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Equity Incentive Plans
 3 Months Ended
Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Equity Incentive Plans

Note 8 – Equity Incentive Plans

 

2017 Equity Incentive Plan

 

Under the Company’s 2017 Equity Incentive Plan, as may be modified and amended by the Company from time to time (the “2017 Equity Plan”), the Board of Directors (the “Board”) (or the compensation committee of the Board, if one is established) may award stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock unit awards (“RSUs”), shares granted as a bonus or in lieu of another award, and other stock-based performance awards. The 2017 Equity Plan allocates 333,333 shares of the Company’s common stock (“Plan Shares”) for issuance of equity awards under the 2017 Equity Plan. If any shares subject to an award are forfeited, expire, or otherwise terminate without issuance of such shares, the shares will, to the extent of such forfeiture, expiration, or termination, again be available for awards under the 2017 Equity Plan.

 

During the three months ended March 31, 2023, no shares or options were issued, or cancelled under the 2017 Plan.

 

As of March 31, 2023, of the 333,333 shares authorized under the 2017 Plan for equity awards, 163,692 shares have been issued, awards relating to 147,177 options remain outstanding, and 22,464 shares remain available for future equity awards.

 

 

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

(in US Dollars except share numbers)

(Unaudited)

 

2021 Equity Incentive Plan

 

On March 22, 2021, the Board approved the 2021 Equity Incentive Plan (the “2021 Equity Plan”), which was approved by the stockholders on July 22, 2021. The 2021 Equity Plan permits the Board to grant awards of up to 666,667 shares of common stock. The 2021 Equity Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), non-qualified stock options, stock appreciation rights (“SARs”), restricted stock awards and restricted stock unit awards and other equity linked awards to our employees, consultants, and directors. If an equity award (i) expires or otherwise terminates without having been exercised in full or (ii) is settled in cash (i.e., the holder of the award receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of common stock that may be issued pursuant to this Plan.

 

During the three months ended March 31, 2023, the Company issued 122,398 shares of its common stock in settlement of restricted stock units issued to its independent directors under the 2021 Equity Incentive Plan, pursuant to the Director Compensation plan adopted on January 17, 2022.

 

During the three months ended March 31, 2023,138,491 non-qualified stock options were issued to five employees and three former employees in respect of the Company’s 2021 Equity Incentive Plan. The options vested immediately, have a term of 10 years and an exercise price of $0.8955. An expense of $89,970 in respect of this issuance had been accrued in 2022. An additional expense of $32,376 was recognized in 2023 upon management and board finalization and approval of the awards.

 

As of March 31, 2023, of the 666,667 shares authorized under the 2021 Equity Plan, 132,568 shares have been issued in settlement of restricted stock units, awards relating to 183,615 non-qualified stock options, and 40,816 incentive stock options remain outstanding, and 309,668 shares remain available for future equity awards.

 

There was $45,919 in unrecognized compensation expense for unvested non-qualified stock options, and incentive stock options at March 31, 2023 which will be recognized over approximately 2 years.

 

Non-Qualified and Incentive Stock Options

 

A summary of the non-qualified stock options and incentive stock options granted to employees and consultants under the 2017 and 2021 Equity Plans during the three months ended March 31, 2023, are presented in the table below:

 

  

Number of

Options

  

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Contractual

Term

  

Aggregate

Intrinsic

Value

 
                 
Outstanding, December 31, 2022   192,073   $8.94    7.6   $            - 
Granted   138,489   $0.90    8.4   $- 
Exercised   -   $-    -   $- 
Forfeited   (500)  $6.10    8.9   $- 
Expired   -   $-    -   $- 
Outstanding, March 31, 2023   330,062   $5.57    7.6   $- 
Exercisable, March 31, 2023   304,972   $5.59    8.2   $- 

 

 

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

(in US Dollars except share numbers)

(Unaudited)

 

A summary of non-vested non-qualified stock options activity for employees and consultants under the 2017 and 2021 Equity Plans for the three months ended March 31, 2023, are presented in the table below:

 

  

Number of

Options

  

Weighted

Average

Grant-Date

Fair Value

  

Aggregate

Intrinsic Value

  

Grant-Date

Fair Value

 
                
Nonvested, December 31, 2022   43,846   $5.65   $  -   $247,730 
Granted   138,489   $0.88   $-   $122,346 
Vested   (156,912)  $1.49   $-   $(234,296)
Forfeited   (333)  $6.67   $-   $(2,225)
Expired   -   $-   $-   $- 
Nonvested, March 31, 2023   25,090   $4.98   $-   $133,555 

 

For the three months ended March 31, 2023 and March 31, 2022, the Company recorded $45,778 and $32,939 as compensation expense related to vested options issued to employees and consultants, net of forfeitures, respectively.

 

A summary of the non-qualified stock options granted to directors under the 2017 Equity Plan and the 2021 Equity Plan, during the three months ended March 31, 2023, are presented in the table below:

 

  

Number of

Options

  

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Contractual

Term

  

Aggregate

Intrinsic

Value ($000)

 
                 
Outstanding, December 31, 2022   57,122   $9.44    6.0   $      - 
Granted   -    -    0.0   $- 
Exercised   -    -    -   $- 
Forfeited/Cancelled   -    -    -   $- 
Expired   -    -    -   $- 
Outstanding, March 31, 2023   57,122   $9.44    5.7   $- 
Exercisable, March 31, 2023   57,122   $9.44    5.7   $- 

 

There were no non-vested, non-qualified stock options issued to directors under the 2017 Equity Plan and the 2021 Equity Plan, for the three months ended March 31, 2023.

 

 

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2023

(in US Dollars except share numbers)

(Unaudited)

 

During the three months ended March 31, 2023 and March 31, 2022, the Company incurred $0 and $29,656 respectively, as compensation expense related to 0 and 6,250 fully vested options issued to directors, respectively.

 

Restricted Stock Units

 

Effective January 3, 2023, the Company issued a total of 119,032 restricted stock units (RSUs) under the 2021 Equity Plan to its four independent directors. These RSUs vested upon grant.

 

Effective January 17, 2023, the Company settled 3,366 RSUs that had been issued on January 17, 2022 to two new directors and that vested after 12 months by the issuance of shares of common stock

 

During the three months ended March 31, 2023 and March 31, 2022, the Company recorded $101,316 and $29,923, respectively, as compensation expense related to vested RSUs issued to directors.

 

  

Number of

Units

  

Weighted

Average

Grant-Date

Fair Value

  

Aggregate

Intrinsic

Value

 
            
Outstanding, December 31, 2022   3,366   $7.42   $- 
Granted   119,032   $0.84   $- 
Vested and settled with share issuance   (122,398)  $1.02   $- 
Forfeited/canceled   -   $-   $- 
Outstanding, March 31, 2023   -   $-   $-