STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

11. STOCK-BASED COMPENSATION

We compensate officers, directors, key employees and consultants with stock-based compensation under the Image Sensing Systems, Inc. 2014 Stock Option and Incentive Plan (the "2014 Plan"), which was approved by our shareholders and is administered under the supervision of our Board of Directors. The Image Sensing Systems, Inc. 2005 Stock Incentive Plan (the "2005 Plan") expired in 2015, although there are options to purchase 15,000 shares outstanding under the 2005 Plan that were issued before the 2005 Plan expired. The 2014 Plan and the 2005 Plan and awards granted under the 2014 Plan and the 2005 Plan were assumed by Autoscope in the Reorganization. Stock option awards are granted at exercise prices equal to the closing price of our stock on the day before the date of grant. Generally, options vest proportionally over periods of three to five years from the dates of the grant, beginning one year from the date of grant, and have a contractual term of nine to 10 years.

Compensation expense, net of estimated forfeitures, is recognized ratably over the vesting period. Stock-based compensation expense included in general and administrative expense for the years ended December 31, 2021 and 2020 was $226,000 and $224,000, respectively. At December 31, 2021, 245,504 shares were available for grant under the 2014 Plan.

Stock Options

The following tables summarize stock option activity:

	For the year ended December 31, 2021
	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2020		15,000		$	4.76		2.94	$	2,700
Granted		—		$	-		—	$	—
Exercised		(2,000	)	$	4.22		—	$	—
Expired		—		$	-		—	$	—
Forfeited		(1,000	)	$	4.22		—	$	—

Options outstanding at December 31, 2021		12,000		$	4.90		1.13	$	19,860
Options exercisable at December 31, 2021		12,000		$	4.90		1.13	$	19,860

	For the year ended December 31, 2020
	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2019		16,000		$	4.73		3.97	$	3,505
Granted		—		$	—		—	$	—
Exercised		—		$	—		—	$	—
Expired		—		$	—		—	$	—
Forfeited		(1,000	)	$	4.22		—	$	—

Options outstanding at December 31, 2020		15,000		$	4.76		2.94	$	2,700
Options exercisable at December 31, 2020		15,000		$	4.76		2.94	$	2,700

We recognized no stock-based compensation related to stock options during the years ended December 31, 2021 and 2020.

At December 31, 2021, there was no unrecognized stock option expense related to non-vested stock options.

The fair value of stock options granted under stock‑based compensation programs has been estimated as of the date of each grant using the multiple option form of the Black‑Scholes valuation model, based on the grant price and assumptions regarding the expected grant life, stock price volatility, dividends, and risk‑free interest rates. Each vesting period of an option award is valued separately, with this value being recognized evenly over the vesting period. No options were granted for the years ended December 31, 2021 and 2020.

Restricted Stock and Stock Awards

Restricted stock awards are granted under the 2014 Plan at the discretion of the Compensation Committee of our Board of Directors. We issue restricted stock awards to executive officers and key consultants. These awards may contain certain performance conditions or time-based vesting criteria. The restricted stock awards granted to executive officers vest if the various performance or time-based metrics are met. Stock-based compensation is recognized for the number of awards expected to vest at the end of the period and is expensed beginning on the grant date through the end of the vesting period. At the time of vesting, the recipients of common stock may request to receive a net of the number of shares required for employee withholding taxes, which can be withheld up to the relevant jurisdiction's maximum statutory rate. Stock awards granted to consultants are recognized over the performance period based on the stock price on the date when the consultant's performance is complete.

We also issue stock awards as a portion of the annual retainer for each director on a quarterly basis. The stock awards are fully vested at the time of issuance. Compensation expense related to stock awards is determined on the grant date based on the publicly-quoted fair market value of our common stock and is charged to earnings on the grant date.

The following table summarizes restricted stock award activity for 2021 and 2020:

	2021				2020
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value

Awards outstanding at beginning of year	33,330		$	4.52	58,961		$	4.32
Granted	31,233		$	6.40	31,455		$	3.97
Vested	(45,966	)	$	5.31	(57,086	)	$	4.01
Forfeited	—		$	—	—		$	—

Awards outstanding at end of year	18,597		$	5.72	33,330		$	4.52

As of December 31, 2021, the total stock-based compensation expense related to non-vested awards not yet recognized was $54,000, which is expected to be recognized over a weighted average period of 1.8 years. During the years ended December 31, 2021 and 2020, we recognized $226,000 and $224,000, respectively, of stock-based compensation expense related to restricted stock awards.