Price
Outstanding, beginning of period		100,000		$	0.52
Stock options canceled		(100,000	)	$	0.52
Outstanding, end of period		—			—

The following table summarizes the activities for our RSUs for the six months ended June 30, 2023:

	RSUs
	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding, beginning of period		4,913,339		$	0.79
Granted		4,070,000		$	0.31
Vested		(2,039,989	)	$	0.86
Cancelled		(50,001	)	$	0.54
Outstanding, end of period		6,893,349		$	0.49