Note 11 - Stock-based Compensation

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE 11 – STOCK-BASED COMPENSATION

On May 8, 2019, our Board of Directors approved the Charlie’s Holdings, Inc. 2019 Omnibus Incentive Plan (the “2019 Plan”), and the 2019 Plan was subsequently approved by holders of a majority of our outstanding voting securities on the same date. Up to 11,072,542 stock options may be granted under the 2019 Plan. The shares of Common Stock issuable under the 2019 Plan will consist of authorized and unissued shares, treasury shares, and shares purchased on the open market or otherwise. 

On December 22, 2021, our Board of Directors unanimously adopted resolutions by written consent approving an amendment to increase the number of shares of Common Stock available for issuance under the 2019 Plan by 15.0 million shares, from 11,072,542 to 26,072,542 shares (the “2019 Plan Amendment”). Furthermore, the Company received written consents approving the 2019 Plan Amendment from holders of approximately 50.3% of our outstanding voting securities. In accordance with Rule 14c of the Exchange Act, our Board of Directors’ authority to implement the 2019 Plan Amendment became effective February 28, 2022, twenty calendar days after notification of our shareholders. The 2019 Plan Amendment will allow the Company to maintain a sufficient number of available shares for future grants under the 2019 Plan.

Non-Qualified Stock Options

The following table summarizes stock option activities during the three months ended March 31, 2022 (all option amounts are in thousands):

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2022		7,123		$	0.54		7.5	$	-
Options forfeited/expired		(260	)		0.44		-		-
Outstanding at March 31, 2022		6,863		$	0.55		7.2	$	-
Options vested and exercisable at March 31, 2022		5,283		$	0.58		7.0	$	-

As of March 31, 2022, there was approximately $24,000 of total unrecognized compensation expense related to non-vested stock option compensation arrangements granted under the 2019 Plan. That cost is expected to be recognized over a weighted average period of 2.4 years. For the three months ended March 31, 2022, and 2021, the Company recorded compensation expense of approximately $2,000 and $77,000 related to the granting of stock options, respectively.

Restricted Stock Awards 

The following table summarizes restricted stock awards activities during the three months ended March 31, 2022 (all share amounts are in thousands):

	Number of Shares		Weighted Average Grant Date Fair Value per Share
Nonvested at January 1, 2022		1,750	$	0.044
Restricted stock granted		5,781		0.038
Vested		-		-
Nonvested at March 31, 2022		7,531	$	0.038

On March 2, 2022, the Company granted approximately 5.8 million restricted stock awards (“RSAs”) to employees, officers and directors of the Company pursuant to the 2019 Plan, as amended. The RSAs are subject to a vesting schedule and have all the rights of a shareholder of the Company with respect to voting, share adjustments, receipt of dividends (if any) and distributions (if any) on such shares.

As of March 31, 2022, there was approximately $253,000 of total unrecognized compensation expense related to non-vested restricted share-based compensation arrangements granted under the 2019 Plan. That cost is expected to be recognized over a weighted average period of 3.0 years. The Company recorded total stock-based compensation of approximately $16,000 during the three months ended March 31, 2022, related to the RSAs.