Annual report pursuant to Section 13 and 15(d)

Employee Benefit Plans

v3.20.4
Employee Benefit Plans
12 Months Ended
Dec. 31, 2020
Employee Benefit Plans  
Employee Benefit Plans

Note 16 – Employee Benefit Plans

Defined Contribution Retirement Plan

The Company sponsors a qualified defined contribution retirement plan (the “401(k) Plan”) covering all eligible employees, as defined in the 401(k) Plan. The 401(k) Plan allows participating employees to defer the receipt of a portion of their compensation, on a pre-tax or post-tax basis, and contribute such amount to one or more investment options. Employer contributions to the plan are at the discretion of the Company. The Company did not accrue or make any employer contributions in 2020 and 2019.

Equity Incentive Plan

In October 2013, the Board approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Equity Plan”). The 2013 Equity Plan provides for the granting of stock options, warrants, restricted stock or other stock-based awards to directors, officers, key employees and other key individuals performing services for the Company. All awards are required to be approved by the Board or a designated committee of the Board. Options are generally granted with an exercise price equal to fair market value on the date of grant and expire after ten years. Vesting of options and restricted stock can either be based on the passage of time or on the achievement of performance goals.

The 2013 Equity Plan will terminate automatically in October 2023, unless terminated by the Board at an earlier date. The Board has the authority to amend, modify or terminate the 2013 Equity Plan, subject to any required approval by the Company’s stockholders under applicable law or upon advice of counsel. No such action would affect any options previously granted under the 2013 Equity Plan without the consent of the holders.

Effective June 4, 2019, the Company’s stockholders approved amendments to the 2013 Equity Plan (the “2019 Equity Plan”). Among other things, the amendments increased the number of shares of common stock authorized for issuance under the 2019 Equity Plan by 2,300,000 shares to a new maximum aggregate limit of 7,073,922 shares. As of December 31, 2020, the Company had 1,216,192 remaining shares available for issuance under the 2019 Equity Plan.

Stock-based compensation cost for the years ended December 31, 2020 and 2019 was $1.8 million and $1.3 million, respectively, and is included in general and administrative expenses in the consolidated statements of income and comprehensive income. Included in stock-based compensation cost was $0.3 million and $0.2 million of unrestricted stock granted to directors for years ended December 31, 2020 and 2019, respectively. Such grants were awarded consistent with the Board’s compensation practices.

Stock Option Activity

Changes in outstanding stock options during the years ended December 31, 2020 and 2019 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Weighted

 

average

 

Intrinsic

 

 

 

 

average exercise

 

remaining

 

value

 

    

Shares

    

price

    

contractual life

    

(thousands)

Outstanding at December 31, 2018

 

2,001,008

 

$

3.29

 

  

 

 

  

Granted

 

68,000

 

 

2.99

 

  

 

 

  

Exercised

 

(42,000)

 

 

2.13

 

  

 

 

  

Cancelled, expired or forfeited

 

(220,500)

 

 

2.70

 

  

 

 

  

Outstanding at December 31, 2019

 

1,806,508

 

$

3.37

 

5.87 years

 

$

1,428

Exercisable at December 31, 2019

 

1,270,508

 

$

3.93

 

5.10 years

 

$

667

Granted

 

 —

 

 

 —

 

  

 

 

  

Exercised

 

(18,000)

 

 

2.13

 

  

 

 

  

Cancelled, expired or forfeited

 

(81,500)

 

 

3.75

 

  

 

 

  

Outstanding at December 31, 2020

 

1,707,008

 

$

3.37

 

4.98 years

 

$

1,454

Exercisable at December 31, 2020

 

1,443,675

 

$

3.57

 

4.68 years

 

$

1,112

 

The fair value of options granted in the year ended December 31, 2019 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions by grant year:

 

 

 

 

Expected life, in years

 

8.5 years

Risk-free interest rate

 

2.62

%

Volatility

 

42.0

%

Dividend yield

 

 —

%

 

The weighted average fair value of stock options issued was $1.55 for the year ended December 31, 2019. There were no stock options granted in the year ended December 31, 2020.

A summary of the status of the Company’s non-vested stock options as of December 31, 2020 and 2019 and changes during the years then ended, is presented below:

 

 

 

 

 

 

 

 

 

 

Weighted average

 

    

Shares

    

grant date fair value

Non-vested stock options at December 31, 2018

 

926,500

 

$

0.91

Granted

 

68,000

 

 

2.99

Vested

 

(281,500)

 

 

1.12

Cancelled, expired or forfeited

 

(177,000)

 

 

0.95

Non-vested stock options at December 31, 2019

 

536,000

 

$

0.87

Granted

 

 —

 

 

 —

Vested

 

(272,667)

 

 

0.75

Cancelled, expired or forfeited

 

 —

 

 

 —

Non-vested stock options at December 31, 2020

 

263,333

 

$

0.99

 

The fair value of options that vested in the years ended December 31, 2020 and 2019 were $0.2 million and $0.3 million, respectively. As of December 31, 2020, there are 579,402 milestone-based options outstanding, and there is approximately $0.7 million of unrecognized compensation cost related to these milestone-based options. These options vest based on the achievement of Company and individual objectives as set by the Board.

As of December 31, 2020, there is approximately $0.2 million of total unrecognized compensation cost related to non-vested awards, which will be recognized over a weighted-average period of 1.8 years.

Restricted Stock Unit Activity

The Company issues restricted stock units (“RSUs”) under the 2019 Equity Plan. The fair value of these RSUs is determined based upon the closing fair market value of the Company’s common stock on the grant date.

A summary of the status of RSUs and changes during the years ended December 31, 2020 and 2019 is presented below:

 

 

 

 

 

 

 

 

 

 

Weighted average

 

    

Shares

    

grant date fair value

Non-vested RSUs at December 31, 2018

 

764,201

 

$

2.54

Granted

 

584,593

 

 

3.04

Vested

 

(227,889)

 

 

2.64

Cancelled, expired or forfeited

 

(165,894)

 

 

2.73

Non-vested RSUs at December 31, 2019

 

955,011

 

$

2.69

Granted

 

1,316,174

 

 

1.21

Vested

 

(305,027)

 

 

2.77

Cancelled, expired or forfeited

 

(94,566)

 

 

2.12

Non-vested RSUs at December 31, 2020

 

1,871,592

 

$

1.68

 

As of December 31, 2020,  150,000 restricted shares subject to performance-based vesting were still outstanding, and there is approximately $0.4 million of unrecognized compensation cost related to these milestone-based options. As of December 31, 2020, the Company had approximately $1.7 million of total unrecognized compensation costs related to restricted stock awards, which will be recognized over a weighted average period of 1.8 years.