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Note 7 - Stock-based Compensation

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

7. Stock-Based Compensation

2019 Stock Plan

The Aemetis Amended and Restated 2019 Stock Plan (the “2019 Stock Plan”) allows the Company to grant Incentive Stock Options, Non-Statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares and other stock or cash awards as the Company’s Board may determine in its discretion. Option grants made under the Second Amended and Restated 2007 Stock Plan prior to the adoption of the 2019 Stock Plan remain in place according to their terms. The number of shares authorized for issuance under the 2019 Stock Plan increases on January 1 of each year according to the terms of the plan. In addition, shares associated with stock options that expire or are forfeited without being exercised become available again for issuance.

The following table summarizes activity under the 2019 Stock Plan and prior plan during the nine-month period ending September 30, 2023:

		Shares Available for Grant				Number of Shares Outstanding				Weighted-Average Exercise Price
Balance as of December 31, 2022			65	*			4,694			$	4.63
Authorized			1,644				-				-
Options Granted			(1,278	)			1,278				3.60
RSAs Granted			(244	)			-				-
Exercised			-				(141	)			1.63
Forfeited/expired			221				(221	)			5.58
Balance as of September 30, 2023			408				5,610			$	4.43

The number of outstanding option shares as of September 30, 2023, includes 3.8 million shares that are vested.

*The 2015 Employment Inducement Stock Plan (the “2015 Inducement Plan”) authorizes issuance of options for 100 thousand shares of common stock to new employees, which are not included in the above table. As of September 30, 2023, there are no option grants outstanding under the 2015 Inducement Plan.

Valuation and Expense Recorded for Stock Option Issuances

Stock-based compensation is accounted for in accordance with the provisions of ASC 718 Compensation-Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

All issuances of stock options or other issuances of equity instruments to employees as the consideration for services received by us are accounted for based on the fair value of the equity instrument issued. The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock based compensation expense requires us to make assumptions and judgments about the variables used in the calculation, including the fair value of our common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of our common stock, a risk-free interest rate, and expected dividends. Under ASU 2016-09 Improvements to Employee Share-Based Payments Accounting, we have elected to recognize forfeitures as they occur. We use the simplified calculation of expected life described in the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment, and volatility is based on an average of the historical volatilities of the common stock of four entities with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividends in the foreseeable future. Expected forfeitures are assumed to be zero due to the small number of plan participants.

The weighted average fair value calculations for the options granted during the nine months ended 2023 and 2022 are based on the following assumptions:

		*For the nine months ended September 30,*
Description		*2023*				*2022*
Dividend-yield			-				-
Risk-free interest rate			3.86	%			2.03	%
Expected volatility			124.62	%			117.21	%
Expected life (years)			7.00				7.00
Market value per share on grant date		$	3.60			$	10.97
Fair value per option on grant date		$	3.29			$	9.71

During the nine months ended September 30, 2023 and 2022, the Company granted 243,850 and 60,300 restricted stock awards, respectively, with a fair value on date of grant of $3.60 and $13.75, respectively, per share.

As of September 30, 2023, the Company had $8.9 million of total unrecognized compensation expense for option issuance, which the Company will amortize over the remaining vesting period for each applicable grant, which has a weighted average of 1.7 as of September 30, 2023.