Quarterly report pursuant to Section 13 or 15(d)

SUBSEQUENT EVENTS

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SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2021
SUBSEQUENT EVENTS  
NOTE 13 - SUBSEQUENT EVENTS

NOTE 13 – SUBSEQUENT EVENTS

 

2021 Equity Incentive Plan

 

On October 12, 2021, after approval from the Stockholders at the Company’s Annual Stockholders Meeting, the Company entered into and adopted the 2021 Equity Incentive Plan (the “2021 Incentive Plan”) for the purpose of enhancing the Registrant’s ability to attract and retain highly qualified directors, officers, key employees and other persons and to motivate such persons to improve the business results and earnings of the Company by providing an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company. The 2021 Incentive Plan will be administered by the compensation committee of the Board who will, amongst other duties, have full power and authority to take all actions and to make all determinations required or provided for under the 2021 Incentive Plan. Pursuant to the 2021 Incentive Plan, the Company may grant options, share appreciation rights, restricted shares, restricted share units, unrestricted shares and dividend equivalent rights. The Plan has a duration of 10 years.

 

Subject to adjustment as described in the 2021 Incentive Plan, the aggregate number of common shares (“Shares”) available for issuance under the 2021 Incentive Plan is initially set at One Million (1,000,000) Shares; this number is automatically increased each January 1st by an amount equal to 5% of the number of common stock shares outstanding at that date. The exercise price of each Share subject to an Option (as defined in the 2021 Incentive Plan) shall be at least the Fair Market Value (as defined in the 2021 Incentive Plan) (except in the case of an incentive stock option granted to more than 10% shareholder of the Company, in which case the price should not be less than 110% of the Fair Market Value) on the date of the grant of a Share and shall have a term of no more than ten years. As of November 15, 2021, 969,644 Options have been issued (see Note 13 – SUBSEQUENT EVENTS: Common Stock Option Grants).

 

Certain existing grant commitments to several Company employees provide for the contingent issuance of an additional 150,000 options of the Company’s common stock at an exercise price of at least the Fair Market Value (as defined in the 2021 Incentive Plan) on the date of the grant of a Share and with a term of no more than ten years.

 

Non-Employee Director Compensation Policy

 

On October 12, 2021, the Company’s Board of Directors approved a new Non-Employee Director Compensation Policy. The policy calls for the non-employee board members to be compensated as follows.

 

Annual Cash Compensation

 

The annual cash compensation amount set forth below is payable to each member of the board of directors of the Company who is not also serving as an employee of or consultant to the Company or any of its subsidiaries (“Eligible Directors”) in equal quarterly installments, payable in arrears on the last day of each fiscal quarter in which the service occurred. If an Eligible Director joins or resigns from the Board or a committee of the Board at a time other than effective as of the first day of a fiscal quarter, each annual retainer set forth below will be pro-rated based on days served in the applicable fiscal year, with the pro-rated amount paid for the first fiscal quarter in which the Eligible Director provides the service, and for new Board members, regular full quarterly payments thereafter. Eligible Directors may elect to receive vested shares of the Company’s common stock in lieu of the following retainers on the date on which such retainers would otherwise have been paid in cash in accordance with the terms and conditions of the 2021 Incentive Plan.

 

 

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Annual Board Service Retainer:

 

 

 

 

All Eligible Directors: $40,000

 

 

 

Non-Executive Chair (in addition to above retainer): $5,000

 

 

 

 

 

 

 

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Annual Committee Member Service Retainer:

 

 

 

 

 

 

 

Member of the Audit Committee: $4,000

 

 

 

Member of the Compensation Committee: $4,000

 

 

 

Member of the Nominating and Governance Committee: $4,000

 

 

 

Members of Committees acting as Committee Chair will receive an additional $2,000 retainer.

   

Equity Compensation

 

The equity compensation set forth below will be granted under the 2021 Incentive Plan, subject to the approval of the Plan by the Company’s stockholders. All stock options granted under this policy will be nonstatutory stock options, with an exercise price per share equal to 100% of the Fair Market Value (as defined in the 2021 Incentive Plan) of the underlying common stock on the date of grant, and a term of ten years from the date of grant (subject to earlier termination in connection with a termination of service as provided in the 2021 Incentive Plan; provided that to the extent vested, such stock options shall remain exercisable for up to 12 months following such termination of service).

 

1.

Annual Equity Award:

 

 

 

 

 

On the date of each annual stockholder meeting of the Company that occurs beginning with calendar year 2021, each Eligible Director who continues to serve as a non-employee member of the Board following such stockholder meeting will be automatically, and without further action by the Board or the Compensation Committee of the Board, granted a stock option to purchase shares of the Company’s common stock with an approximate target value on the date of grant equal to $50,000 (the “Annual Grant”). The shares subject to the Annual Grant will vest in four equal installments, the first three on the three-month, six-month and nine-month anniversary of the date of grant, and the fourth on the day prior to the subsequent annual stockholder meeting which will be the term of that service for that grant.

  

 

2.

Initial Equity Award:

 

 

 

 

 

From and after the 2021 annual stockholder meeting, if an individual first becomes an Eligible Director other than on the date of an annual stockholder meeting of the Company, each such Eligible Director automatically, and without further action by the Board or Compensation Committee of the Board, if any, will be granted, on the date that he or she is first elected or appointed to the Board (or, if such date is not a market trading day, the first market trading day thereafter), an initial annual equity award with an aggregate target value equal to the pro rated target value of the Annual Grant to reflect a reduction for each month prior to the date of grant that has elapsed since the preceding annual stockholder meeting of the Company, calculated in the same manner as the Annual Grant.

   

Non-Employee Director Compensation Limit

 

Notwithstanding the foregoing, the aggregate value of all compensation granted or paid, as applicable, to any individual for service as a Eligible Director (as defined in the 2021 Incentive Plan) shall in no event exceed the limits set forth in the Plan or any limitations contained in any successor plan.

 

Common Stock Option Grants

 

Under the new Non-Employee Board Compensation Policy, on October 12, 2021, and the 2021 Incentive Plan the Board of Directors approved the grant of $50,000 worth of stock options to each of the four non-employee directors. The options have an exercise price of $4.48, the closing value on October 12, 2021, and term of 10 years. The number of optioned shares were determined based on Black Scholes pricing model relying on the following assumptions: volatility 142.54; annual rate of dividends 0%; discount rate 1.59%. Each of the non-employee directors, John Payne, Nola Masterson, Alison Cornell, and Christopher Maggiore received an option grant for 11,416 shares of common stock, or a total option grant of 45,664 shares of stock valued at $200,000. In addition, Ms. Cornell was granted options for 7,660 shares to reflect her partial service on the Board of Directors for the prior term, from February 8, 2021 to October 12, 2021. The value of these options using the same Black Scholes pricing model assumptions is $33,549.

 

On October 21, 2021, under the terms of the 2021 Incentive Plan, the Company’s Compensation Committee of the Board of Directors granted options to the two named officers and three of the Company’s Board Members. The granted options all have an exercise price of $5.50 and have a 10-year term. The grantees and the number of underlying shares are: Andrew Dahl, 376,000; Keith Marchiando 288,000; John Payne, 192,000; Christopher Maggiore, 42,000; and Nola Masterson, 26,000. The total number of options granted is 924,000 and these options were valued at $3,476,392 using the Black Scholes pricing model relying on the following assumptions: volatility 141.38%; annual rate of dividends 0%; discount rate 1.68%.

 

Supply Chain Consulting Agreement

 

On November 3, 2021, the Company and the “member of the Consultant” signed a second amendment to the original consulting agreement. The monthly cash payment was raised to $15,000. All other terms of the original agreement as amended remained unchanged.

     

Investor / Public Relations

 

On October 15, 2021, the Company, per its consulting agreement with CorProminence, LLC (dba COREir), issued 2,500 shares of common stock to CorProminence, LLC. The shares were valued on October 15, 2021, at $4.15 per share for a total expense in the aggregate of $10,375. On October 31, 2021, the Company informed CorProminence LLC that it was immediately terminating the consulting agreement. Under the termination clause of the agreement, the Company may be liable for an additional 2,500 shares to be issued to CorProminence.