XML 142 R25.htm IDEA: XBRL DOCUMENT v3.24.1.1.u2
Stockholders Equity
 3 Months Ended
Mar. 31, 2024
Stockholders Equity  
Stockholders' Equity 18. Stockholders’ Equity

 

Amendment of 2016 Long-Term Incentive Plan

 

In October 2016, the Company’s board of directors adopted and in November 2016 the stockholders approved the 2016 Long-Term Incentive Plan, pursuant to which a maximum of 6,491,394 shares of common stock may be issued pursuant to restricted stock grants, incentive stock options, non-qualified stock options and other equity-based incentives may be granted. In March 2019, the Company’s board of directors and stockholders approved an increase in the maximum number of shares of common stock subject to the 2016 long-term incentive plan to 15,120,000 shares.

 

Amendment of the 2016 Restricted Stock Grants

 

Pursuant to the 2016 Long-Term Incentive Plan, the board of directors granted 3,819,949 shares as restricted stock grants in October 2016, of which 3,045,963 shares were granted to officers and directors. On March 23, 2019, the Company’s board of directors approved the following modifications with respect to the 2016 Restricted Stock Grants:

 

 

·

Granted to the holders of 1,184,434 restricted shares the right to exchange their restricted shares for a ten-year option to purchase 2.119 shares of common stock at $5.01 per share for each share of restricted stock exchanged.

 

·

Granted to the chief executive officer, the then current executive vice president and one other employee, who held 1,348,213, 998,676 and 199,736 restricted shares, respectively, the right (a) to exchange 50% of their restricted shares for a ten-year option to purchase 2.119 shares of common stock at $5.01 per share and (b) transfer to the Company 50% of their restricted shares for a total of $1,275,000, or $1.01 per share.

 

The grantees of the restricted stock grants have all rights of ownership with respect to the shares, including the right to vote the shares and to receive dividends and distributions with respect to the shares until and unless a forfeiture event shall occur; provided, however, that prior to a forfeiture termination event, (i) the grantees shall have no rights to sell, encumber or otherwise transfer the shares, and (ii) any shares of any class or series of capital stock which are issued to the grantee as a holder of the shares as a result of a stock dividend, stock split, stock distribution, reverse split, recapitalization, or similar event, shall be subject to the same forfeiture provisions as the shares. A forfeiture termination event shall mean such date as is six months following a public stock event. The definition of a public stock event includes, among other events, the effectiveness of a registration statement relating to an underwritten public offering by the Company. The board of directors has the right to defer the date of a forfeiture event to a later date. As a result of the Company’s completion of its initial public offering on February 12, 2024, the restricted shares became non-forfeitable and will vest six months following such date.

On October 7, 2016, the Company entered into an advisory services agreement with a consultant who has been providing services to the Company including, among other things, business planning, financial strategy and implementation and corporate structure related to the Company’s business development, financing and acquisition transactions. The term of the service commenced on September 1, 2016 and has been extended to April 30, 2019 pursuant to amendments. As compensation for the service, the Company issued to the consultant 336,000 shares of restricted stock valued at $5.01 per share based on the then current fair value of the common stock, subject to forfeiture if the public stock event has not occurred by December 31, 2023, which was extended to April 20, 2024. The restricted stock was granted on October 7, 2016 pursuant to the 2016 Long-Term Incentive Plan and is subject to restrictions and forfeiture provisions that are applicable to other restricted stock grants pursuant to the plan as described under the caption “2016 Restricted Stock Grants.” As a result of the Company’s completion of its initial public offering on February 12, 2024, the restricted shares are now non-forfeitable and will vest six months following the public offering date of February 12, 2024.

 

None of  the shares granted above pursuant to the 2016 Long-Term Incentive Plan had vested as of March 31, 2024 and are not considered to have been issued under the requirement of U.S. GAAP since the shares are still subject to   the vesting provision of the agreement even though they met the forfeiture provision on February 12, 2024 when the public offering event was deemed completed.  

 

As of December 31, 2023, total unrecognized compensation costs for outstanding restricted stock awarded was estimated at $1.3 million, based on the estimate of the then most recent price at which shares were sold of $5.01 per share.

 

The following table below summarizes the activity of the restricted stock shares:

 

 

 

Number of Shares

 

 

Weighted Average Grant Date Fair Value per Share

 

Outstanding at December 31, 2023

 

 

264,650

 

 

 

5.01

 

Nonvested as of December 31, 2023

 

 

264,650

 

 

 

5.01

 

Outstanding at March 31, 2024

 

 

264,650

 

 

 

5.01

 

Nonvested as of March 31, 2024

 

 

264,650

 

 

 

5.01

 

 

Stock Options

 

From time to time, the Company granted non-qualified stock options to its employees and consultants for their services. Option awards are generally granted with an exercise price equal to the estimated fair value of the Company’s stock at the date of grant; those option awards generally vest between 18 months and 36 months of continuous service and have contractual terms of seven to ten years. The vested options are exercisable for six months after the termination date unless (i) termination is due to optionee’s death or disability, in which case the option shall be exercisable for 12 months after the termination date, or (ii) the optionee is terminated for cause, in which case the option will immediately terminate. 

A summary of option activity is as follows:

 

 

 

Number of Options

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Contractual (years)

 

 

Aggregate Intrinsic Value

 

Outstanding at December 31, 2023

 

 

6,295,858

 

 

 

4.96

 

 

 

4.5

 

 

 

-

 

Nonvested as of December 31, 2023

 

 

5,946,320

 

 

 

5.01

 

 

 

4.7

 

 

 

-

 

Exercisable as of December 31, 2023

 

 

349,538

 

 

 

4.15

 

 

 

2.5

 

 

 

300,000

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exchanged

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Cancelled or forfeited

 

 

(48,183 )

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding at March 31, 2024

 

 

6,247,675

 

 

 

4.93

 

 

 

4.3

 

 

 

-

 

Nonvested as of March 31, 2024

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercisable as of March 31, 2024

 

 

6,247,675

 

 

 

4.93

 

 

 

4.3

 

 

 

-

 

 

Forfeitures are accounted for as actual forfeitures occur.

 

The aggregate intrinsic value represents the total pretax intrinsic value. The aggregate intrinsic values as of December 31, 2023 are based upon the value per share of $5.01, which was the latest sale price of the Company’s common stock in May 2018.

 

Non-vested Option Awards

 

The following table summarizes the Company’s nonvested option awards activity:

 

Balance at December 31, 2023

 

$5,946,320

 

Granted

 

 

-

 

Forfeited

 

 

 (48,183

)

Vested

 

 

(5,898,137 )

Balance at March 31, 2024

 

$-

 

 

As a result of the Company’s completion of its initial public offering, all the stock options which are performance-based awards are vested and compensation cost of $17.2 million related to such stock options was recognized for the three months ended March 31, 2024 as the performance condition of such awards has been met. The compensation cost of $17.2 million is determined using the Black Scholes model that includes key assumptions for each grant of options as follows: volatility ranging from 54.34% to 67.75%, the risk-free rate ranging from 1.55% to 2.34%, and an expected term ranging from 5 to 6.5 years. For the three months ended March 31, 2023, approximately $1.3 million and $15.9 million of compensation cost was charged to cost of revenue and general and administrative expenses, respectively, related to stock options. During the three months ended March 31, 2024 and 2023, no vested options to purchase shares of common stock were cancelled. No nonvested options to purchase common stock were cancelled during the three months ended March 31, 2023.