Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

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 2022 and 2021 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 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 December 31, 2022, the total number of shares of our common stock reserved for issuance under the 2017 ECP was 24,550,000.

Compensation Expense

We recorded stock-based compensation expense for all equity incentive plans of $2,350,314 and $2,179,254 for the years ended December 31, 2022 and 2021, respectively. Total compensation cost not yet recognized at December 31, 2022 was $2,323,398 to be recognized over a weighted-average recognition period of one year.

The following table summarizes the stock grants outstanding under our 2017 ECP plan as of December 31, 2022:


	Options Outstanding	RSUs Outstanding	Options and RSUs Exercised	Available Shares	Total
Total	100,000	4,913,339	4,560,799	14,975,862	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 our stock option activity during 2022:


	Options	Weighted Average Exercise Price
Outstanding, beginning of year	1,500	$	0.56
Stock options, granted	100,000	$	0.52
Stock options exercised	—	$	—
Stock options canceled	1,500	$	0.56
Outstanding, end of year	100,000	$	0.52
Exercisable, end of year	—	$	—

Expected volatility is based on the historical volatility of our common stock over the period commensurate with or longer than the expected life of the options. The expected life of the options is based on the vesting schedule of the option in relation to the overall term of the option. The risk free interest rate is based on the market yield of the U.S. Treasury Bill with a term equal to the expected term of the option awarded. We do not anticipate paying any dividends so the dividend yield in the model is zero.

The following table summarizes the weighted average assumptions for our granted options and RSUs.


	Options			RSUs
Award/Strike Price	$	0.52		$	—
Market Price	$	0.52		$	0.41
Volatility	107		%	—		%
Dividend Yield	—		%	—		%
Expected Life	5.5 years			0 years
Risk Free Rate	3		%	—		%

The following table summarizes our restricted stock unit activity for 2022:


	Restricted Stock Unit	Weighted Average Fair Value
Outstanding, beginning of year	3,960,001	$	1.33
Granted	2,960,000	$	0.41
Vested	(1,826,661)	$	1.34
Forfeited	(180,001)	$	0.95
Outstanding, end of year	4,913,339	$	0.79