Note 11 - Share-based Compensation

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

( 11 ) Share-Based Compensation

BioCardia Lifesciences adopted, and the BioCardia Lifesciences shareholders approved, the

2002

Stock Plan in

2002

(the

“2002

Plan”), and the Company assumed the

2002

Plan in the Merger. The Company has

not

granted or does

not

intend to grant any additional awards under the

2002

Plan following the Merger. In

2016,

BioCardia Lifesciences adopted, and the BioCardia Lifesciences shareholders approved, the

2016

Equity Incentive Plan (the

“2016

Plan”), and the Company assumed the

2016

Plan in the Merger. BioCardia has granted awards, including incentive stock options and non-qualified stock options, under the

2016

Plan following the Merger. Under the

2002

Plan and the

2016

Plan, the number of shares, terms, and vesting periods are determined by the Company's board of directors or a committee thereof on an option-by-option basis. Options generally vest ratably over service periods of

four

 years and expire

ten

 years from the date of grant. The per share exercise price shall be

no

less than the fair market value on the date of grant. Compensation cost for employee share-based awards is based on the grant-date fair value and is recognized over the vesting period of the applicable award on a straight-line basis. The number of shares reserved for issuance or transfer pursuant to awards under the

2016

Plan will be increased by (i) the number of shares represented by awards outstanding under

2016

Plan that are returned to the plan because they are either forfeited or lapse unexercised or that are repurchased for the original purchase price thereof, (ii) if approved by the Administrator of the

2016

Plan, an annual increase on the

first

day of each fiscal year equal to the lessor of (A) 

4%

of the shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year; (B) 

268,997

shares (

1,000,000

shares effective

January 1, 2021).

As of

December 31, 2020,

160,020

shares have been authorized and available for awards under the

2016

Plan.

The Company recognizes in the consolidated statements of operations the grant-date fair value of stock options and other equity-based compensation. Share-based compensation expense for the years ended

December 31, 2020

and

2019

was recorded as follows (in thousands):

	Years ended December 31,
	2020		2019
Cost of goods sold	$	-	$	191
Research and development		1,369		1,115
Selling, general and administrative		1,583		1,416
Total stock-based compensation	$	2,952	$	2,722

On

January 29, 2020 (

the “repricing date”), the Company's Board of Directors repriced certain previously granted and still outstanding vested and unvested stock option awards held by employees, executives, and certain service providers of the Company; as a result, the exercise price was lowered to

$5.32

per share.

No

other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing,

515,036

vested and unvested stock options outstanding with original exercise prices ranging from

$10.05

to

$97.21,

were repriced.

The repricing on

January 29, 2020

resulted in incremental stock-based compensation expense of

$569,000,

of which

$412,000

related to vested employee stock option awards and was expensed on the repricing date, and

$157,000

related to unvested stock option awards and is being amortized on a straight-line basis over the approximately

three

year remaining weighted average vesting period of those awards.

The following table summarizes activity under the Company's stock option plans, including the

2002

Plan and the

2016

Plan and related information (in thousands, except share and per share amounts and term):

	Options outstanding
	Number of shares			Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value (in thousands)
Balance, December 31, 2019		821,464		$	18.99		7.6	$	-
Stock options granted		342,232			3.10
Stock options exercised		—			—
Stock options cancelled		(49,390	)		12.79
Balance, December 31, 2020		1,114,306		$	5.89		7.5	$	177.1
Options exercisable December 31, 2020		615,470		$	7.51		6.3	$	15.6
Options vested and expected to vest		1,114,306		$	5.89		7.5	$	177.1

The aggregate intrinsic value represents the difference between the total pre-tax value (i.e., the difference between the Company's stock price and the exercise price) of stock options outstanding as of

December 31, 2020,

based on the Company's common stock closing price of

$3.46

per share, which would have been received by the option holders had all their in-the-money options been exercised as of that date.

The total intrinsic value of options exercised during the years ended

December 31, 2020

and

2019

was

zero

in both years. The weighted average grant-date BSM fair value of options granted during the years ended

December 31, 2020

and

2019

was

$1.73

and

$3.87

per share, respectively.

Employee, Director and Non-employee Share-Based Compensation

 

During the years ended

December 31, 2020

and

2019,

the Company granted stock options to certain employees, non-employee directors and non-employees to purchase

342,232

and

254,785

shares of common stock, respectively. The fair value of each option grant was estimated on the date of the grant using the BSM option pricing model with the following assumptions: 

	Years ended December 31,
	2020				2019
Risk-free interest rate		0.4	-	1.6%		1.40	-	2.14%
Volatility		107	-	112%		74	-	94%
Dividend yield		None				None
Expected term (in years)		6.25	-	10.0		6.25	-	10.0

Unrecognized share-based compensation for employees, non-employee directors and non-employee options granted through

December 31, 2020

is approximately

$2.1

million to be recognized over a remaining weighted average service period of

2.2

years.

Share-Based Compensation (RSUs)

During the years ended

December 31, 2020

and

2019,

respectively, the Company granted to certain members of management

113,976

and

34,713

restricted stock units, or RSUs in lieu of paying bonuses. The fair value of each RSU is estimated on the closing market price of the Company's common stock on the grant date.  

During the year ended

December 31, 2020,

the Company granted

122,977

RSUs to board members to settle

$613,000

of board compensation earned from

April 2018

to

March 30, 2020.

The associated compensation expense was recognized when earned. During the year ended

December 31, 2020,

the Company granted

69,321

RSUs to board members and recognized approximately

$190,000

in stock compensation expense for board service from

April 1, 2020

to

December 31, 2020.

The RSUs were granted on a quarterly basis and were calculated based on

$92,500

divided by the greater of

$4

or the closing share price of the Company's common stock on the last trading day of the fiscal quarter. These RSUs represent a contingent right to receive

one

share of common stock, but for which delivery of the stock will occur on the earlier of the

two

-year anniversary of the grant, the board member's separation from the Company, a change in control as defined by the

2016

Equity Incentive Plan or the board member's death. 

The following table summarizes the activity for RSUs during the year ended

December 31, 2020:

				Weighted
				average
				grant date
	Number of			fair values
	shares			per share
Balance, December 31, 2019		36,981		$	10.56
RSUs granted		381,094			3.93
RSUs vested and settled		(137,603	)		5.48
RSUs forfeited		(56,161	)		3.75
Balance, December 31, 2020		224,311		$	4.12

RSUs vested and settled are converted into the Company's common stock on a

one

-for-

one

basis. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. Of the

224,311

RSUs outstanding on

December 31, 2020,

216,111

RSUs are vested and have

not

been settled and

8,200

have

not

yet vested. The related compensation expense, which is based on the grant date fair value of the Company's common stock multiplied by the number of units granted, is recognized ratably over the period during which the vesting restrictions lapse. Unrecognized share-based compensation for RSUs granted through 

December 31, 2020

was approximately

$37,000

to be recognized over a remaining weighted average service period of

2.3

years.