Annual report pursuant to Section 13 and 15(d)

Stockholders??? Equity

v3.23.1
Stockholders’ Equity
 12 Months Ended
Dec. 31, 2022
Equity [Abstract]  
Stockholders’ Equity

Note F – Stockholders’ Equity

The Company adopted a new 2022 Stock Incentive Plan, (the “2022 Plan”), approved by its Board of Directors on July 25, 2022 and its stockholders on September 20, 2022. The 2022 Plan provides for the grant of any or all of the following types of awards: (a) stock options, (b) restricted stock, (c) deferred stock, (d) stock appreciation rights, and (e) other stock-based awards including restricted stock units. Awards under the 2022 Plan may be granted singly, in combination, or in tandem. Subject to standard anti-dilution adjustments as provided, the 2022 Plan provides for an aggregate of 2,300,000 shares of the Company’s common stock to be available for distribution. The Company’s Compensation Committee generally has the authority to administer the 2022 Plan, determine participants who will be granted awards, the size and types of awards, the terms and conditions of awards and the form and content of the award agreements representing awards. Awards under the 2022 Plan may be granted to employees, directors and consultants of the Company and its subsidiaries. As of December 31, 2022, there were 2,300,000 shares of common stock available for issuance under the 2022 Plan.

As of December 31, 2022, there were 625,000 shares of common stock subject to outstanding awards under the Company 2013 Stock Incentive Plan (“2013 Plan”). The Company discontinued issuing awards under its 2013 Plan as a result of the adoption of the 2022 Plan.

[1] Restricted Stock Units

A summary of restricted stock units granted during the years ended December 31, 2022 and December 31, 2021 is as follows (each restricted stock unit represents the contingent right to receive one share of the Company’s common stock):

Schedule of restricted stock units                                
    2022     2021  
    Number of
Shares		     Weighted-Average Grant
Date Fair Value		     Number of
Shares		     Weighted-Average Grant
Date Fair Value		  
Balance of restricted stock units outstanding at beginning of year     12,500     $ 3.36       162,500     $ 2.25  
Grants of restricted stock units     670,000       1.92       45,000       3.51  
Vested restricted stock units     (57,500 )     (2.73 )     (195,000 )     (2.47 )
Balance of restricted stock units outstanding at end of year     625,000     $ 1.87       12,500     $ 3.36  

 

 

Restricted stock unit compensation expense was $585,000 for the year ended December 31, 2022 and $238,000 for the year ended December 31, 2021.

The Company has an aggregate of $736,000 of unrecognized restricted stock unit compensation expense as of December 31, 2022 to be expensed over a weighted average period of 2.61 years.

The fair value of restricted stock units is determined based on the number of shares granted and the quoted market price of the Company’s common stock on the date of grant for time-based and performance-based awards and fair value at grant date using the Monte Carlo simulation model for market-based awards. The key inputs into the Monte Carlo simulation used to value the restricted stock units was a risk-free rate of 2.39%, expected term of 4 years, expected volatility of 40% and a stock price of $2.47.

All of the Company’s issued restricted stock units have dividend equivalent rights. As of December 31, 2022 and 2021, there was $37,000 and $72,000 accrued for dividend equivalent rights which were included in other accrued expenses.

[2] Stock Options

At December 31, 2022, there were no stock options outstanding. At December 31, 2021, one stock option to purchase 500,000 shares of common stock was outstanding, representing an option grant outside of the 2013 Plan (issued prior to the establishment of the 2013 Plan). The stock option had a weighted average exercise price of $1.19 and a weighted average remaining life of 0.84 years. There were no grants of stock options during the years ended December 31, 2022 and 2021.

The following table summarizes stock option activity for the years ended December 31:

 

                               
   

2022

    

2021

  
          Weighted           Weighted  
          Average           Average  
    Options     Exercise     Options     Exercise  
   

Outstanding

    

Price

    

Outstanding

    

Price

  
Options outstanding at beginning of year     500,000     $ 1.19       500,000     $ 1.19  
Granted     —       —       —       —  
Expired     —       —       —       —  
Exercised     500,000     $ 1.19       —     —  
Options outstanding at end of year     —     —       500,000     $ 1.19  
Options exercisable at end of year     —     —       500,000     $ 1.19  
                                 

 

During the year ended December 31, 2022 and 2021, the Company did not recognize any stock-based compensation related to the vesting of prior issued stock options to employees. The Company at December 31, 2022 and 2021 had no remaining unrecognized expenses related to unvested stock options to employees and directors. The aggregate intrinsic value of all stock options exercisable at December 31, 2022 and 2021 was $-0- and $815,000, respectively.

On October 27, 2022, the Company’s Chairman and Chief Executive Officer exercised a stock option to purchase 500,000 shares of the Company’s common stock at an exercise price of $1.19 per share on a net exercise (or cashless) basis. In connection with the net exercise of the stock option, the Company’s Chairman and Chief Executive Officer delivered 334,459 shares of common stock (including 94,539 shares for withholding taxes) to the Company and received 165,541 net shares.