• Filing Date: 2020-05-13
  • Form Type: 10-Q
  • Description: Quarterly report
v3.20.1
EQUITY INCENTIVE PLAN
3 Months Ended
Mar. 31, 2020
Equity [Abstract]  
EQUITY INCENTIVE PLAN

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 compensation expense for the three months ended March 31, 2020 and 2019 was $171,000 and $63,000, respectively, and is presented as part of general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.

 

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 three months ended March 31, 2020 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, 2019     1,655,383     $ 1.68       8.33     $ 3,224  
      Granted     20,000       4.32       9.91          
      Exercised     (1,294 )     3.81                  
      Forfeited     (3,146 )     1.42                  
Canceled     (36,684 )     1.82                  
Outstanding Balance at March 31, 2020     1,634,259     $ 1.71       8.17     $ 2,854  
Exercisable at March 31, 2020     1,050,452     $ 1.79       6.59     $ 1,743  

 

The weighted average grant date fair value of options granted, to employees and non-employees, for the three months ended March 31, 2020 and 2019 was $0.31 and $0.68, respectively. The intrinsic value of the stock options granted during the three months ended March 31, 2020 and 2019 was $0 and $3,000, respectively. The total fair value of options that vested in the three months ended March 31, 2020 and 2019 was $40,000 and $513,000, respectively.

 

As of March 31, 2020, there was $368,000 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 1.52 years.

 

Restricted Stock Units

 

A summary of RSU activity under the Company’s 2017 Plan for the three months ended March 31, 2020 is as follows:

 

    Number of Shares     Weighted Average Unit Price     Weighted Average Remaining Contractual Term (Years)     Aggregate Intrinsic Value  
Outstanding Balance at December 31, 2019     -     $ -       -     $ -  
      Granted     334,450       4.06       2.75          
      Vested     -       -                  
      Forfeited     -       -                  
Outstanding Balance at March 31, 2020     334,450     $ 4.06       2.75     $ -  

 

The grant date fair value was based on the estimated fair value of our common stock on the date of grant. All RSUs granted vest upon the satisfaction of a service-based vesting condition.

 

As of March 31, 2020, there was $1,317,000 of unrecognized stock compensation expense related to unvested RSUs granted under the 2017 Plan that will be recognized over an average remaining period of 2.75 years.

 

Compensation expense for restricted stock and RSUs is recognized on a straight-line basis over the requisite service period. There were not RSUs issued in fiscal year 2019.