9. Stock Compensation Plan

 Schedule Of Stock Options Activity

On February 25, 2022, the Company held its 2021 Annual Meeting. At the 2021 Annual Meeting, the shareholders of the Company approved and ratified the Company’s 2021 Equity Incentive Plan (the “2021 Incentive Plan”), which is a successor to the 2012 Incentive Plan. The 2021 Incentive Plan provides the aggregate number of shares of Common Stock that may be issued under the 2021 Plan will not exceed the sum of (i) 166,667 new shares, (ii) the number of shares remaining available for the grant of new awards under the 2012 Incentive Plan as of immediately prior to the effective date of the 2021 Incentive Plan, and (iii) certain shares subject to outstanding awards granted under the 2012 Incentive Plan that may become available for issuance under the 2021 Incentive Plan, as such shares become available from time to time. As of September 30, 2023, an aggregate of 111,990 shares of common stock are covered by outstanding option awards and 51,449 shares of common stock are available for future awards under the 2021 Incentive Plan.

Options are granted at the fair market value of the Company’s stock on the date of grant which determines the exercise price after the completion of the vesting period. Options can vest either immediately or over a period of up to three years from their respective grant dates and expire 10 years from the date of grant. As of September 30, 2023 and December 31, 2022, the Company did not award any stock appreciation rights under the 2021 Incentive Plan.

Total compensation cost related to stock options was approximately a $1,600 benefit due to forfeitures and $278,988 for the three months ended September 30, 2023 and 2022, respectively. Total compensation cost related to stock options was approximately $142,003 and $369,235 for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, there was approximately $126,896 of unrecognized compensation costs related to stock options, which is expected to be recognized over a weighted average period of less than one year.

On August 8 2023, the Compensation Committee and Board of Directors approved restricted stock awards to certain of our executive officers under the Company’s 2021 Equity Incentive Plan, consisting of 25,000 shares to our Chief Executive Officer, Ms. Kimberly Murphy, with 20,000 shares to vest immediately and 5,000 shares to vest within six (6) months from date of the award and 15,000 shares to our Chief Financial Officer, Ms. Janet Huffman, with 10,000 shares to vest immediately and 5,000 shares to vest within six (6) months from date of the award. The restricted stock awards are subject to the terms and conditions of the Company’s form of restricted stock award agreement which include earlier vesting upon a change in control of the Company. An aggregate of an additional 100,000 shares of common stock were awarded to four of the Company’s non-employee directors with 80,000 shares to vest immediately and 20,000 shares to vest within six (6) months from the date of the award.

Total compensation cost related to restricted stock awards was approximately $404,396 for the three and nine months ended September 30, 2023. There was no restricted stock award cost related for the three and nine months ended September 30, 2022. As of September 30, 2023, there was approximately $67,392 of unrecognized compensation costs related to restricted stock awards, which is expected to be recognized over a weighted average period of less than six months.

During the nine-months ended September 30, 2023, the Company granted 7,000 stock options to the Chief Financial Officer as an onboarding award. The exercise price, determined by the stock price close on March 7, 2023, was $4.00 per share. The fair value of this award was $3.92 per share of common stock which is used to expense the option over the vesting period. This fair value was determined using the Black Scholes Option Pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the life of the option. The assumptions used in the Black-Scholes Option Pricing model were as follows for stock options granted in the nine-month period ended September 30, 2023:

 Summary of Assumptions Used to Estimate the Fair Value of Stock Options Granted