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Equity Incentive Plans
 9 Months Ended
Sep. 30, 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 nine months ended September 30, 2023, no shares or options were issued and 1,665 options were cancelled under the 2017 Plan.

 

As of September 30, 2023, of the 333,333 shares authorized under the 2017 Plan for equity awards, 163,692 shares have been issued, awards relating to 145,512 options remain outstanding, and 24,129 shares remain available for future equity awards.

 

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 nine months ended September 30, 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.

 

-138,489 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.

 

-16,631 non-qualified stock options were cancelled and 333 non-qualified stock options were forfeited that had previously been issued under the 2021 Equity Incentive Plan.

 

 

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2023

(in US Dollars except share numbers)

(Unaudited)

 

As of September 30, 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 182,728 non-qualified stock options, and 40,816 incentive stock options remain outstanding, and 310,555 shares remain available for future equity awards.

 

There was $15,586 in unrecognized compensation expense for unvested non-qualified and incentive stock options as of September 30, 2023 which will be recognized over approximately the next 18 months.

 

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 nine months ended September 30, 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    6.4   $- 
Exercised   -   $-    -   $- 
Forfeited   (18,629)  $2.63    9.2   $- 
Expired   -   $-    -   $- 
Outstanding, September 30, 2023   311,933   $5.74    6.6   $- 
Exercisable, September 30, 2023   286,843   $5.78    6.5   $- 

 

A summary of non-vested non-qualified stock options activity for employees and consultants under the 2017 and 2021 Equity Plans for the nine months ended September 30, 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   28,756   $4.73   $-   $136,016 
Granted   138,489   $0.88   $-   $121,870 
Vested   (141,822)  $0.92   $-   $(130,476)
Forfeited   (333)  $6.67   $-   $(2,222)
Expired   -   $-   $-   $- 
Nonvested, September 30, 2023   25,090   $4.98   $-   $124,948 

 

 

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2023

(in US Dollars except share numbers)

(Unaudited)

 

For the nine months ended September 30, 2023 and September 30, 2022, the Company recorded $76,110 and $129,733 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 and 2021 Equity Plans, during the nine months ended September 30, 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   -    -    -   $- 
Exercised   -    -    -   $- 
Forfeited/Cancelled   -    -    -   $- 
Expired   -    -    -   $- 
Outstanding, September 30, 2023   57,122   $9.44    5.3   $- 
Exercisable, September 30, 2023   57,122   $9.44    5.3   $- 

 

There were no non-vested, non-qualified stock options issued to directors under the 2017 Equity Plan and the 2021 Equity Plan, for the nine months ended September 30, 2023.

 

During the nine months ended September 30, 2023 and September 30, 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 nine months ended September 30, 2023 and September 30, 2022, the Company recorded $101,316 and $42,413, respectively, as compensation expense related to vested RSUs issued to directors.

 

 

CEA Industries Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2023

(in US Dollars except share numbers)

(Unaudited)

 

  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, September 30, 2023   -   $-   $-