XML 24 R13.htm IDEA: XBRL DOCUMENT v3.22.2.2
Equity
 6 Months Ended
Jun. 30, 2022
Equity  
Equity

Note 6 – Equity

Common Stock and Preferred Stock

The Company is authorized to issue 62.5 million shares of common stock and 2.0 million shares of preferred stock. Preferences, limitations, voting powers and relative rights of any preferred stock to be issued may be determined by the Company’s Board of Directors. The Company has not issued any shares of preferred stock.

In July 2018, the Company completed a private equity offering and executed a Stock Purchase Agreement with clirSPV LLC, which permits participation in future capital raising transactions (the “Participation Right”) on the same terms as other investors participating in such transactions. In no event may the Participation Right be exercised to the extent it would cause clirSPV LLC or any of its affiliates to beneficially own 20% or more of the Company’s then outstanding common stock or hold shares with 20% or more of the voting power. In May 2022, the Company signed an agreement with clirSPV LLC, that provides for an election right to extend the Participation Right beyond the original expiration date of December 31, 2023, but to no later than June 30, 2027. This election is pursuant to specific terms and conditions and expires on December 31, 2023.

​

On June 1, 2022, the Company completed a firm commitment underwritten public offering pursuant to an underwriting agreement, dated May 27, 2022, by and between the Company and Newbridge Securities Corporation by issuing 4,186 thousand shares of common stock at a price to the public of $1.11 per share, resulting in gross proceeds of approximately $4.6 million and net cash proceeds of approximately $4.2 million.

​

The Company has an At-The-Market (“ATM”) Offering Sales Agreement with Virtu Americas LLC, as sales agent pursuant to which it may currently sell shares of common stock with an aggregate offering price of up to $8.7 million. During the six months ended June 30, 2022, the Company issued approximately 501 thousand shares of its common stock at an average price of $1.24 per share for gross proceeds of approximately $624 thousand and net cash proceeds of approximately $587 thousand. As of June 30, 2022, the Company has issued approximately 1.6 million shares of common stock under the ATM program, at an average price of $3.84 per share. Gross proceeds totaled approximately $6.1 million and net cash proceeds was approximately $5.9 million.

​

Equity Incentive Plan

On June 17, 2021, the Company's shareholders approved and the Company adopted the ClearSign Technologies Corporation 2021 Equity Incentive Plan (the “2021 Plan”) which permits the Company to grant Incentive Stock Options, Non-statutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, and Performance Shares, to eligible participants, which includes employees, directors and consultants. The Compensation Committee of the Board of Directors is authorized to administer the 2021 Plan.

​

The 2021 Plan provides for an annual increase in available shares equal to the lessor of (i) 10% of the aggregate number of shares of Common Stock issued by the Company in the prior fiscal year; or (ii) such number provided by the Compensation Committee; provided, however, that the total cumulative increase in the number of shares available for issuance pursuant to this automatic share increase shall not exceed 400 thousand shares of common stock. In 2022, the board of directors approved an increase of 150,423 shares.

Ending balances of the Plans are as follows:

​

​

​

​

​

​

​

​

June 30, 

​

December 31, 

(in thousands)

    

2022

    

2021

Outstanding options and restricted stock units

 

3,358

 

3,076

Reserved but unissued shares under the Plans

​

2,706

​

2,901

Total authorized shares under the Plans

 

6,064

 

5,977

​

Stock Options

​

Under the terms of the 2021 Plan, incentive stock options and nonstatutory stock options must have an exercise price at or above the fair market value on the date of the grant. At the time of grant, the Company will determine the period within which the option may be exercised and will specify any conditions that must be satisfied before the option vests and may be exercised. The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model.

​

As permitted by SEC Staff Accounting Bulletin (SAB) 107, management utilized the simplified approach to estimate the expected term of the options, which represents the period of time that options granted are expected to be outstanding. Expected volatility has been determined through the Company’s historical stock price volatility. The Company has not made an estimate of forfeitures at the time of the grant, but rather accounts for forfeitures at the time they occur. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

​

The following weighted-average assumptions were utilized in the calculation of the fair value of stock options:

​

​

​

​

​

​

​

June 30, 

​

​

​

2022

​

Expected life

    

5.71 years

    

Weighted average volatility

​

77.64

%

Weighted average risk-free interest rate

​

1.39

%

Expected dividend rate

​

0

%

​

Compensation expense associated with stock option awards for the three and six months ended June 30, 2022 totaled $15 thousand and $57 thousand, respectively. Compensation expense associated with stock option awards for the three and six months ended June 30, 2021 totaled $19 thousand and $429 thousand, respectively.

​

A summary of the Company’s stock option activity and changes is as follows:

​

​

​

​

​

​

​

​

​

​

​

June 30, 

​

​

2022

(in thousands)

​

Options to Purchase Common Stock

​

Weighted Average Exercise Price

​

Weighted Average Remaining Contractual Life (in years)

Outstanding at January 1

 

2,964

​

$

2.06

 

6.89

Granted

 

88

​

$

1.26

 

9.51

Exercised

 

(3)

​

$

0.89

 

—

Forfeited/Expired

 

(10)

​

$

2.93

 

—

Outstanding at June 30

 

3,039

​

$

2.03

 

6.47

Exercisable at June 30

 

2,212

​

$

1.71

 

5.79

​

The estimated aggregate pretax intrinsic value of the Company’s outstanding vested stock options at June 30, 2022 is $291 thousand. The intrinsic value is the difference between the Company’s common stock price and the option exercise prices multiplied by the number of in-the-money options. This amount changes based on the fair value of the Company’s common stock.

​

At June 30, 2022, there was $1.7 million of total unrecognized compensation cost related to non-vested stock option-based compensation arrangements. Vesting criteria ranges from time-based to performance-based. The Company records costs for time-based arrangements ratably across the timeframe, whereas performance-based arrangements require management to continually evaluate predetermined goals against actual circumstances.

​

Restricted Stock Units

The Company approved compensation for board service to be paid to its independent directors in restricted stock units (“RSUs”) under the 2021 Plan. Compensation is earned on a quarterly basis with the target value of compensation set at $85 thousand per quarter. A RSU grant is to be awarded to each independent director in the beginning of the quarter in which services will be rendered, and the number of RSUs granted is to be based on the trading value of the Company’s stock on the date of the award.

The vesting of the RSU grants is contingent upon the occurrence of one of four future events which the Company cannot predict or control. Accordingly, stock based compensation has not been recognized for services performed during each of the six months ended June 30, 2022 or 2021 in accordance with FASB Accounting Standards Codification, Topic 718, Compensation-Stock Compensation, (ASC 718). During the six months ended June 30, 2022, the Company issued 110 thousand RSUs for board services amounting to $170 thousand of unrecognized compensation.

During January 2022, the Company issued retention bonuses for employees in the form of RSUs. These awards vest 12 months from the date of award for services rendered in 2022. During the six months ended June 30, 2022, the Company issued 97 thousand RSUs to employees amounting to $70 thousand of recognized compensation and $70 thousand for unrecognized compensation.

Stock Grants

During the six months ended June 30, 2022, the Company issued 66 thousand shares of common stock with a fair value of $1.44 per share to its employees. These shares were issued in lieu of cash for payment of 2021 accrued bonuses

totaling $125 thousand that were recorded during the year ended December 31, 2021. In addition, the Company issued 3 thousand shares for a one-time $3 thousand bonus to one employee in recognition of their performance.

Consultant Stock Plan

The 2013 Consultant Stock Plan (the “Consultant Plan”) provides for the granting of shares of common stock to consultants who provide services related to capital raising, investor relations, and making a market in or promoting the Company’s securities. The Company’s officers, employees, and board members are not entitled to receive grants from the Consultant Plan. The Compensation Committee of the Board of Directors is authorized to administer the Consultant Plan and establish the grant terms. The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine.

​

The Consultant Plan activity and change is as follows:

​

​

​

​

​

​

​

June 30, 

(in thousands)

    

2022

Reserved but unissued shares, January 1

​

​

211

Grants

​

​

(8)

Reserved but unissued shares

​

 

203

​

The Consultant Plan compensation expense is summarized as follows:

​

​

​

​

​

​

​

​

​

​

For the Six Months Ended

​

​

June 30, 

​

    

2022

    

2021

Compensation Expense

​

$

14

​

$

17

Weighted Average Value Per Share

​

$

1.93

​

$

2.33

​

Inducement Stock Options

Pursuant to the rules of The Nasdaq Stock Market, and in compliance with those rules, the Company may issue equity awards, including stock options, as an inducement to an individual to accept employment with the Company. Inducement awards need not be approved by the Company's shareholders. During the year ended December 31, 2019, the Company granted 341 thousand non-qualified stock options to its Chief Executive Officer. The fair value of the non-qualified stock options estimated on the date of grant using the Black-Scholes valuation model was $176 thousand. The compensation expense recognized for these awards for the six months ended June 30, 2022 and 2021 was zero and $13 thousand, respectively.