Note 9 - Stock-based Compensation Plans and Warrants

12 Months Ended

Dec. 31, 2021

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 had 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.

Effective July 1, 2021, under the 2019 Equity Incentive Plan, each outside director receives $75,000 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 $18,750 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. 

Stock Options to Directors, Officers and Consultants

The Company had no options outstanding under either of the above plans as of December 31, 2021.

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 an 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, 2021 and 2020 relating to these options. No stock options were exercised during 2021.

No options were granted in 2021 and 2020. A summary of option activity under the plans as of December 31, 2021, and changes during the year ended December 31, 2020 are presented below:

	Shares		Weighted- Average Exercise Price		Average Remaining Contractual Term		Aggregate Intrinsic Value ($000’s)
Outstanding at January 1, 2020		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	$	12.17		0.4	$	919
Granted		-	$	-
Forfeited, Expired or canceled		115,000	$	12.17			$	919
Exercised		-	$	-
Outstanding at December 31, 2021		-	$	-		0.0	$	-
Options exercisable at December 31, 2021		-	$	-		0.0	$	-
Weighted-average years of remaining contractual life of options outstanding at December 31, 2021		0.0

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, 1,120,292 shares and restricted stock units (“RSUs”) have been awarded to the Company directors, employees and consultants as of December 31, 2021. Of the 1,120,292 shares and RSUs awarded, 14,243 shares were awarded to the Company’s directors for services performed during the plan year ended June 30, 2021. These shares vested and were issued on January 31, 2022. 850,000 RSUs were granted to employees in April 2021 as long-term equity incentive awards ( “April 2021 RSU Grant”). Of the 825,000 RSUs granted under the April 2021 RSU Grant, 510,000 RSUs vest upon completion of certain milestones, including (a) 255,000 RSUs which vested in July 2021 upon completion of refinancing of the Company’s Prior Senior Secured Debt and funding to complete the purchase of the Northern Pipeline (“Vesting Event”), and (b) 255,000 RSUs scheduled to vest upon completion of final binding water supply agreement(s) for the delivery of at least 9,500 acre-feet of water per annum to customers. Of the remaining 315,000 RSUs granted under the April 2021 RSU Grant, 60,000 RSUs are scheduled to vest on January 3, 2023, and 255,000 RSUs are scheduled to vest on March 1, 2023. The RSU incentive awards are subject in each case to continued employment with the Company through the vesting date. Of the 255,000 RSUs earned upon the Vesting Event, the Company issued 158,673 shares net of taxes withheld and paid in cash by the Company.

The accompanying consolidated statements of operations and comprehensive loss include approximately $4,747,000 and $2,096,000 of stock-based compensation expense related to stock awards in the years ended December 31, 2021 and 2020, respectively.

A summary of RSU activity under the plans during the years ended December 31, 2021 and 2020 is presented below:

	Shares			Weighted- Average Grant-date Fair Value
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
Granted		850,729		$	11.31
Forfeited or canceled		-		$	-
Vested		(335,763	)	$	10.84
Nonvested at December 31, 2021		634,247		$	11.14