Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.21.1
Stockholders' Equity
3 Months Ended
Mar. 31, 2021
Stockholders Equity Note [Abstract]  
Stockholders' Equity

NOTE 8 – STOCKHOLDERS’ EQUITY

The Company’s amended and restated certificate of incorporation filed on December 14, 2017, authorizes the Company to issue 10,000,000 shares of preferred stock and 50,000,000 shares of common stock.

Stock Options

 

Effective June 24, 2020, the Company entered into an employment agreement with Mr. Raun to serve as the Company’s president and chief executive officer. Pursuant to the terms of the employment agreement, Mr. Raun is entitled to receive 412,125 restricted stock units (“RSUs”) that shall vest over three years, with one third of the RSUs vesting following the one-year anniversary of the date of grant, and the remaining RSUs vesting in four equal installments, commencing six months after the one-year anniversary of the date of grant and every six months thereafter until fully vested; and 412,125 Incentive Stock Options (“ISOs”) pursuant to the Company’s 2017 Equity Incentive Plan, whereby the exercise price for the ISOs shall be no less than the fair market value of the Company’s common stock at the date of grant, ($2.14).

 

The ISOs shall vest at the end of each of the second and fourth quarters, the price of the Company’s common stock as of the end of quarter two or quarter four, as applicable, shall be determined using the ten-day trailing volume weighted average price (“VWAP”) after reporting of quarter two and quarter four earnings, as applicable.  The date of each such determination shall be referred to as a “Determination Date.”  If on any Determination Date the Company’s stock price has increased from the prior Determination Date, then a portion of the ISOs shall become vested.  The number of ISOs that shall become vested on a Determinate Date is determined as follows: ((Price at Determination Date – Price at prior Determination Date) x 100) * 1,177.52 = Vested ISOs.  If on any Determination Date the Company’s stock price is $5.50 per share, all ISOs shall immediately become vested.

 

In the event that Mr. Raun’s employment agreement is terminated for a reason other than “good cause” or for “good reason”, Mr. Raun, upon executing an effective waiver and release of claims, unvested RSUs shall accelerate so that an additional twelve (12) months of RSUs shall vest from the termination date.    

A summary of stock option activity under each of the Company’s stock option plans during the three month period ended March 31, 2021:

 

 

 

Stock Options Outstanding

 

 

 

Number of

Shares

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Life (in years)

 

 

Aggregate

Intrinsic

Value

 

Outstanding at January 1, 2021

 

 

1,320,267

 

 

$

1.81

 

 

 

6.43

 

 

$

2,889,274

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited / Cancelled

 

 

1,113

 

 

$

1.95

 

 

 

6.28

 

 

$

4,886

 

Exercised

 

 

(198,891

)

 

$

1.08

 

 

 

3.17

 

 

$

1,047,002

 

Outstanding at March 31, 2021

 

 

1,122,489

 

 

$

1.95

 

 

 

6.72

 

 

$

4,932,363

 

Exercisable at March 31, 2021

 

 

663,265

 

 

$

1.75

 

 

 

5.08

 

 

$

3,044,253

 

Vested and expected to vest at March 31,

   2021

 

 

1,108,712

 

 

$

1.94

 

 

 

6.69

 

 

$

4,875,720

 

 

The following table presents details of the assumptions used to calculate the weighted-average grant date fair value of common stock options granted by the Company.  There were no options granted during the three month period ended March 31, 2021:

 

 

 

For the Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Expected term (in years)

 

0

 

 

5.87

 

Expected volatility

 

 

0.00

%

 

43. - 47.8%

 

Risk-free interest rate

 

 

0.00

%

 

 

1.41

%

Weighted average grant date fair value per share

 

$

-

 

 

$

2.70

 

Grant date fair value of options vested

 

$

1,160,847

 

 

$

720,095

 

Intrinsic value of options exercised

 

$

1,047,002

 

 

$

463,800

 

 

As of March 31, 2021, the amount of unearned stock-based compensation estimated to be expensed from 2021 through 2025 related to unvested common stock options is $49,012, net of estimated forfeitures. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is 0.93 years.

If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate, increase, or cancel any remaining unearned stock-based compensation expense or calculate and record additional expense.  Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional common stock options or other stock-based awards.

Restricted Stock Units

Restricted stock units may be granted at the discretion of the compensation committee of the Board of Directors under the Company’s 2017 Equity Incentive Plan that was adopted on October 10, 2017 (the “2017 Plan”) in connection with the hiring and retention of personnel and are subject to certain conditions.  Restricted stock units generally vest quarterly or semi-annually over a period of one to three years and are typically forfeited if employment is terminated before the restricted stock unit vest.  The compensation expense related to the restricted stock units is calculated as the fair value of the common stock on the grant date and is amortized to expense over the vesting period and is adjusted for estimated forfeitures.

The Company’s restricted stock unit activity for the three month period ended March 31, 2021 is as follows:

 

 

 

Restricted Stock Units

 

 

 

Number of

Shares

 

 

Weighted

Average Grant

Date Fair Value

 

Unvested at January 1, 2021

 

 

575,922

 

 

$

2.65

 

Granted

 

 

-

 

 

$

-

 

Vested

 

 

(93,793

)

 

$

2.37

 

Cancelled

 

 

-

 

 

$

2.70

 

Unvested at March 31, 2021

 

 

482,129

 

 

$

2.70

 

 

As of March 31, 2021, there was $786,901 of unrecognized compensation cost related to unvested restricted stock units which is expected to be recognized over a weighted average period of 2.07 years.

Stock-based compensation expense for the three month periods ended March 31, 2021 and 2020 was comprised of the following:

 

 

 

For the Three Months Ended March 31,

 

Stock-based compensation classified as:

 

2021

 

 

2020

 

General and administrative

 

$

401,000

 

 

$

159,680

 

Production

 

 

14,659

 

 

 

17,969

 

Marketing and selling

 

 

15,397

 

 

 

17,292

 

Research and development

 

 

7,338

 

 

 

12,820

 

 

 

$

438,394

 

 

$

207,761

 

 

 

Warrants

The following table summarizes the Company’s warrant activity during the three month period ended March 31, 2021:

 

 

 

Number of

Warrants

 

 

Weighted

Average

Exercise Price

 

Warrants outstanding – January 1, 2021

 

 

505,946

 

 

$

5.00

 

Warrants granted

 

 

-

 

 

$

-

 

Warrants exercised

 

 

(35,067

)

 

$

1.85

 

Warrants outstanding – March 31, 2021

 

 

470,879

 

 

$

5.23