Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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

7. Stockholders’ Equity

 

Common Stock

 

2020

 

On March 2, 2020, the Company issued 234,500 shares of common stock in exchange for cash in conjunction with a warrant exercise. The shares were exercised at the strike price of $1.00 per share.

 

On September 17, 2020, the Company issued 15,000 shares of common stock in exchange for cash in conjunction with a stock option exercise. The shares were exercised at the strike price of $0.48 per share.



In December of 2020, the Company commenced a private placement of its common stock with warrant exercises for one unit of our common stock at an exercise price of $1.25 per share to receive a new warrant to purchase to one share of our common stock at an exercise price of $2.00 per share. As of December 31, 2020, the Company had sold 2,666,459 units of its common stock for gross proceeds of $3,333,074. In addition, the Company issued 1,113,767 units of its common stock associated with the settlement of $1,200,000 of principal, $192,208 of accrued interest, and a loss on settlement of $668,260 (See Note 6).



During 2020, the Company recorded stock-based compensation expense of $260,003 related to restricted stock units for members of our board of directors.



As of December 31, 2020 we had an equity payable balance of $100,862.



2021



On March 31, 2021, the Company recorded stock-based compensation expense of $65,002 related to restricted stock units for members of our board of directors.  In addition, we also recorded $3,694 of stock-based compensation expense related to restricted stock units as employee compensation.



As of March 31, 2021 we had an equity payable balance of $100,862.



Stock-based Plans

 

Stock Option Activity

 

The following table summarizes stock option activity for the year ended December 31, 2020 and for the three months ended March 31, 2021:

 







 



 

   

Options

Outstanding at December 31, 2019

5,781,884 

Granted

1,545,000 

Exercised

(15,000)

Forfeit/canceled

(814,068)

Expired

(490,264)

Outstanding at December 31, 2020

6,007,552 

Granted

67,500 

Exercised

 —

Forfeit/canceled

(70,156)

Expired

(89,836)

Outstanding at March 31, 2021

5,915,060 

 

The weighted average exercise price of stock options granted during the period was $1.80 and the related weighted average grant date fair value was $1.16 per share.

  

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.



2021

 

On March 26, 2021, the Company granted five employees a total of 67,500 options to purchase shares of the Company common stock at the closing price as of March 26, 2021 of $1.80 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 26, 2031. The total estimated value using the Black-Scholes Model, based on a volatility rate of 73.97% and an option fair value of $1.16 was $78,492.



 

Stock-Based Compensation Expense from Stock Options and Warrants

 

The impact on our results of operations of recording stock-based compensation expense for the three months ended March 31, 2021 and 2020 were as follows:

 







 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 



Three Months Ended

 



March 31,

 



2021

 

2020

 

General and administrative

$

84,130 

 

$

78,549 

 

Sales and marketing

 

32,745 

 

 

13,677 

 

Engineering, research, and development

 

43,052 

 

 

41,987 

 



$

159,927 

 

$

134,213 

 

 

Valuation Assumptions

 

The fair value of each stock option award was calculated on the date of grant using the Black-Scholes option pricing model. The following weighted average assumptions were used for the three months ended March 31, 2021 and 2020.

 





 

 

 

 

 

   

Three Months Ended



March 31,

   

2021

 

2020

Risk-free interest rate

1.01 

%

 

0.58 

%

Expected life (years)

6.00 

 

 

6.00 

 

Expected dividend yield

 —

%

 

 —

%

Expected volatility

73.97 

%

 

77.57 

%

 

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 2021 and 2020 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 for the year ended December 31, 2020 and for the three months ended March 31, 2021:

 





 

 

   

Shares

Outstanding at December 31, 2019

 

1,152,248 

Awarded

 

284,480 

Released

 

 —

Canceled/forfeited/expired

 

 —

Outstanding at December 31, 2020

 

1,436,728 

Awarded

 

536,112 

Released

 

 —

Canceled/forfeited/expired

 

 —

Outstanding at March 31, 2021

 

1,972,840 



 

 

Expected to vest at March 31, 2021

 

1,972,840 

Vested at March 31, 2021

 

1,472,840 

Unvested at March 31, 2021

 

 —

Unrecognized expense at March 31, 2021

$

 —

  

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, the company recorded $260,003 in restricted stock units as board compensation.



2021



On March 26, 2021, the Company issued to four independent directors a total of 36,112 restricted stock units. These restricted stock units were issued for the $65,000 of board compensation earned for the first quarter of 2021. The units were valued at $65,002 or $1.80 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) March 26, 2024, (B) a change in control of the Company, and (C) the termination of the director’s service with the Company.



On March 26, 2021, the Company granted to one employee 1,000,000 restricted shares of the Company’s Common Stock at the closing price as of March 26, 2021 of $1.80 per share.  The restricted stock will vest as follows (a) 50% of the restricted shares will vest ratably over forty-eight (48) months; (b) 15% of the restricted shares will vest upon the Company achieving $25,000,000 in annualized recurring revenues as reported by totaling all contracted revenues for the trailing twelve months following the end of a reporting quarter; (c) the final 35% of the restricted shares will vest upon the Company achieving $50,000,000 in annualized recurring revenues as reported by totaling all contracted revenues for the trailing twelve months following the end of a reporting quarter.  Vesting is dependent on the employee’s continued employment with the Company.  All of the 1,000,000 restricted shares will include a single trigger accelerated vesting should the Company undergo a change of control after August 1, 2021.  If the Company undergoes a change of control prior to August 1, 2021, 300,000 of the restricted shares would be eligible for single trigger accelerated vesting.   



In the three months ended March 31, 2021, the company recorded $65,002 in restricted stock units as board compensation and $3,694 as employee compensation.



Stock Based Compensation from Restricted Stock

 

The impact on our results of operations of recording stock-based compensation expense for restricted stock units for the three months ended March 31, 2021 and 2020 was as follows:

 





 

 

 

 

 

 



 

 

 

 

 

 



Three Months Ended

 



March 31,

 



2021

 

2020

 

General and administrative

$

65,002 

 

$

65,000 

 

Sales and marketing

$

3,694 

 

$

 —

 



$

68,696 

 

$

65,000 

 

 

As of March 31, 2021, there was no unearned restricted stock unit compensation.

 

Warrants



2020



On March 2, 2020 one warrant holder exercised their common stock purchase warrant for 234,500 shares at the exercise price of $1.00 per share, resulting in additional capital of $234,500.  In December 2020, warrant holders exercised warrants to purchase common stock at $1.25 per share.  At the commencement of the December warrant exercise, there were warrants outstanding that entitled their holders to purchase 2,691,459 shares of our common stock at exercise prices of $1.25 per share.  Pursuant to the offer, warrant holders exercised warrants to purchase 2,666,459 shares of our common stock, resulting in additional capital of $3,333,074.  As part of the exercise, 2,666,459 new warrants were issued to purchase common stock at $2.00 per share within three years.  

 

2021



As of March 31, 2021, we have outstanding warrants to purchase 25,000 shares of Common Stock at $1.25 per share in addition to warrants to purchase 2,666,459 shares of common stock at $2.00 per share. These warrants expire in 2021 and 2023, respectively.