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Note 17 - Shareholders' Equity | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Stockholders' Equity Note Disclosure [Text Block] | 17— SHAREHOLDERS’ EQUITY 17 - 1 Common stock As of December 31, 2019, EDAP TMS S.A.’s common stock consisted of 29,433,994 issued shares fully paid and with a par value of €0.13 each. 29,141,566 of the shares were outstanding. 17 - 2 Pre-emptive subscription rights Shareholders have preemptive rights to subscribe on a pro rata basis for additional shares issued by the Company for cash. Shareholders may waive such preemptive subscription rights at an extraordinary general meeting of shareholders under certain circumstances. Preemptive subscription rights, if not previously waived, are transferable during the subscription period relating to a particular offer of shares. 17 - 3 Dividend rights Dividends may be distributed from the statutory retained earnings, subject to the requirements of French law and the Company’s by-laws. The Company has not distributed any dividends since its inception as the result of an accumulated statutory deficit of €15,392 thousand. Dividend distributions, if any, will be made in euros. The Company has no plans to distribute dividends in the foreseeable future. 17 - 4 Treasury stock As of December 31, 2019, all 292,428 shares held as treasury stock consisted of (i) 112,138 shares acquired between August and December 1998 and (ii) 180,290 shares acquired in June and July 2001 for a total of €718 thousand. All treasury stocks have been acquired to cover outstanding stock options (see Note 17 - 5 ). 17 - 5 Stock-option plans As of December 31, 2019, the 292,428 ordinary shares held as treasury stock were dedicated to serve stock purchase option plans as follows: 42,000 shares which may be purchased at a price of €2.38 per share pursuant to the exercise of options that were granted on June 25, 2010, the balance of 250,428 may be allocated by the Board of Directors in the future, as per June 28, 2019 shareholders’ approval. As of December 31, 2019, EDAP TMS S.A. sponsored four stock purchase and subscription option plans open to employees of EDAP TMS group: On June 24, 2010, the shareholders authorized the Board of Directors to grant up to 229,100 options to purchase pre-existing Shares at a fixed price to be set by the Board of Directors. All of the Shares that may be purchased through the exercise of stock options are currently held as treasury stock. Conforming to this stock option plan, on June 25, 2010, the Board of Directors granted 229,100 options to purchase existing Shares to certain employees of EDAP TMS. The exercise price was fixed at €2.38 per share. Options were to begin vesting one year after the date of grant and were fully vested as of June 25, 2014 ( i.e., four years after the date of grant). Shares acquired pursuant to the options cannot be sold prior to four years from the date of grant. The options expire on June 25, 2020 ( i.e., ten years after the date of grant) or when employment with the Company ceases, whichever occurs earlier. There was no impact on 2017, 2018 and 2019 operating expenses, in accordance with ASC 718. Under this plan, 42,000 options are outstanding and exercisable at December 31, 2019. On December 19, 2012, the shareholders authorized the Board of Directors to grant up to 500,000 options to subscribe to 500,000 new shares at a fixed price to be set by the Board of Directors. Conforming to this stock option plan, the Board of Directors granted 500,000 options to subscribe Shares to certain employees of EDAP TMS on January 18, 2013. The exercise price was fixed at €1.91 per share. Options were to begin vesting one year after the date of grant and all options were fully vested as of January 18, 2017 ( i.e., four years after the date of grant). Shares acquired pursuant to the options cannot be sold prior to four years from the date of grant. The options expire on January 18, 2023 ( i.e., ten years after the date of grant) or when employment with the Company ceases, whichever occurs earlier. At December 31, 2013 the total fair value of the options granted under this plan was €660 thousand. This non-cash financial charge has been recognized in the Company’s operating expenses over a period of 48 months (using the graded vesting method). The impact on operating income, in accordance with ASC 718, was €2 thousand, €0 thousand and €0 thousand, in 2017, 2018 and 2019, respectively. Under this plan, 282,500 options are outstanding and exercisable at December 31, 2019. On February 18, 2016, the shareholders authorized the Board of Directors to grant up to 1,000,000 options to subscribe to 1,000,000 new shares at a fixed price to be set by the Board of Directors. Conforming to this stock option plan, the Board of Directors granted 575,000 options to subscribe Shares to certain employees of EDAP TMS on April 26, 2016. The exercise price was fixed at €3.22 per share. Options were to begin vesting one year after the date of grant and all options will be fully vested as of April 26, 2020 ( i.e., four years after the date of grant). Shares acquired pursuant to the options cannot be sold prior to four years from the date of grant. The options expire on April 26, 2026 ( i.e., ten years after the date of grant) or when employment with the Company ceases, whichever occurs earlier. At December 31, 2016 the total fair value of the options granted under this plan was €960 thousand. This non-cash financial charge will be recognized in the Company’s operating expenses over a period of 48 months (using the graded vesting method). Conforming to this February 18, 2016 stock option plan, the Board of Directors granted 260,000 options to subscribe Shares to certain employees of EDAP TMS on April 25, 2017. The exercise price was fixed at €2.39 per share. Options were to begin vesting one year after the date of grant and all options will be fully vested as of April 25, 2021 ( i.e., four years after the date of grant). Shares acquired pursuant to the options cannot be sold prior to four years from the date of grant. The options expire on April 25, 2027 ( i.e., ten years after the date of grant) or when employment with the Company ceases, whichever occurs earlier. At December 31, 2017, the total fair value of the options granted on April 25, 2017 under this plan was €335 thousand. This non-cash financial charge will be recognized in the Company’s operating expenses over a period of 48 months (using the graded vesting method). Conforming to this February 18, 2016 stock option plan, the Board of Directors granted 165,000 options to subscribe Shares to certain employees of EDAP TMS on August 29, 2018. The exercise price was fixed at €2.65 per share. Options were to begin vesting one year after the date of grant and all options will be fully vested as of August 29, 2022 ( i.e., four years after the date of grant). Shares acquired pursuant to the options cannot be sold prior to four years from the date of grant. The options expire on August 29, 2029 ( i.e., ten years after the date of grant) or when employment with the Company ceases, whichever occurs earlier. At December 31, 2018, the total fair value of the options granted on August 29, 2018 under this plan was €219 thousand. This non-cash financial charge will be recognized in the Company’s operating expenses over a period of 48 months (using the graded vesting method). Conforming to this February 18, 2016 stock option plan, the Board of Directors granted 155,000 options to subscribe Shares to certain employees of EDAP TMS on April 4, 2019. The exercise price was fixed at €3.90 per share. Options were to begin vesting one year after the date of grant and all options will be fully vested as of April 4, 2023 ( i.e., four years after the date of grant). Shares acquired pursuant to the options cannot be sold prior to four years from the date of grant. The options expire on April 4, 2029 ( i.e., ten years after the date of grant) or when employment with the Company ceases, whichever occurs earlier. At December 31, 2019, the total fair value of the options granted on April 4, 2019 under this plan was €299 thousand. This non-cash financial charge will be recognized in the Company’s operating expenses over a period of 48 months (using the graded vesting method). The impact on this February 18, 2016 Plan on operating income, in accordance with ASC 718, was €380 thousand, €289 thousand and €260 thousand in 2017, 2018 and 2019, respectively. Under this 2016 plan, 949,400 options are outstanding and 494,400 options are exercisable at December 31, 2019. On June 28, 2019, the shareholders authorized the Board of Directors to grant up to a maximum of 358,528 options to purchase pre-existing Shares and to grant 1,000,000 options to subscribe to 1,000,000 new shares at a fixed price to be set by the Board of Directors. As of December 31, 2019, none of the options authorized under this Plan have been allocated. Forfeited stock-options are recognized as they occur, in accordance with ASU 2016 - 09. The fair value of each stock option granted during the year is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Weighted-average expected life (years) |  |  | 6.25 |  |  |  | 6.25 |  |  |  | 6.25 |
Expected volatility rates (1) |  |  | 49.45 | % |  |  | 52.6 | % |  |  | 57.4 | %
Expected dividend yield |  |  | 0 | % |  |  | 0 | % |  |  | 0 | %
Risk-free interest rate |  |  | -0.08 | % |  |  | 0.18 | % |  |  | 0.02 | %
Weighted-average exercise price (€) |  |  | 3.90 |  |  |  | 2.65 |  |  |  | 2.39 |
Weighted-average fair value of options granted during the year (€) |  |  | 1.93 |  |  |  | 1.33 |  |  |  | 1.29 |
( 1 ) Historical volatility calculated over 10 years. As of December 31, 2019, a summary of stock option activity to purchase or to subscribe to Shares under these plans is as follows:
|  | 2019 |  | 2018 |  | 2017
|  | Options |  | Weighted average exercise price (€) |  | Options |  | Weighted average exercise price (€) |  | Options |  | Weighted average exercise price (€)
Outstanding on January 1, |  |  | 1,347,600 |  |  |  | 2.61 |  |  |  | 1,207,600 |  |  |  | 2.61 |  |  |  | 1,427,438 |  |  |  | 2.94 |
Granted |  |  | 155,000 |  |  |  | 3.90 |  |  |  | 165,000 |  |  |  | 2.65 |  |  |  | 260,000 |  |  |  | 2.39 |
Exercised |  |  | (143,700 | ) |  |  | 2.16 |  |  |  | - |  |  |  | - |  |  |  | (60,000 | ) |  |  | 1.91 |
Forfeited |  |  | (85,000 | ) |  |  | 1.94 |  |  |  | (25,000 | ) |  |  | 3.05 |  |  |  | (134,750 | ) |  |  | 3.09 |
Expired |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (285,088 | ) |  |  | 3.99 |
Outstanding on December 31, |  |  | 1,273,900 |  |  |  | 2.78 |  |  |  | 1,347,600 |  |  |  | 2.61 |  |  |  | 1,207,600 |  |  |  | 2.61 |
Exercisable on December 31, |  |  | 818,900 |  |  |  | 2.60 |  |  |  | 772,600 |  |  |  | 2.44 |  |  |  | 598,850 |  |  |  | 2.29 |
Share purchase options available for grant on December 31 |  |  | 250,428 |  |  |  |  |  |  |  | 250,428 |  |  |  |  |  |  |  | 250,428 |  |  |  |  |
The following table summarizes information about options to purchase existing Shares held by the Company, or to subscribe to new Shares, at December 31, 2019:
|  | Outstanding options |  | Fully vested options (1)
Exercise price (€) |  | Options |  | Weighted average remaining contractual life |  | Weighted average exercise price (€) |  | Aggregate Intrinsic Value (2) (€) |  | Options |  | Weighted average exercise price (€) |  | Aggregate Intrinsic Value (2)
3.90 |  |  | 130,000 |  |  |  | 9.3 |  |  |  | 3.90 |  |  |  | 5,954 |  |  |  | - |  |  |  | - |  |  |  | - |
3.22 |  |  | 485,000 |  |  |  | 6.3 |  |  |  | 3.22 |  |  |  | 352,013 |  |  |  | 363,750 |  |  |  | 3.22 |  |  |  | 264,010 |
2.65 |  |  | 145,000 |  |  |  | 8.7 |  |  |  | 2.65 |  |  |  | 187,891 |  |  |  | 36,250 |  |  |  | 2.65 |  |  |  | 46,973 |
2.39 |  |  | 189,400 |  |  |  | 7.3 |  |  |  | 2.39 |  |  |  | 294,669 |  |  |  | 94,400 |  |  |  | 2.39 |  |  |  | 146,868 |
2.38 |  |  | 42,000 |  |  |  | 0.5 |  |  |  | 2.38 |  |  |  | 65,764 |  |  |  | 42,000 |  |  |  | 2.38 |  |  |  | 65,764 |
1.91 |  |  | 282,500 |  |  |  | 3.0 |  |  |  | 1.91 |  |  |  | 575,114 |  |  |  | 282,500 |  |  |  | 1.91 |  |  |  | 575,114 |
1.91 to 3.90 |  |  | 1,273,900 |  |  |  | 7.0 |  |  |  | 2.78 |  |  |  | 1,481,405 |  |  |  | 818,900 |  |  |  | 2.60 |  |  |  | 1,098,728 |
| ( 1 ) | Fully vested options are all exercisable options
| ( 2 ) | The aggregate intrinsic value represents the total pre-tax intrinsic value, based on the Company’s closing stock price of $4.43 at December 31, 2019, which would have been received by the option holders had all in-the-money option holders exercised their options as of that date.
A summary of the status of the non-vested options to purchase shares or to subscribe to new shares as of December 31, 2019, and changes during the year ended December 31, 2019, is presented below:
|  | Options |  | Weighted average Grant-Date Fair Value (€)
Non-vested at January 1, 2019 |  |  | 575,000 |  |  |  | 1.47 |
Granted |  |  | 155,000 |  |  |  | 1.93 |
Vested |  |  | (204,400 | ) |  |  | 1.52 |
Forfeited |  |  | (70,600 | ) |  |  | 1.58 |
Non-vested at December 31, 2019 |  |  | 455,000 |  |  |  | 1.58 |
As of December 31, 2019, there were €271 thousand of total unrecognized compensation expenses related to non-vested stock-options, over a period of 3.25 years. 17 - 6 Accumulated other comprehensive income (loss) The components of accumulated other comprehensive income (loss) net of tax, for the years ended December 31, 2019, and 2018, are as follows:
|  | Year Ended December 31, 2019
|  | Foreign currency translation adjustments |  | Provision for retirement indemnities |  | Total
Beginning balance |  |  | (3,173 | ) |  |  | (577 | ) |  |  | (3,748 | )
Other comprehensive income (loss) before reclassifications |  |  | - |  |  |  | - |  |  |  | - |
Reclassified from accumulated other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |
Net current-period other comprehensive income (loss) |  |  | (61 | ) |  |  | 374 |  |  |  | 313 |
Ending balance |  |  | (3,234 | ) |  |  | (203 | ) |  |  | (3,436 | )
|  | Year Ended December 31, 2018
|  | Foreign currency translation adjustments |  | Provision for retirement indemnities |  | Total
Beginning balance |  |  | (3,027 | ) |  |  | (577 | ) |  |  | (3,604 | )
Other comprehensive income (loss) before reclassifications |  |  | - |  |  |  | - |  |  |  | - |
Reclassified from accumulated other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |
Net current-period other comprehensive income (loss) |  |  | (146 | ) |  |  | - |  |  |  | (146 | )
Ending balance |  |  | (3,173 | ) |  |  | (577 | ) |  |  | (3,748 | )
As there is an allowance recorded against deferred tax assets, there is no net impact of tax.

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