• Filing Date: 2019-11-15
  • Form Type: 10-Q/A
  • Description: Quarterly report (Amendment)
9 Months Ended
Sep. 30, 2019
Equity [Abstract]  

In August 2017, the Company approved and adopted the 2017 Equity Award Plan (the “2017 Plan”) which replaced the 2016 Equity Award Plan (the “2016 Plan”). The 2017 Plan permits the granting of stock options, stock appreciation rights, restricted and unrestricted stock awards, phantom stock, performance awards and other stock-based awards for the purpose of attracting and retaining quality employees, directors and consultants. Maximum awards available under the 2017 Plan were initially set at 3,000,000 shares.


Stock Options


Stock options granted under the 2017 Plan may be either incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”). ISOs may be granted to employees and NSOs may be granted to employees, directors, or consultants. Stock options are granted at exercise prices as determined by the Board of Directors. The vesting period is generally three to four years with a contractual term of ten years.


The 2017 Plan is administered by the Administrator, which is currently the Board of Directors of the Company. The Administrator has the exclusive authority, subject to the terms and conditions set forth in the 2017 Plan, to determine all matters relating to awards under the 2017 Plan, including the selection of individuals to be granted an award, the type of award, the number of shares of Rekor common stock subject to an award, and all terms, conditions, restrictions and limitations, if any, including, without limitation, vesting, acceleration of vesting, exercisability, termination, substitution, cancellation, forfeiture, or repurchase of an award and the terms of any instrument that evidences the award.


When making an award under the 2017 Plan, the Administrator may designate the award as “qualified performance-based compensation,” which means that performance criteria must be satisfied in order for an employee to be paid the award. Qualified performance-based compensation may be made in the form of restricted common stock, restricted stock units, common stock options, performance shares, performance units or other stock equivalents. The 2017 Plan includes the performance criteria the Administrator has adopted, subject to stockholder approval, for a “qualified performance-based compensation” award.


A summary of stock option activity under the Company’s 2017 Plan for the nine months ended September 30, 2019 is as follows:


    Number of Shares Subject to Option     Weighted Average Exercise Price     Weighted Average Remaining Contractual Term (Years)     Aggregate Intrinsic Value  
Outstanding balance at December 31, 2018     1,227,557     $ 2.13       8.39       -  
Granted     862,049       1.02       9.43          
Exercised     -       -       -          
Forfeited     (66,930 )     2.62       -          
Expired     -       -       -          
    Canceled     (315,520 )     1.96       -          
Outstanding balance at September 30, 2019     1,707,156     $ 1.68       8.57     $ 1,407  
Exercisable at September 30, 2019     776,963     $ 1.67       7.88     $ 575  


Stock compensation expense for the three months ended September 30, 2019 and 2018 was $76,000 and $87,000, respectively, and for the nine months ended September 30, 2019 and 2018 was $314,000 and $296,000, respectively, and is presented as part of general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. The weighted average grant date fair value of options granted, to employees and non-employees, for the nine months ended September 30, 2019 was $0.52. The intrinsic value of the stock options granted during the nine months ended September 30, 2019 was $1,030,000. No options were granted for the nine months ended September 30, 2018. The total fair value of options that are vested as of September 30, 2019 and 2018 was $684,000 and $735,000, respectively.


As of September 30, 2019, there was $634,000 of unrecognized stock compensation expense related to unvested stock options granted under the 2017 Plan that will be recognized over an average remaining period of 1.77 years.