NOTE 13 – EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AWARD PLAN AND 401(k)

In June 2020, officers and directors of the Company voluntarily returned stock options that had previously been granted to them. In total, 2,265,000 options with a weighted average exercise price of $6.87 per share were returned to and cancelled by the Company. No grants, cash payments or other consideration has been or will be made to replace the options or otherwise in connection with the return. As a result of the return and cancellation of the options, the Company incurred additional compensation expense of $768,379.

During October and December 2020, as a result of changes to the executive team and the Board of Directors (the “Board”) of the Company, the Company accelerated the vesting of 1,131,955 shares of restricted stock and as a result of such acceleration, the Company incurred additional compensation expense of $2,361,362.

Compensation expense charged against income for share-based awards during the years ended December 31, 2021, 2020, and 2019 was $2,418,323, $5,364,162,and $3,082,625, respectively. These amounts are included in general and administrative expense in the Statements of Operations.

In 2011, the Board approved and adopted a long-term incentive plan (the “2011 Plan”), which was subsequently approved and amended by the shareholders. There were 341,155 shares eligible for grant, either as stock options or as restricted stock, as of December 31, 2021.

In 2021, the Board approved and adopted The Omnibus Incentive Plan (the “2021 Plan”), which was subsequently approved and amended by the shareholders at the 2021 Annual Meeting. There were 7,814,128 shares eligible for grant, either as stock options or as restricted stock, as of December 31, 2021.

Employee Stock Options – No stock options have been granted in the years ended December 31, 2021, 2020, or 2019. All outstanding stock option awards vest at the rate of 20% each year over five years beginning one year from the date granted and expire ten years

from the grant date. A summary of the status of the stock options as of December 31, 2021, 2020, and 2019 and changes during the years ended December 31, 2021, 2020, and 2019 is as follows:

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For the years ended December 31, 2021, 2020, and 2019 the Company incurred share-based compensation expense related to stock options of $20,934, $927,559, and $625,855, respectively. As of December 31, 2021, the Company had $0 of unrecognized compensation cost related to stock options. The aggregate intrinsic value of options vested and expected to vest as of December 31, 2021 was $82,600. The aggregate intrinsic value of options exercisable at December 31, 2021 was $82,600. The year-end intrinsic values are based on a December 31, 2021 closing stock price of $2.28.

Stock options exercised of 100,000 in 2021 had an aggregate intrinsic value on the date of exercise of $114,000. No stock options were exercised in 2020 or 2019.

The following table summarizes information related to the Company’s stock options outstanding as of December 31, 2021:

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Restricted stock grants – Following is a table reflecting the restricted stock grants during 2019, 2020 and 2021:

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Restricted stock grants prior to 2020 vest at the rate of 20% each year over five years beginning one year from the date granted. Restricted stock grants in 2020 and 2021 vest at a rate of 33% each year over three years beginning one year from the date granted for all employees; for members of the Company’s Board of Directors, the restricted stock grants vest on the earliest of (i) the day before the next shareholder meeting or (ii) the first anniversary of the date of the award. A summary of the status of restricted stock grants as of December 31, 2021 and 2020 and changes during the years ended December 31, 2021, 2020 and 2019 is as follows:

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For the years ended December 31, 2021, 2020 and 2019, the Company incurred share-based compensation expense related to restricted stock grants of $2,225,895, $4,436,603, and $2,456,770, respectively. As of December 31, 2021, the Company had $2,721,852 of unrecognized compensation cost related to restricted stock grants that will be recognized over a weighted average period of 2.02 years.

During 2021, 2020, and 2019, 785,357, 1,180,392, and 187,136 shares of restricted stock vested, respectively. At the dates of vesting those shares had an aggregate intrinsic value of $2,049,603, $801,133, and $494,605, respectively.

Performance Stock Units - In accordance with the 2021 Plan, as of November 22, 2021, the Company entered into performance stock unit (“PSU”) agreements (the “PSU Agreement”) with certain employees. Upon approval the Board, a total of 860,216 PSU were granted to the Company’s five executive officers (the “2021 PSU Awards”). The performance period for the 2021 PSU Awards began on January 1, 2021, and will end December 31, 2023, with such awards vesting on the last day of the performance period (the vesting date). The PSUs are performance-based restricted stock units subject to the terms of the 2021 Plan and the PSU Agreement. A summary of the status of the performance stock grants as of December 31, 2021 and changes during the year ended December 31, 2021 is as follows:

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For the year ended December 31, 2021, the Company incurred share-based compensation expense related to the 2021 PSU Awards of $171,494. As of December 31, 2021, the Company had $3,348,851 of unrecognized compensation cost related to the 2021 PSU Awards that will be recognized over a weighted average period of 2 years.

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401(k) Plan- In 2019, the Company initiated a sponsored 401(k) plan that is a defined contribution plan for the benefit of all eligible employees. The plan allows eligible employees, after a three-month waiting period, to make pre-tax or after-tax contributions, not to exceed annual limits established by the federal government. The Company makes matching contributions of up to 6% of any employee’s compensation. Employees are 100% vested in the employer contribution upon receipt.

The following table presents the matching contributions expense recognized for the Company’s 401(k) plan for the years ended December 31, 2021, 2020, and 2019.

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