Stock-Based Payments

9 Months Ended

Sep. 30, 2023

Stock-Based Payments [Abstract]

STOCK-BASED PAYMENTS

NOTE 11: STOCK-BASED PAYMENTS

The Company has common stock, common stock units, and common stock purchase options and warrants reserved pursuant to the 2022 Omnibus Stock Incentive Plan (“2022 Plan”), 2018 Omnibus Stock Incentive Plan (“2018 Plan”), and the Amended and Restated 2015 Stock Incentive Plan (“2015 Plan”).

Stock-based compensation, including stock options, warrants and stock issued for compensation and services is included in the unaudited condensed consolidated statements of operations as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of goods sold	$	245,026	$	453,978	$	894,626	$	1,425,055
Research and development		110,724		275,290		421,570		897,866
Sales and marketing		188,395		314,967		625,271		1,004,621
General and administrative		111,676		505,772		789,394		1,445,595
Total	$	655,821	$	1,550,007	$	2,730,861	$	4,773,137

2022 Omnibus Stock Incentive Plan

On July 29, 2022, Arcimoto’s shareholders approved the 2022 Omnibus Stock Incentive Plan (the “2022 Plan”). The Plan enables the Company to provide additional incentives or awards to Employees, Directors and Consultants. The maximum aggregate number of shares which may be issued pursuant to all awards is 100,000 shares. The 2022 Plan was amended on June 16, 2023 to increase the number of shares available for issuance to 1,600,000.

The 2022 Plan provides the Company the ability to grant shares of common stock of the Company through the grant of equity awards, including, but not limited to, options that are incentive stock options or non-qualified stock options (“NQSOs”) and restricted stock, provided that only employees are entitled to receive incentive stock options in accordance with IRS guidelines. During the nine months ended September 30, 2023, the Company issued 100,000 restricted stock awards under the plan, which vested immediately. There is no non-vested compensation expense as of September 30, 2023. Awards that are forfeited generally become available for grant under the 2022 Plan.

Stock-based compensation expense under the 2022 Plan for the three and nine months ended September 30, 2023 was $0 and $258,923, respectively, recorded in the Unaudited Condensed Consolidated Statements of Operations. There was no stock-based compensation expense under the 2022 Plan for the three and nine months ended September 30, 2022.

2018 Omnibus Stock Incentive Plan

The 2018 Plan authorizing 50,000 shares was approved by the Board of Directors and the Company’s shareholders at the Company’s 2018 annual meeting of shareholders held on June 9, 2018. At the 2019 Annual Meeting, the shareholders approved an additional 50,000 shares of common stock to be issued under the 2018 Plan. On April 20, 2020, the board of directors approved an increase from 100,000 to 200,000 shares; at the annual shareholder meeting on June 20, 2020, the increase was approved by a majority of the shareholders. At the annual shareholder meeting on June 11, 2021, a majority of the shareholders approved an increase from 200,000 to 300,000 shares.

The 2018 Plan provides the Company the ability to grant to employees, directors, consultants or advisors shares of common stock of the Company through the grant of equity awards, including, but not limited to, options that are incentive stock options or NQSOs and restricted stock, provided that only employees are entitled to receive incentive stock options in accordance with IRS guidelines. As of September 30, 2023, the Company had a remaining reserve of 220,489 shares of common stock under the 2018 Plan for outstanding grants. Since approval of the 2022 Plan, awards that are forfeited no longer become available for grant under the 2018 Plan.

Stock-based compensation expense under the 2018 Plan for the three and nine months ended September 30, 2023 was $655,821 and $2,470,263, respectively. Stock-based compensation expense under the 2018 Plan for the three and nine months ended September 30, 2022 was $1,548,773 and $4,750,995, respectively, recorded in in the Condensed Consolidated Statements of Operations.

During the first nine months of 2022, unqualified and qualified options to purchase 108,303 shares of common stock were granted to employees and vendors/consultants under the 2018 Plan with a grant date fair value of approximately $6,162,000. The options were valued using the Black-Scholes option pricing model with approximately a 6.1 year expected term, risk free interest rate of 2.2%, a dividend yield of 0%, and an annualized standard deviation of stock price volatility of 60.97%. These options vest over three years.

During the first nine months of 2022, 23,690 restricted stocks were issued to certain personnel and outside consultants with a grant date fair value of approximately $1,514,000. These shares were valued by using the closing date of the Company’s stock price on the date of the grant. These awards have various vesting terms, ranging from immediate vesting to one year.

No options were granted or restricted stock issued during the first nine months of 2023 under the 2018 Plan.

Total compensation cost related to non-vested awards issued under the 2018 Plan not yet recognized as of September 30, 2023 was approximately $2,666,461 and will be recognized on a straight-line basis through July 2025 based on the respective vesting periods. The amount of future stock option compensation expense could be affected by any future option grants or forfeitures.

2015 Stock Incentive Plan

The 2015 Plan provides the Company the ability to grant to employees, directors, consultants, or advisors shares of common stock of the Company through the grant of options that are incentive stock options or NQSOs and/or the grant of restricted stock, provided that only employees are entitled to receive incentive stock options in accordance with IRS guidelines. 50,000 shares of common stock were authorized for issuance under the 2015 Plan. Since approval of the 2022 Plan, awards that are forfeited no longer become available for grant under the 2015 Plan. As of September 30, 2023, 25,688 shares of common stock were reserved for issuance pursuant to stock options that are outstanding.

Stock-based compensation expense under the 2015 Plan for the three and nine months ended September 30, 2023 was $0 and $1,675, respectively. Stock-based compensation expense under the 2015 Plan for the three and nine months ended September 30, 2022 was $1,234 and $22,142, respectively, recorded in in the Condensed Consolidated Statements of Operations.

There is no non-vested compensation expense as September 30, 2023 as all awards were fully vested as of May 2023.