STOCK OPTIONS

12 Months Ended

Dec. 31, 2021

STOCK OPTIONS.

STOCK OPTIONS

16.  STOCK OPTIONS

Stock options

Options for the purchase of 3,649,508 shares of Common Stock have been issued under the 2008 Stock Option Plan. Options for the purchase of 173,050 shares under the 2008 Stock Option Plan were outstanding as of December 31, 2021. No shares are available for future issuance under the 2008 Stock Option Plan, which expired July 25, 2018.

Options for the purchase of 1,350,000 shares of Common Stock are issued and outstanding under the 2021 Stock Option Plan and none have vested.  650,000 shares are available for future issuance under the 2021 Stock Option Plan.

The Compensation and Benefits Committee administers the Company’s stock option plans.

Stock option exercises

Stock options were exercised by the Company’s employees and directors during 2021, and, consequently, a total of 25,400 shares of Common Stock were issued for an aggregate payment to the Company of $48,600 to exercise such options.

Director, officer, and employee options

A summary of Director, officer, and employee options granted and outstanding under the 2008 Stock Option Plan is presented below:

	Years Ended December 31,
	2021			2020			2019
		Weighted			Weighted			Weighted
		Average			Average			Average
		Exercise			Exercise			Exercise
	Shares	Price		Shares	Price		Shares	Price
Outstanding at beginning of period	199,450	$	2.05	639,300	$	2.12	1,300,303	$	1.57
Granted	—	$	—	—	$	—	—	$	—
Exercised	(25,400)	$	1.91	(431,550)	$	(2.14)	—	$	—
Forfeited	(1,000)	$	2.75	(8,300)	$	(2.75)	(661,003)	$	(1.05)
Outstanding at end of period	173,050	$	2.06	199,450	$	2.05	639,300	$	2.12
Exercisable at end of period	173,050	$	2.06	199,450	$	2.05	639,300	$	2.12

No options were issued in 2021, 2020, or 2019 under the 2008 Stock Option Plan to employees or non-employee directors.

The following table summarizes information about Director, officer, and employee options outstanding under the 2008 Stock Option Plan at December 31, 2021:

			Weighted Average
Exercise Prices		Shares Outstanding	Remaining Contractual Life	Shares Exercisable
$	1.05	70,000	4.99	70,000
$	2.75	103,050	4.70	103,050

In the year ended December 31, 2021, three officers were granted options for the purchase of a total of 1,350,000 shares under the 2021 Stock Option Plan.  All options were outstanding, but none were exercisable at the end of 2021.  The fair value of the 2021 grant is $10.21 per share using the Black-Scholes option pricing model with a risk-free rate of $1.20 and a volatility factor of 92.66%.  The options were granted on March 16, 2021, have a ten-year term, and may vest in their entirety three years from the grant date.

Non-employee options

In 2021 and 2020, there were no non-employee options outstanding. In 2019, non-employees forfeited 57,500 shares underlying options exercisable at $0.81 under the 2008 Stock Option Plan.

Stock-based Compensation

The Company recorded $3,660,387 in stock-based compensation expense in 2021. Assuming there are no changes to the stock options granted under the 2021 Stock Option Plan, the Company expects to recognize $4,595,400,

$4,595,400, and $935,013 in stock-based compensation expense in 2022, 2023, and 2024, respectively.  No stock-based compensation expense was recorded in 2020 or 2019.

The total intrinsic value of outstanding and exercisable stock options with exercise prices lower than the closing market price was $842,349 and $1,733,856 at December 31, 2021 and December 31, 2020, respectively.

Options Pricing Models – Assumptions

The expected life is based on the Company’s historical experience with option exercise trends.  The assumptions for expected volatility are based on a calculation of volatility over the five-years preceding the grant date.  Risk-free interest rates are set using grant-date U.S. Treasury yield curves. In its calculations, the Company assumed no dividends. The Company elected a policy to account for forfeitures as they occur, rather than on an estimated basis.