Note 9 - Stock-based Compensation Plans and Warrants

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE 9 – STOCK-BASED COMPENSATION PLANS AND WARRANTS

The Company has issued options and has granted stock awards pursuant to its 2009 Equity Incentive Plan and 2019 Equity Incentive Plan, as described below. 

2009 Equity Incentive Plan

The 2009 Equity Incentive Plan was approved by stockholders at the 2009 Annual Meeting.  The plan provides for the grant and issuance of up to 850,000 shares and options to the Company’s employees and consultants.  The plan became effective when the Company filed a registration statement on Form S-8 on December 18, 2009.  All options issued under the 2009 Equity Incentive Plan have a ten-year term with vesting periods ranging from issuance date to 24 months.    

2019 Equity Incentive Plan

The 2019 Equity Incentive Plan was approved by stockholders at the July 10, 2019 Annual Meeting.  The plan provides for the grant and issuance of up to 1,200,000 shares and options to the Company’s employees, directors and consultants. 

Under the 2019 Equity Incentive Plan, each outside director receives $50,000 of cash compensation and receives a deferred stock award consisting of shares of the Company’s common stock with a value equal to $25,000 on June 30 of each year.  The award accrues on a quarterly basis, with $12,500 of cash compensation and $6,250 of stock earned for each fiscal quarter in which a director serves.  The deferred stock award vests automatically on the January 31 that first follows the award date. 

All options that have been issued under the above plans have been issued to officers, employees and consultants of the Company.  In total, options to purchase 115,000 shares were unexercised and outstanding on December 31, 2020 under the equity incentive plans. 

For consultants of the Company, the fair value of each option granted under the 2009 Equity Incentive Plan is estimated at each reporting period using the option-pricing model and recorded as a liability until the award is settled.   

For officers and employees of the Company, the fair value of each option granted under the plans was estimated on the date of grant using the option-pricing model.

The risk-free interest rate is assumed to be equal to the yield of a U.S. Treasury bond of comparable maturity, as published in the Federal Reserve Statistical Release for the relevant date.  The expected life estimate is based on an analysis of the employees receiving option grants and the expected behavior of each employee.  The expected volatility is derived from an analysis of the historical volatility of the trading price per share of the Company’s common stock on the NASDAQ Global Market.  The Company does not anticipate that it will pay dividends to common stockholders in the future. 

The Company recognized no stock-option-related compensation costs for the years ended December 31, 2020 and 2019 relating to these options.  No stock options were exercised during 2020. 

No options were granted in 2020 and 2019.  A summary of option activity under the plans as of December 31, 2020, and changes during the year ended December 31, 2019 are presented below:

						Average		Aggregate
				Weighted-		Remaining		Intrinsic
				Average		Contractual		Value
	Shares			Exercise Price		Term		($000’s)
Outstanding at January 1, 2019		492,500		$	11.66		1.3	$	3,834
Granted		-		$	-
Forfeited, Expired or canceled		-		$	-			$	-
Exercised		-		$	-
Outstanding at December 31, 2019		492,500		$	11.66		0.3	$	3,834
Granted		-		$	-
Forfeited, Expired or canceled		377,500		$	11.50			$	2,915
Exercised		-		$	-
Outstanding at December 31, 2020		115,000	(a)	$	12.17		0.4	$	919
Options exercisable at December 31, 2020		115,000		$	12.17		0.4	$	919
Weighted-average years of remaining contractual life of options outstanding at December 31, 2020		0.4

(a) Exercise prices vary from $9.88 to $12.51, and expiration dates vary from April 2021 to December 2021.

Stock Awards to Directors, Officers, Consultants and Employees

The Company has granted stock awards pursuant to its 2019 Equity Incentive Plan.

Of the total 1,200,000 shares reserved under the 2019 Equity Incentive Plan, 269,563 shares have been awarded to the Company directors, employees and consultants as of December 31, 2020.  Of the 269,563 shares awarded, 19,279 shares were awarded to the Company’s directors for services performed during the plan year ended June 30, 2020.  These shares vested and were issued on January 31, 2021.

In January 2020, the Company granted a total of 150,000 restricted stock units (“RSU”) to its employees under the 2019 Equity Incentive Plan.  These restricted stock units vest ratably in three equal annual installments on the first day of each year commencing January 1, 2020.  As of December 31, 2020, we had approximately $240 thousand of unrecognized compensation expense related to unvested stock-based awards, which is expected to be recognized over the remaining weighted average requisite service period of approximately 1 year.

The accompanying consolidated statements of operations and comprehensive loss include approximately $2,096,000 and $562,000 of stock-based compensation expense related to stock awards in the years ended December 31, 2020 and 2019, respectively.

A summary of stock awards activity under the plans during the years ended December 31, 2019 and 2020 is presented below:

				Weighted-
				Average
				Grant-date
	Shares			Fair Value
Nonvested at December 31, 2018		10,224		$	12.71
Granted		49,228		$	10.76
Forfeited or canceled		-		$	-
Vested		(44,140	)	$	11.33
Nonvested at December 31, 2019		15,312		$	10.45
Granted		253,654		$	9.31
Forfeited or canceled		-		$	-
Vested		(149,685	)	$	9.60
Nonvested at December 31, 2020		119,281		$	9.10