Stockholders' Equity |
8. Stockholders’ Equity Equity Incentive Plans A total of 4,000,000 shares of common stock are eligible for issuance under the Company’s 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provides for the grant of any or all of the following types of awards: stock options (incentive or non-qualified), restricted stock, restricted stock units, performance awards, or cash awards. The 2021 Plan is administered by the Company’s Board of Directors, or, at the Board’s discretion, a committee of the Board. In addition, stock-based awards (including options, warrants, and restricted stock) previously granted under the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) remain outstanding and shares of common stock may be issued to satisfy options or warrants previously granted under the 2011 Plan, although no new awards may be granted under the 2011 Plan. Stock-based Compensation The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation - Stock Compensation,” by recognizing the fair value of stock-based compensation as an operating expense over the service period of the award or term of the corresponding contract, as applicable. Forfeitures are accounted for as a reduction of compensation cost in the period when such forfeitures occur. For stock option awards for which vesting is contingent upon the achievement of certain performance targets, the timing and amount of compensation expense recognized is based upon the Company’s projections and estimates of the relevant performance metric(s) until the time the performance obligation is satisfied. Expense for such awards is recognized only to the extent that the achievement of the specified performance target(s) has been met or is considered probable. Total expense recognized for all forms of stock-based compensation was approximately $0.05 million for both the current quarter and prior year quarter. For both periods, the majority of the expense was related to directors and consultants, and was recorded as operating costs within “other selling, general and administrative expenses” in the accompanying condensed consolidated statements of operations. Total expense recognized in the current nine months and prior year nine months for all forms of stock-based compensation was approximately $0.17 million and $0.67 million, respectively. Of the current nine months expense amount, approximately $0.15 million related to directors and consultants, and approximately $0.02 million related to employees; all such stock-based compensation expense was recorded within “other selling, general and administrative expenses” in the accompanying condensed consolidated statements of operations. Of the prior year nine months expense amount, approximately $0.41 million related to employees and approximately $0.26 million related to directors and consultants. Approximately $0.57 million of the prior year nine months expense was recorded as operating costs, and approximately $0.10 million was recorded as part of other operating costs and expenses (income). Stock Options A summary of the Company’s stock options activity for the current nine months is as follows: | | | | | | | | | | | | | | | | | | Weighted | | | | | | | | | | | Average | | | | | | | | Weighted | | Remaining | | | | | | | | Average | | Contractual | | Aggregate | | | Number of | | Exercise | | Life | | Intrinsic | | | Options | | Price | | (in Years) | | Value | Outstanding at January 1, 2023 | | 5,614,310 | | $ | 2.12 | | 4.76 | | $ | — | Granted | | 100,000 | | | 1.51 | | | | | | Exercised | | (87,750) | | | 0.80 | | | | | | Expired/Forfeited | | (482,390) | | | 3.17 | | | | | | Outstanding at September 30, 2023, and expected to vest | | 5,144,170 | | $ | 2.04 | | 4.37 | | $ | — | Exercisable at September 30, 2023 | | 1,481,670 | | $ | 2.83 | | 1.92 | | $ | — |
On August 23, 2023 the Company granted options to purchase an aggregate of 100,000 shares of common stock to non-management directors. The exercise price of the options is $1.51 per share, and 50% of the options vest on each of April 1, 2024 and April 1, 2025. Compensation expense related to stock options for the current quarter and the prior year quarter was approximately $0.02 million and $0.03 million, respectively. Compensation expense related to stock options for the current nine months and the prior year nine months was approximately $0.07 million and $0.43 million, respectively. Total unrecognized compensation expense related to unvested stock options at September 30, 2023 was approximately $0.11 million and is expected to be recognized over a weighted average period of approximately 1.23 years. A summary of the Company’s non-vested stock options activity for the current nine months is as follows: | | | | | | | | | | Weighted | | | | | Average | | | Number of | | Grant Date | | | Options | | Fair Value | Balance at January 1, 2023 | | 3,697,500 | | $ | 0.05 | Granted | | 100,000 | | | 0.86 | Vested | | (135,000) | | | 0.68 | Forfeited or Canceled | | — | | | — | Balance at September 30, 2023 | | 3,662,500 | | $ | 0.04 |
Warrants A summary of the Company’s warrants activity for the current nine months is as follows: | | | | | | | | | | | | | | | | | | Weighted | | | | | | | | | | | Average | | | | | | | | Weighted | | Remaining | | | | | | | | Average | | Contractual | | Aggregate | | | Number of | | Exercise | | Life | | Intrinsic | | | Warrants | | Price | | (in Years) | | Value | Outstanding and exercisable at January 1, 2023 | | 116,065 | | $ | 3.15 | | 1.57 | | $ | — | Granted | | 1,000,000 | | | 1.50 | | | | | | Exercised | | — | | | — | | | | | | Expired/Forfeited | | — | | | — | | | | | | Outstanding at September 30, 2023 | | 1,116,065 | | $ | 1.67 | | 8.71 | | $ | — | Exercisable at September 30, 2023 | | 116,065 | | $ | 3.15 | | 0.82 | | $ | — |
See Note 4 for information regarding the warrant to purchase 1,000,000 shares of common stock granted during the current nine months in connection with the Halston Master License. Excluding the contra-revenue recognized with respect to the Halston Master License warrant, there was no compensation expense related to warrants recognized in the current quarter, prior year quarter, current nine months, or prior year nine months. Stock Awards A summary of the Company’s restricted stock activity for the current nine months is as follows: | | | | | | | | | | Weighted | | | Number of | | Average | | | Restricted | | Grant Date | | | Shares | | Fair Value | Outstanding at January 1, 2023 | | 333,333 | | $ | 3.71 | Granted | | 113,968 | | | 1.01 | Vested | | (103,968) | | | 1.04 | Expired/Forfeited | | — | | | — | Outstanding at September 30, 2023 | | 343,333 | | $ | 3.63 |
On January 1, 2023, the Company issued 8,334 shares of common stock to a consultant, which vested immediately. On April 17, 2023, the Company issued 8,334 shares of common stock to a consultant, which vested immediately. On May 15, 2023, the Company issued 50,000 shares of common stock to a consultant, which vested immediately. On July 20, 2023, the Company issued 7,300 shares of common stock to an employee, which vested immediately. On August 23, 2023, the Company issued an aggregate of 40,000 shares of common stock to non-management directors, of which 50% shall vest on April 1, 2024, and 50% shall vest on April 1, 2025. Compensation expense related to stock awards was approximately $0.03 million for the current quarter and approximately $0.02 million for the prior year quarter. Compensation expense related to stock awards was approximately $0.10 million for the current nine months and approximately $0.24 million for the prior year nine months. Total unrecognized compensation expense related to unvested restricted stock grants at September 30, 2023 was approximately $0.08 million and is expected to be recognized over a weighted average period of approximately 1.23 years. Restricted Stock Units There were no restricted stock units outstanding as of September 30, 2023 and December 31, 2022, and no restricted stock units have been issued since the inception of the 2021 Plan. Shares Available Under the Company’s Equity Incentive Plans As of September 30, 2023, there were 3,170,191 shares of common stock available for future award grants under the 2021 Plan. Shares Reserved for Issuance As of September 30, 2023, there were 8,430,426 shares of common stock reserved for issuance, including 4,838,135 shares reserved pursuant to unexercised warrants and stock options previously granted under the 2011 Plan, 422,100 shares reserved pursuant to unexercised stock options granted under the 2021 Plan, and 3,170,191 shares available for issuance under the 2021 Plan.
|