Quarterly report pursuant to Section 13 or 15(d)

Share Based Payments and Stock Options

v3.20.2
Share Based Payments and Stock Options
9 Months Ended
Sep. 30, 2020
Share-based Payment Arrangement [Abstract]  
SHARE BASED PAYMENTS AND STOCK OPTIONS

10. SHARE BASED PAYMENTS AND STOCK OPTIONS

 

The Company accounts for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors of the Company, including stock options and restricted shares.

 

During the three months ended September 30, 2020 the Company issued 1,000 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $4,490. During the three months ended September 30, 2019 the Company did not issue any shares of common stock (stock-based awards) to employees that vested immediately.

 

During the nine months ended September 30, 2020 the Company issued 534,333 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $2,200,947. During the nine months ended September 30, 2019 the Company issued 17,500 shares of common stock (stock-based awards) to employees that vested immediately resulting in compensation expense of approximately $35,800.

 

During the three months and nine months ended September 30, 2020, the Company recorded $0 and $125,000, respectively, of share-based compensation to executives that is included in payroll and payroll tax liabilities. During the three months and nine months ended September 30, 2019, the Company recorded $217,100 and $716,600, respectively, of share-based compensation to executives that is included in payroll and payroll tax liabilities.

 

The following table presents share-based payment expense and new shares issued for the three months ended September 30, 2020 and 2019.

 

    Three Months Ended
September 30,
 
    2020     2019  
Total non-cash share-based compensation   $ 1,022,137     $ 553,492  

 

The following table presents share-based payment expense and new shares issued for the nine months ended September 30, 2020 and 2019.

 

    Nine Months Ended
September 30,
 
    2020     2019  
Total non-cash share-based compensation   $ 6,324,109     $ 1,075,735  

  

On March 6, 2014, the Company's Board of Directors (the "Board") approved the 2014 Equity Incentive Plan ("2014 Plan") pursuant to which the Company may grant incentive, non-statutory options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock or cash awards to employees, nonemployee members of our Board, consultants and other independent advisors who provide services to the Company. The maximum shares of common stock which may be issued over the term of the 2014 Plan shall not exceed 2,500,000 shares. Awards under the 2014 Plan are made by the Board or a committee designated by the Board. Options under the 2014 Plan are to be issued at the market price of the stock on the day of the grant except to those issued to holders of 10% or more of the Company's common stock which is required to be issued at a price not less than 110% of the fair market value on the day of the grant. Each option is exercisable at such time or times, during such period and for such numbers of shares shall be determined by the plan administrator. No option may be exercisable for more than ten years (five years in the case of an incentive stock option granted to a 10% stockholder) from the date of grant.

 

On January 7, 2018, the Board adopted the 2018 Equity Compensation Plan (the "2018 Plan") and on April 20, 2018, the shareholders approved the 2018 Plan. On February 7, 2020, the Board approved the amendment and restatement of the 2018 Plan to increase the number of shares issuable thereunder from 2,500,000 to 5,000,000, which amendment was approved by shareholders on May 11, 2020. The 2018 Plan will be administered by the Board. The Board may grant options to purchase shares of common stock, stock appreciation rights, restricted stock units, restricted or unrestricted shares of common stock, performance shares, performance units, other cash-based awards and other stock-based awards. The Board also has broad authority to determine the terms and conditions of each option or other kind of equity award, adopt, amend and rescind rules and regulations for the administration of the 2018 Plan and amend or modify outstanding options, grants and awards.

 

No options, stock purchase rights or awards may be made under the 2018 Plan on or after the ten-year anniversary of the adoption of the 2018 Plan by the Board, but the 2018 Plan will continue thereafter while previously granted options, stock appreciation rights or awards remain subject to the 2018 Plan. Options granted under the 2018 Plan may be either "incentive stock options" that are intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or "nonstatutory stock options" that do not meet the requirements of Section 422 of the Code. The Board will determine the exercise price of options granted under the 2018 Plan. The exercise price of stock options may not be less than the fair market value, on the date of grant, per share of our Common Stock issuable upon exercise of the option (or 110% of fair market value in the case of incentive options granted to a 10% stockholder). No option may be exercisable for more than ten years (five years in the case of an incentive stock option granted to a 10% stockholder) from the date of grant.

 

Unvested Share Based Awards as of September 30, 2020 are summarized below:

 

    # of
Unvested
Awards
    $ of
Unvested
Awards
 
             
Option awards     915,000     $ 1,449,230  
Stock Awards     776,667       2,097,035  
Total           $ 3,546,265  

  

Awards issued under the 2014 Plan as of September 30, 2020 are summarized below:

 

    2020  
Total shares available for issuance pursuant to the 2014 Plan     2,500,000  
Options outstanding, September 30, 2020     (110,000 )
Total options exercised under 2014 Plan     (2,003,833 )
Total shares issued pursuant to the 2014 Plan     (375,000 )
Awards available for issuance under the 2014 Plan, September 30, 2020     11,167  

 

Awards issued under the 2018 Plan as of September 30, 2020 are summarized below: 

 

    2020  
Total shares available for issuance pursuant to the 2018 Plan, after amendment     5,000,000  
Options outstanding, September 30, 2020     (1,725,500 )
Total options exercised under 2018 Plan     (164,833 )
Total shares issued pursuant to the 2018 Plan     (693,333 )
Awards available for issuance under the 2018 Plan, September 30, 2020     2,416,334  

  

The table below summarizes all option activity under all plans during the nine months ended September 30, 2020:

 

Options   Shares     Weight -
Average
Exercise
Price
    Weighted -
Average
Remaining
Contractual
Term
    Weighted -
Average
Grant Date
Fair Value
 
Outstanding at December 31, 2019     1,920,333     $ 2.78       3.81 years     $ 1.71  
Granted     861,500     $ 4.31             $ 2.64  
Exercised     (654,663 )   $ 2.05             $ 1.04  
Forfeited or expired     (25,000 )   $ 3.17             $ 2.07  
Outstanding at September 30, 2020     2,102,170     $ 3.58       3.65 years     $ 2.22  
Options vested at September 30, 2020     1,187,170     $ 3.19       3.27 years     $ 1.95  

 

    September 30,
2020
 
Options outstanding pursuant to 2014 Plan     110,000  
Options outstanding pursuant to 2018 Plan     1,725,500  
Options issued outside of 2014 and 2018 Plans     266,670  
      2,102,170