STOCK OPTIONS

12 Months Ended

Dec. 31, 2023

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 147,150 shares under the 2008 Stock Option Plan were outstanding as of December 31, 2023. No shares are available for future issuance under the 2008 Stock Option Plan, which expired July 25, 2018.

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.  The options had a ten-year term and were to vest in their entirety three years from the grant date.  The fair value of the 2021 grant was $10.21 per share using the Black-Scholes option pricing model with a risk-free rate of 1.20%, an exercise price of $13.00 per share and a volatility factor of 92.66%.  All such options were terminated on December 19, 2022.  No options are currently outstanding under the 2021 Stock Option Plan, and none were granted in 2022 or 2023.  Options for the purchase of 2,000,000 shares of Common Stock are available for future issuance under the 2021 Stock Option Plan.  

FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation (ASU 718), provides accounting guidance and treatment of share-based compensation.  ASC 718-20-35-9 provides that a cancellation of an award that is not accompanied by the concurrent grant of (or offer to grant) a replacement award or other valuable consideration shall be accounted for as a repurchase for no consideration. Accordingly, any previously unrecognized compensation cost shall be recognized at the cancellation date.  Under this guidance, the Company accelerated the recognition of all future stock option expense related to the terminated option grants.  The impact to the financial statements for the year ended December 31, 2022 was the recognition of an additional $5.5 million in stock option expense.

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 2022, and, consequently, a total of 11,200 shares of Common Stock were issued for an aggregate payment to the Company of $13,800 to exercise such options. No stock options were exercised in 2023.

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,
	2023			2022			2021
		Weighted			Weighted			Weighted
		Average			Average			Average
		Exercise			Exercise			Exercise
	Shares	Price		Shares	Price		Shares	Price
Outstanding at beginning of period	147,150	$	2.06	173,050	$	2.06	199,450	$	2.05
Granted	—	$	—	—	$	—	—	$	—
Exercised	—	$	—	(11,200)	$	1.23	(25,400)	$	1.91
Forfeited	—	$	—	(14,700)	$	2.75	(1,000)	$	2.75
Outstanding at end of period	147,150	$	2.06	147,150	$	2.06	173,050	$	2.06
Exercisable at end of period	147,150	$	2.06	147,150	$	2.06	173,050	$	2.06

The following table summarizes information about Director, officer, and employee options outstanding under the 2008 Stock Option Plan at December 31, 2023:

			Weighted Average
Exercise Prices		Shares Outstanding	Remaining Contractual Life	Shares Exercisable
$	1.05	60,000	2.99	60,000
$	2.75	87,150	2.69	87,150

Non-employee options

There were no non-director and non-employee options outstanding from 2021 - 2023.  

Stock-based Compensation

The Company recorded $3,660,387 in stock-based compensation expense in 2021.

On December 19, 2022, the Company terminated all stock option awards issued under the 2021 Stock Option Plan, causing the acceleration of the recognition of future stock option expense in the amount of $5.5 million.  The Company recorded a total of $10.1 million in stock-based compensation expense in 2022.

No stock-based compensation expense was recorded in 2023.

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.