Note 10 - Stock Options and Stock Purchase Warrants

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

Note 10.  Stock Options and Stock Purchase Warrants

During 2015, shareholders of the Company approved the 2015 Incentive Plan which authorized the issuance of up to 500,000 shares of the common stock pursuant to stock options, restricted stock, stock appreciation rights and other equity incentives awarded to directors, officers, consultants, advisors and employees of the Company. Stock option awards under the 2015 Incentive Plan are granted at the market value of the common stock on the date of grant, vest over service periods of one to five years and terminate not more than ten years from the date of grant. 

Under the 2015 Incentive Plan, stock option awards covering 120,000 shares of the common stock were granted during 2021. No stock option awards were granted during 2020. No stock options were exercised during either 2021 or 2020.

The following table shows a summary of stock option transactions under the 2015 Incentive Plan during 2021 and 2020:

	Number of Shares			Weighted Average Exercise Price
Outstanding, January 1, 2020		460,000		$	7.34
Granted		-			-
Exercised		-			-
Forfeited or expired		(400,000	)		(7.40	)
Outstanding, December 31, 2020		60,000		$	6.93
Granted		120,000			5.43
Exercised		-			-
Forfeited or expired		-			-
Outstanding, December 31, 2021		180,000		$	5.93

Weighted average remaining contractual life was 6.85 years at December 31, 2021 and 5.83 years at December 31, 2020. The exercise price of all stock options was below the market value at both December 31, 2021 and 2020. Therefore, there is no intrinsic value at December 31, 2021 and 2020. Total unrecognized compensation expense on options outstanding as of December 31, 2021 was $0.3 million. Options to purchase 54,000 shares of common stock were exercisable as of December 31, 2021.

The Company estimates the fair value of each stock option granted on the date of grant using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of Wilhelmina’s and similar companies’ common stock for a period equal to the expected term. The risk-free interest rates for periods within the contractual term of the options are based on rates for U.S. Treasury Notes with maturity dates corresponding to the options’ expected lives on the dates of grant. Expected term is determined based on the option term.

The following table lists the inputs to the Black-Scholes model used for the fair value measurement of the stock options granted during 2021.

	Year ended December 31, 2021
Weighted average fair value at the measurement date ($)	3.1
Dividend yield (%)	0
Expected volatility of the share prices (%)	68.9
Risk-free interest rate (%)	1.3
Expected life of share options (years)	4.0 to 6.3
Weighted average share price ($)	5.4