Annual report pursuant to Section 13 and 15(d)

Stock Options

v3.19.3.a.u2
Stock Options
12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock Options

Note 19 - Stock Options

 

In September 2011, the Company adopted the 2011 Employee Stock Incentive Plan (the "2011 Plan") which provides for the granting of incentive and non-statutory common stock options and stock based incentive awards to employees, non-employee directors, consultants and independent contractors. The plan was amended and restated in May 2014. Unless terminated sooner by the Board of Directors, this plan will terminate on August 31, 2021.

 

In February 2018, the Company adopted the 2018 Employee Stock Incentive Plan (the "2018 Plan" and together with the 2011 Plan, the "Option Plans"), which will be utilized with the 2011 Plan for employees, corporate officers, directors, consultants and other key persons employed. The 2018 Plan will provide for the granting of incentive stock options, NQSOs, stock grants and other stock-based awards, including Restricted Stock and Restricted Stock Units (as defined in the 2018 Plan).

  

Incentive stock options granted under the Option Plans are granted at exercise prices not less than 100% of the estimated fair market value of the underlying common stock at date of grant. The exercise price per share for incentive stock options may not be less than 110% of the estimated fair value of the underlying common stock on the grant date for any individual possessing more that 10% of the total outstanding common stock of the Company. Options granted under the Option Plans vest over periods ranging from immediately to four years and are exercisable over periods not exceeding ten years.

 

The aggregate number of shares that may be awarded as of December 31, 2019 under the 2011 Plan and the 2018 Plan were 3,521 and 8,316,376, respectively. As of December 31, 2019, 121,796 of options were granted to employees, directors and consultants of the Company (including 1 share outside of our plan) and 8,198,102 options were available for future grant under the Option Plans.

 

During the year ended December 31, 2018, the Company granted options under the 2018 Plan for the purchase of 1,690 shares of common stock to employees and consultants of the Company. These options are 100% vested or vest pro-rata over 48 months, have a life of ten years and an exercise price between $288.90 and $570.60 per share. The Company valued the stock options using the Black-Scholes option valuation model and the fair value of the awards was determined to be $428,000. The fair value of the common stock as of the grant date was determined to be between $288.90 and $570.60 per share.

 

During the year ended December 31, 2019, the Company granted options under the 2018 Plan for the purchase of 130,651 shares of common stock to employees and consultants of the Company. These options are 100% vested or vest pro-rata over 12, 36, 40 or 48 months, have a life of ten years and an exercise price between $6.30 and $101.70 per share. The Company valued the stock options using the Black-Scholes option valuation model and the fair value of the awards was determined to be $4,364,000. The fair value of the common stock as of the grant date was determined to be between $6.30 and $101.70 per share.

 

During the year ended December 31, 2019 and 2018, the Company recorded a charge of $3,247,000 and $949,000, respectively, for the amortization of employee stock options.

 

As of December 31, 2019, the fair value of non-vested options totaled approximately $1,010,000, which will be amortized to expense over the weighted average remaining term of 0.81 years.

 

The fair value of each employee option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. Key weighted-average assumptions used to apply this pricing model during the years ended December 31, 2019 and 2018 were as follows:

 

    For the Years Ended
December 31,
 
    2019     2018  
Risk-free interest rate     1.77-2.66%     2.79-3.01%
Expected life of option grants     7 years       5-6 years  
Expected volatility of underlying stock     49.48-106.16%     45.64-46.18%
Dividends assumption   $ --     $ --  

 

The expected stock price volatility for the Company's stock options was determined by the historical volatilities for industry peers and used an average of those volatilities. The Company attributes the value of stock-based compensation to operations on the straight-line single option method. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods. The dividends assumptions was $0 as the Company historically has not declared any dividends and does not expect to.

 

The following table summarizes the changes in options outstanding during the years ended December 31, 2018 and 2019:

 

    Number
of
Options
    Weighted
Average
Exercise
Price
    Aggregate
Intrinsic
Value
(in thousands)
 
Outstanding at January 1, 2018     9     $ 1,223,157.60     $ --  
Granted     1,690       564.75       --  
Exercised     --       --       --  
Expired     (59 )     26,750.25       --  
Forfeitures     (16 )     45,779.85       --  
Outstanding at December 31, 2018     1,624     $ 5,229.00     $ --  
Granted     130,651       61.79       --  
Exercised     (14     6.30       --  
Expired     (2,106 )     353.19       --  
Forfeitures     (8,359 )     91.67       --  
Outstanding at December 31, 2019     121,796     $ 123.66     $ --  
                         
Exercisable at December 31, 2018     1,497     $ 4,705.65     $ --  
                         
Exercisable at December 31, 2019     77,576     $ 167.88     $ --