StockBased Compensation |
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Stock-based Compensation |
Note 8 - Stock-Based Compensation
a) Warrants
The following table summarizes the changes in warrants outstanding of the Company during the year ended December 31, 2022 and December 31, 2021:
2022
Effective April 4, 2022, the Company granted a warrant to purchase 54,000 shares of common stock to a Company employee for services to the Company and/or its subsidiaries. This warrant shall vest in two equal installments at 12 months and 24 months from the grant date, subject to continued service and expire on April 4, 2028 and April 4, 2029, respectively, with an exercise price of $3.05 per share. The Company has calculated the estimated fair market value of this warrant at $80,901, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $2.95, exercise price $3.05, 71.07% volatility, 2.53% risk-free rate, and no forfeiture rate.
2021
Effective January 1, 2021, the Company granted warrants to purchase 125,000 shares of common stock to a Company employee for services to the Company. These warrants vest on January 1, 2022 (subject to continued employment through such date) and expire on January 1, 2027, with an exercise price of $3.95 per share. The Company has calculated the estimated fair market value of these warrants at $242,877, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $3.80, exercise price $3.95, 74.53% volatility, 0.50% risk free rate, and no forfeiture rate.
Effective February 1, 2021, the Company granted warrants to purchase 185,000 shares of common stock to a Company employee for services to the Company. These warrants vested on February 1, 2022 (subject to continued employment through such date) and expire on February 1, 2027, with an exercise price of $4.90 per share. The Company has calculated the estimated fair market value of these warrants at $459,352, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $4.80, exercise price $4.90, 75.03% volatility, 0.59% risk free rate, and no forfeiture rate.
Below is a table summarizing the warrants issued and outstanding as of December 31, 2022. The warrants outstanding have a weighted average price of $3.80 per share and an aggregate weighted average remaining contractual life of 3.24 years. The warrants exercisable have a weighted average price of $3.88 per share.
Stock-based compensation expense related to warrants of $84,102 and $701,781 was recorded for the years ended December 31, 2022, and December 31, 2021, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is approximately $35,812 and is expected to be recognized over a period of 1.26 years. As of December 31, 2022, the total intrinsic value of warrants was $0.
b) Options
The Company currently has options outstanding under both its 2011 Equity Incentive Plan (the “2011 Plan”) (for option issuances prior to 2016,) and its 2015 Stock Incentive Plan (the “2015 Plan”) (for option issuances commencing in 2016). Effective as of January 1, 2016, no additional awards were or may be made under the 2011 Plan.
The 2015 Plan was adopted by the Board of Directors on August 18, 2015 and approved by the stockholders at an annual meeting held on October 30, 2015. On August 5, 2016, the Board of Directors adopted an amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 1,750,000 shares, which amendment was approved by the stockholders at an annual meeting held on October 7, 2016. On June 13, 2017, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 2,500,000 shares, which amendment was approved by the stockholders at an annual meeting held on September 8, 2017. On June 15, 2018, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 3,250,000 shares, which amendment was approved by the stockholders at an annual meeting held on September 7, 2018.
On March 27, 2019, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 1,000,000 shares to an aggregate maximum of 4,250,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 14, 2019. On March 31, 2021, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 1,750,000 shares to an aggregate maximum of 6,000,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 17, 2021. On April 4, 2022, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such plan by 1,750,000 shares to an aggregate maximum of 7,750,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 13, 2022.
The 2015 Plan permits the grant of incentive stock options, non-statutory stock options, restricted stock awards, stock bonus awards, stock appreciation rights, restricted stock units and performance awards. The primary purpose of the 2015 Plan is to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company that is tied to the Company’s performance, thereby giving them an interest in the success and increased value of the Company. The 2015 Plan is administered by the Compensation Committee comprised solely of members of the Board of Directors or by the Board of Directors as a whole.
The following table summarizes the changes in options outstanding of the Company during the years ended December 31, 2022 and December 31, 2021:
2022
During the year ended December 31, 2022, no options were granted.
On August 18, 2022, 2,515 Options previously granted to an employee on August 3, 2021 were cancelled and returned as authorized shares under the 2015 Plan upon the resignation of such employee.
On November 18, 2022, 5,000 Options previously granted to an employee on April 13, 2020 were cancelled and returned as authorized shares under the 2015 Plan upon three months following the termination of such employee.
On November 18, 2022, 32,383 Options previously granted to an employee on August 3, 2021 were cancelled and returned as authorized shares under the 2015 Plan upon the resignation of such employee.
On November 18, 2022, 2,515 Options previously granted to an employee on August 3, 2021 were cancelled and returned as authorized shares under the 2015 Plan upon three months following the termination of such employee. 2021
Effective May 20, 2021, the Company granted stock options to purchase 40,000 shares of common stock to a Company employee in exchange for services provided to the Company. These options vested on May 20, 2022 and were initially scheduled to expire six years after the grant date, with an exercise price of $3.60 per share. The Company extended the expiration date to ten years after the original grant date. The Company has calculated the estimated fair market value of these options at $73,641, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $3.50, exercise price $3.60, 76.16% volatility, 0.58% risk free rate, and no forfeiture rate.
During the year ended December 31, 2021, the Company modified a total of 3,342,518 options to extend their expiration dates to ten years from the original dates of grant. This resulted in $2,450,349 of expense.
The following table summarizes the amendments to the expiration dates of various options approved during the year ended December 31, 2021. Except as otherwise noted, the expiration dates for all options in the table below were extended from six years to ten years from the original date of grant.
Effective September 7, 2021, the Company granted stock options to purchase 50,000 shares of common stock to two employees in exchange for services provided to the Company and/or its subsidiaries. These options vest over two years with 25,000 shares vesting on September 7, 2022, and 25,000 shares vesting on September 7, 2023 subject to continued service by the optionee, and expire 10 years from the date of grant with an exercise price of $3.40 per share. The Company has calculated the estimated fair market value of these options at $98,322, using the Black-Scholes model and the following assumptions: term 5.5 years, stock price $3.32, exercise price $3.40, 68.98% volatility, 1.38% risk free rate, and no forfeiture rate.
Effective October 4, 2021, the Company approved the granting of options under the 2015 Plan vesting upon achievement of certain corporate goals (see additional details in Note 10 (h)). Pursuant to this approval the Company granted stock options to purchase 73,360 shares of common stock to an employee in exchange for services provided to the Company and/or its subsidiaries. These options vest over two years with 36,680 shares vesting on October 4, 2022, and 36,680 shares vesting on October 4, 2023, subject to continued service by the optionee, and expire 10 years from the date of grant with an exercise price of $3.40 per share. The actual number of options that are eligible for the time-based vesting is contingent upon the timely achievement of certain pre-determined corporate goals by the Company and/or its subsidiaries as set forth in the grant documents. The Company has calculated the estimated fair market value of these options at $128,003, using the Black-Scholes model and the following assumptions: term 5.5 years, stock price $3.04 exercise price $3.40, 68.80% volatility, 1.49% risk free rate, and no forfeiture rate. Below is a table summarizing the options issued and outstanding as of December 31, 2022, all of which were issued pursuant to the 2011 Plan (for option issuances prior to 2016) or the 2015 Plan (for option issuances commencing in 2016)and which have a weighted average exercise price of $3.87 per share and an aggregate weighted average remaining contractual life of 5.22 years.
Stock-based compensation expense related to stock options of $1,127,502 and $1,069,605 was recorded for the year ended December 31, 2022 and December 31, 2021 respectively. Total remaining unrecognized compensation cost related to non-vested stock options is approximately $287,363 and is expected to be recognized over a period of 0.76 years. As of December 31, 2022, the total intrinsic value of stock options was $nil.
As of December 31, 2022, an aggregate of 417,318 shares of common stock remained available for future issuance under the 2015 Plan. c) Restricted Stock Units (RSUs)
Below is a table summarizing the RSUs issued and outstanding as of December 31, 2022, all of which were issued pursuant to the 2015 Plan.
2022
Below is a table summarizing the RSUs granted during the year ended December 31, 2022, all of which were issued pursuant to the 2015 Plan. These RSUs vest equally over periods stated on the dates noted, subject to continued service, and will result in the compensation expense stated. The exception to this is specified in note (iv) which is described in detail below.
Below is a table summarizing the RSUs vested during the year ended December 31, 2022, all of which were issued pursuant to the 2015 Plan.
Below is a table summarizing the RSUs cancelled during the year ended December 31, 2022, all of which were originally issued pursuant to the 2015 Plan.
2021
Below is a table summarizing the RSUs granted during the year ended December 31, 2021, all of which were issued pursuant to the 2015 Plan.
Below is a table summarizing the RSUs vested during the year ended December 31, 2021, all of which were issued pursuant to the 2015 Plan.
Below is a table summarizing the RSUs cancelled during the year ended December 31, 2021, all of which were originally issued pursuant to the 2015 Plan.
Below is a table summarizing the RSUs issued and outstanding as of December 31, 2022 of which the last to vest have a remaining contractual life of 3.26 years.
Stock-based compensation expense related to RSUs of $1,903,054 and $898,910 was recorded in the years ended December 31, 2022, and December 31, 2021, respectively. Total remaining unrecognized compensation cost related to non-vested RSUs is $2,214,593. |