Quarterly report pursuant to Section 13 or 15(d)

STOCK OPTIONS

v3.22.2.2
STOCK OPTIONS
9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
STOCK OPTIONS

NOTE 8 – STOCK OPTIONS

 

In 2016 to compensate officers, directors and other key service providers with equity grants, the Board approved the 2016 Omnibus Equity Incentive Plan (“2016 Plan”), which initially allowed for 4,000 shares of common stock, stock options, stock rights (restricted stock units), or stock appreciation rights to be granted by the Board in its discretion. This authorized amount was increased multiple times by Board resolution, most recently to 200,000 shares on January 13, 2022. There are currently no shares available under the 2016 Plan for future issuance; however, the Board may increase the authorized shares under the 2016 Plan each year.

 

The Company issued 150,000 stock options to purchase common stock to officers and directors of the Company during the nine months ended September 30, 2022. These options have a 10 year term. The options have the following vesting schedules:

 

Vesting Description   Number of Options  
       
      87,500  
50% 12 months after issuance and the balance 24 months after issuance     87,500  
100% 10 months after issuance     25,000  
34% 12 months after issuance, 33% 24 months after issuance, and the remaining 36 months after issuance     25,000  
Performance conditions set by Board of Directors     12,500  

 

A summary of stock option activity and related information is as follows:

 

    Options     Weighted Average Exercise Price    

Weighted Average Remaining Contractual Term in

Years

    Aggregate Intrinsic Value  
Outstanding as of December 31, 2021     27,815     $ 30.46       7.90     $ -  
Granted     150,000     $ 9.25       10.00     $ -  
Outstanding as of September 30, 2022     177,815     $ 12.57       9.06     $ -  
Exercisable as of September 30, 2022     30,315     $ 37.00       7.16     $                 -  

 

 

The aggregate intrinsic value of options exercised is the difference between the fair market value of the Company’s closing price of our common stock at each reporting date, less the exercise price multiplied by the number of options granted which was nil at September 30, 2022.

 

As of September 30, 2022, the unrecognized stock-based compensation of $798,754 is expected to be expensed over the next 12 to 28 months based on the option vesting requirements. The weighted average fair value of options granted was $7.82 per share for the nine months ended September 30, 2022. For the nine-month period ended September 30, 2022, the stock-based compensation expense for options expected to vest was $510,449 which is included in compensation and related expenses.

 

We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option pricing model using the fair market value of our common stock on the date of grant and a number of other assumptions. These assumptions include estimates regarding the expected term of the awards, estimates of the stock volatility over a duration that approximates the expected term of the awards, estimates of the risk-free rate, and estimates of expected dividend rates.

 

The assumptions that were used in Black-Scholes option pricing model for the nine months ended September 30, 2022 were as follows:

 

Expected term (years)     5.50  
Expected volatility     130.6% - 166.7 %
Risk-free interest rate     1.65% - 1.86 %
Expected dividend yield     0.0 %