EQUITY

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

EQUITY

NOTE 6—EQUITY

(a) General

At June 30, 2022 the Company had issued and outstanding 39,687,589 shares of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when and if declared by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.

The Company is not authorized to issue preferred stock. Accordingly, no preferred stock is issued or outstanding.

(b) Summary Employee Option Information

The Company’s stock option plans provide for the grant to officers, directors and employees of options to purchase shares of common stock. The purchase price may be paid in cash or, if the option is “in-the-money” at the end of the option term, it is automatically exercised “net”. In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the optionee, but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable for one share of the Company’s common stock. Most options expire within five to ten years from the date of the grant, and generally vest over a three-year period from the date of the grant.

At June 30, 2022, 1,434,850 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. During the three months ended June 30, 2022, 50,000 options were issued to the Company’s CFO. During the six months ended June 30, 2022, 30,000 options were issued to directors, 35,000 options were issued to the Company’s CEO, 50,000 options were issued to the Company’s CFO and 30,770 options were issued to other employees. In the six and three months ended June 30, 2022, there were no grants to non-employees (other than the directors, CEO and CFO).

No options were exercised in the six and three months ended June 30, 2022. The intrinsic value of options outstanding and of options exercisable at June 30, 2022 was $126,000 and $114,000, respectively. The Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the respective years (all in weighted averages):

	Number of Options (in shares)		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at December 31, 2021		833,020	$	0.39	4.7 years	$	291,000
Granted		145,770		0.55
Exercised		—		—
Forfeited or expired		—		—
Outstanding at June 30, 2022		978,790	$	0.41	4.6 years	$	126,000
Exercisable at June 30, 2022		737,579	$	0.38	4.1 years	$	114,000

The fair value of the options granted of $54,000 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate	1.8	%
Expected term of options	3.9 years
Expected annual volatility	93.6	%
Expected dividend yield	—	%

(c) Stock-based Compensation Expense

Stock-based compensation expense included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations was $53,000 and $36,000 for the six-month periods ended June 30, 2022 and 2021, respectively and $22,000 and $21,000 for the three-month periods ended June 30, 2022 and 2021, respectively.

The total compensation cost related to non-vested awards not yet recognized was $59,000 as of June 30, 2022.

(d) Warrants

The Company previously issued warrants at exercise prices equal to or greater than market value of the Company’s common stock at the date of issuance. A summary of warrant activity follows:

	Number of Warrants (in shares)		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life
Outstanding at December 31, 2021		35,000	$	0.13	14.5 months
Granted		—		—
Exercised		—		—
Forfeited or expired		—		—
Outstanding at June 30, 2022		35,000	$	0.13	8.5 months