Annual report pursuant to Section 13 and 15(d)

Stock-based Plans and Stock-based Compensation

v3.21.1
Stock-based Plans and Stock-based Compensation
12 Months Ended
Dec. 31, 2020
Stock-based Plans and Stock-based Compensation [Abstract]  
Stock-based Plans and Stock-based Compensation

8.  Stock-based Plans and Stock-based Compensation



Stock-based Plans



We have the 2010 Incentive Stock Option Plan and the 2013 Incentive Stock Option Plan under which we have granted stock options to our directors, officers and employees. At December 31, 2020,  3,477,356 shares were authorized under the plans and 33,032,730 shares were available for future grant.



We believe that such awards better align the interests of our directors, officers and employees with those of our shareholders. Option awards are generally granted with an exercise price that equals the fair market value of our stock at the date of grant. These option awards generally vest based on four years of continuous service and have 10-year contractual terms.



The following table summarizes stock option activity under our stock-based plans as of and for the years ended December 31, 2020 and 2019:







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Shares

 

Weighted
Average
Exercise Price

 

Weighted
Average
Remaining
Contractual
Term (Years)

 

Aggregate
Intrinsic Value

Outstanding at December 31, 2018

 

4,987,426 

 

$

1.16 

 

 

7.12 

 

$

1,215,067 

Granted

 

2,592,500 

 

$

1.01 

 

 

 —

 

$

 —

Exercised

 

 —

 

 

 —

 

 

 

 

 

 

Forfeit/canceled

 

(923,389)

 

$

1.00 

 

 

 —

 

$

 —

Expired

 

(874,653)

 

$

0.93 

 

 

 —

 

$

 —

Outstanding at December 31, 2019

 

5,781,884 

 

$

1.15 

 

 

7.16 

 

$

527,868 

Granted

 

1,545,000 

 

$

1.19 

 

 

 —

 

$

 —

Exercised

 

(15,000)

 

$

0.48 

 

 

 —

 

$

 —

Forfeit/canceled

 

(814,068)

 

$

0.94 

 

 

 —

 

$

 —

Expired

 

(490,264)

 

$

1.07 

 

 

 —

 

$

 —

Outstanding at December 31, 2020

 

6,007,552 

 

$

1.20 

 

 

6.77 

 

$

4,056,639 



 

 

 

 

 

 

 

 

 

 

 

Expected to vest at December 31, 2020

 

6,007,552 

 

$

1.24 

 

 

6.77 

 

$

4,056,639 

Exercisable at December 31, 2020

 

3,477,356 

 

$

1.24 

 

 

5.15 

 

$

2,252,766 

Unrecognized expense at December 31, 2020

$

1,734,104 

 

 

 

 

 

 

 

 

 



The aggregate intrinsic value of options was calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock. At December 31, 2020, options to purchase 5,990,884 shares of common stock were in-the-money.



The weighted average grant-date fair value of options granted during the years 2020 and 2019 was $0.79 and $0.71, respectively.



2019



On January 7, 2019, the Company granted one employee a total of 10,000 options to purchase shares of the Company common stock at the closing price as of January 7, 2019  of $1.17 per share. The Option Shares will vest ratably over forty-eight (48) months and are exercisable until January 7, 2029.  The total estimated value using the Black-Scholes Model, based on a volatility rate of 90.82% and an option fair value of $.88 was $8,821.



On January 21, 2019, the Company granted one employee a total of 15,000 options to purchase shares of the Company common stock at the closing price as of January 21, 2019 of $1.17 per share. The option shares will vest ratably over forty-eight (48) months and are exercisable until January 21, 2029.  The total estimated value using the Black-Scholes Model, based on a volatility rate of 90.75% and an option fair value of $0.88 was $13,239.



On February 12, 2019, the Company granted one employee a total of 150,000 options to purchase shares of the Company common stock at the closing price as of February 12, 2019  of $1.00 per share. The option shares will vest ratably over forty-eight (48) months and are exercisable until February 12, 2029.  The total estimated value using the Black-Scholes Model, based on a volatility rate of 90.79% and an option fair value of $0.75 was $113,046.



On February 18, 2019, the Company granted one employee a total of 15,000 options to purchase shares of the Company common stock at the closing price as of February 18, 2019  of $1.05 per share. The option shares will vest ratably over forty-eight (48) months and are exercisable until February 18, 2029.  The total estimated value using the Black-Scholes Model, based on a volatility rate of 90.88% and an option fair value of $0.84 was $12,537.



On February 25, 2019, the Company granted one employee a total of 50,000 options to purchase shares of the Company common stock at the closing price as of February 25, 2019  of $1.00 per share. The option shares will vest ratably over forty-eight (48) months and are exercisable until February 25, 2029.  The total estimated value using the Black-Scholes Model, based on a volatility rate of 90.88% and an option fair value of $0.75 was $37,697.



On March 11, 2019, the Company granted one employee a total of 50,000 options to purchase shares of the Company common stock at the closing price as of March 11, 2019  of $1.00 per share. 775,000 option shares will vest ratably over forty-eight (48) months and are exercisable until March 11, 2029.    500,000 option shares will vest immediately, and 500,000 option shares will vest on May 17, 2023. The total estimated value using the Black-Scholes Model, based on a volatility rate of 90.90% and an option fair value of $0.75 was $37,688.



On May 17, 2019, the Company granted three employees a total of 1,775,000 options to purchase shares of the Company common stock at the closing price as of May 17, 2019  of $1.04 per share. The option shares will vest ratably over forty-eight (48) months and are exercisable until May 17, 2029.  The total estimated value using the Black-Scholes Model, based on a volatility rate of 80.17% and an option fair value of $0.72 was $1,283,178.



On August 21, 2019, the Company granted four employees a total of 140,000 options to purchase shares of the Company common stock at the closing price as of August 21, 2019  of $0.95 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until August 21, 2029. The total estimated value using the Black-Scholes Model, based on a volatility rate of 80.17% and an option fair value of $0.65 was $91,537.



On October 21, 2019, the Company granted one employee 150,000 options to purchase shares of the Company common stock at the closing price as of October 21, 2019  of $0.98 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until October 21, 2029. The total estimated value using the Black-Scholes Model, based on a volatility rate of 74.18% and an option fair value of $0.64 was $96,165.



On November 19, 2019, the Company granted twelve employees a total of 237,500 options to purchase shares of the Company common stock at the closing price as of November 19, 2019  of $0.88 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until November 19, 2029. The total estimated value using the Black-Scholes Model, based on a volatility rate of 78.70% and an option fair value of $0.60 was $142,409.



2020



On March 24, 2020, the Company granted one employee a total of 15,000 options to purchase shares of the Company common stock at the closing price as of March 24, 2020 of $0.65 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until March 24, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 77.56% and an option fair value of $0.43 was $6,472.



On April 6, 2020, the Company granted four employees a total of 700,000 options to purchase shares of the Company common stock at the closing price as of April 6, 2020 of $0.70 per share. 500,000 option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until April 6, 2030. 200,000 option shares will vest ratably over forty-eight (48) months and are exercisable until April 6, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 78.21% and an option fair value of $0.47 was $326,752.



On November 5, 2020, the Company granted one employee a total of 20,000 options to purchase shares of the Company common stock at the closing price as of November 5, 2020 of $0.96 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until November 5, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 77.36% and an option fair value of $0.63 was $12,689.



On December 7, 2020, the Company granted one employee a total of 600,000 options to purchase shares of the Company common stock at the closing price as of December 7, 2020 of $1.55 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until December 7, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 77.35% and an option fair value of $1.03 was $615,495.



On December 17, 2020, the Company granted six employees a total of 210,000 options to purchase shares of the Company common stock at the closing price as of December 17, 2020 of $1.83 per share. The option shares will vest 25% on the first anniversary of the grant, then equally in 36 monthly installments thereafter and are exercisable until December 17, 2030. The total estimated value using the Black-Scholes Model, based on a volatility rate of 77.41% and an option fair value of $1.21 was $254,373.



Stock-based Compensation Expense



The impact on our results of operations of recording stock-based compensation expense for the years ended December 31, 2020 and 2019 was as follows:







 

 

 

 

 



 

 

 

 

 



Years Ended



December 31,



2020

 

2019

General and administrative

$

267,306 

 

$

670,188 

Sales and marketing

 

75,235 

 

 

74,229 

Engineering, research, and development

 

171,394 

 

 

155,475 



$

513,935 

 

$

899,892 



As of December 31, 2020, there was approximately $1,734,104 of unearned stock-based compensation that will be expensed from 2021 through 2025. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining unearned stock-based compensation expense. Future unearned stock-based compensation will increase to the extent we grant additional equity awards.



Stock Option Valuation Assumptions



We calculated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model. The ranges of assumptions were used for the years ended December 31, 2020 and 2019:







 

 

 

 



 

 

 

 

   

   

Years Ended



 

December 31,

   

   

2020

 

2019

Risk-free interest rate

   

0.42% to 0.58%

 

1.49% to 2.65%

Expected life (years)

   

6.00 

 

6.06 

Expected dividend yield

   

 —

 

 —

Expected volatility

   

77.36% to 78.21%

 

74.18% to 90.90%





The risk-free interest rate assumption is based upon published interest rates appropriate for the expected life of our employee stock options.



The expected life of the stock options represents the weighted-average period that the stock options are expected to remain outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards.



The dividend yield assumption is based on our history of not paying dividends and no future expectations of dividend payouts.



The expected volatility in 2020 and 2019 is based on the historical publicly traded price of our common stock.



Restricted stock units



The following table summarizes restricted stock unit activity under our stock-based plans as of and for the years ended December 31, 2020 and 2019:







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

   

Shares

 

Weighted Average
Grant Date Fair Value

 

Weighted Average
Remaining
Contractual Term
(Years)

 

Aggregate
Intrinsic Value

Outstanding at December 31, 2018

 

662,800 

 

$

0.72 

 

 

0.70 

 

$

795,360 

Awarded

 

489,448 

 

$

1.04 

 

 

 —

 

$

325,044 

Released

 

 —

 

$

 —

 

 

 —

 

$

 —

Canceled/forfeited/expired

 

 —

 

$

 —

 

 

 —

 

$

 —

Outstanding at December 31, 2019

 

1,152,248 

 

$

0.86 

 

 

 —

 

$

1,120,404 

Awarded

 

284,480 

 

$

0.91 

 

 

 —

 

$

60,003 

Released

 

 —

 

$

 —

 

 

 —

 

$

 —

Canceled/forfeited/expired

 

 —

 

$

 —

 

 

 —

 

$

 —

Outstanding at December 31, 2020

 

1,436,728 

 

$

0.86 

 

 

 —

 

$

1,180,407 



 

 

 

 

 

 

 

 

 

 

 

Vested at December 31, 2020

 

1,436,728 

 

$

 —

 

 

 —

 

$

2,428,070 

Unvested at December 31, 2020

 

 —

 

$

 —

 

 

 —

 

$

 —

Unrecognized expense at December 31, 2020

$

 —

 

 

 

 

 

 

 

 

 



2019



On January 1, 2019, the Company issued to four independent directors a total of 222,224 restricted stock units. These restricted stock units were issued for the $260,000 of board compensation earned in 2018. The units were valued at $260,000 or $1.17 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) January 1, 2022, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.



On March 31, 2019, the Company granted four independent directors a total of 72,224 restricted stock units. The units were valued at $65,001 or $0.90 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) March 31, 2022, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.



On December 31, 2019, the Company granted four independent directors a total of 195,000 restricted stock units. The units were valued at $195,000 or $1.00 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) December 31, 2022, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.



2020



On March 24, 2020, the Company issued to four independent directors a total of 100,000 restricted stock units. These restricted stock units were issued for the $65,000 of board compensation earned for the first quarter of 2020. The units were valued at $65,000 or $0.65 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) March 24, 2023, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.



On August 7, 2020, the Company granted four independent directors a total of 81,252 restricted stock units. The units were valued at $65,000 or $0.80 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) August 7, 2023, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.



On November 5, 2020, the Company granted four independent directors a total of 67,708 restricted stock units. The units were valued at $65,000 or $0.96 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) November 5, 2023, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.



On December 17, 2020, the Company granted four independent directors a total of 35,520 restricted stock units. The units were valued at $65,000 or $1.83 per share, based on the closing stock price on the date of grant. All units vested immediately. The shares of Common Stock associated with the Restricted Stock Unit evidenced by this Agreement will be issued to the director upon the earliest to occur of (A) December 17, 2023, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.



In the twelve months ended December 31, 2020 and 2019, the company recorded $260,003 and $263,378, respectively, in restricted stock units as board compensation.



Restricted Stock Unit Compensation Expense



The impact on our results of operations of recording stock-based compensation expense for years ended December 31, 2020 and 2019 was as follows:







 

 

 

 

 



 

 

 

 

 



Years Ended



December 31,



2020

 

2019

General and administrative

$

260,003 

 

$

263,378 



$

260,003 

 

$

263,378