Stockholder's Equity

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Stockholder's Equity

15. Stockholder’s Equity

Issuance of Common Stock

During 2019, the Company issued 291,099 shares of common stock to directors, employees and consultants for stock-based compensation of $1,653,759. The shares were valued using the closing share price of the Company’s common stock on the date of grant, within the range of $3.68 to $6.13 per share.

In September 2019, the Company issued 280,555 units (the “Units”) in connection with a private offering at a per Unit price of $4.50 per share, resulting in net proceeds of $1,262,497. Each Unit consists of one share of Eastside’s common stock and a three-year warrant to acquire 0.5 shares of common stock at an exercise price of $5.50 per share.

In April 2019, the Company issued 1,077 shares of common stock in connection with existing option exercises at an exercise price of $3.99.

On January 11, 2019, the Company issued 338,212 shares of common stock in connection with the acquisition of Craft Canning for a total consideration of $2,080,004.

On December 31, 2018, the Company issued 3,122 shares in connection with the purchase of the remaining 10% interest in BBD.

On November 20, 2018, the Company issued 1,235,000 shares of common stock at $6.50 per share in connection with an underwritten public offering for net proceeds of approximately $7.2 million. On December 19, 2018 an additional 185,250 shares were issued as part of the overallotment for additional proceeds of approximately $1.1 million.

During 2018, the Company issued 1,345,978 shares of common stock at $5.40 per share in connection with the exercise of warrants for cash proceeds of $7,268,281, and 500,000 shares of common stock at $5.40 per share in connection with the exercise of warrants in exchange for a reduction in outstanding note principal of $2,700,000.

On September 25, 2018, the Company issued 120,000 shares of common stock at $5.40 per share in connection with the exercise of underwriter warrants. The warrants were part of units, and each unit consisted of one share of common stock and one common stock warrant exercisable at $5.40 per share.

In July 2018, the Company issued 167,273 shares of common stock at $6.00 per share in exchange for outstanding note principal and interest. The conversion was within the terms of the original note agreement and no gain or loss was recorded.

During 2018, the Company issued 115,334 shares of common stock at an average of $5.35 per share in connection with the exercise of warrants for proceeds of $617,004. In addition, the Company issued 59,308 shares of common stock at an average of approximately $4.05 per share in exchange for services rendered.

During 2018, the Company issued 79,734 shares of common stock to directors and employees for stock-based compensation of $712,469. The shares were valued using the closing share price of our common stock on the date of grant, with the range of $3.99 - $8.50 per share.

During 2018, the Company issued 35,941 shares of common stock in connection with existing option exercises, at an average exercise price of $4.56.

During 2018, the Company issued 27,400 shares of common stock to consultants in exchange for services. The shares were valued using the closing share price of our common stock on the date of grant, with a range of $3.99 - $7.72 per share, for a total value of $162,378.

Stock-Based Compensation

On September 8, 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”). Pursuant to the terms of the plan, on January 1, 2019, the number of shares available for grant under the 2016 Plan reset to 1,991,350 shares, equal to 8% of the number of outstanding shares of the Company’s capital stock, calculated on an as-converted basis, on December 31 of the preceding calendar year, and then added to the prior year plan amount. As of December 31, 2019, there were 825,659 options and 527,337 restricted stock units (“RSUs”) issued under the 2016 Plan, with vesting schedules varying between immediate and five (5) years from the grant date.

On January 29, 2015, our Board of Directors adopted the 2015 Stock Incentive Plan (the “2015 Plan”). The total number of shares available for the grant of either stock options or compensation stock under the plan is 50,000 shares, subject to adjustment. At December 31, 2019, there were 19,584 options issued under the Plan outstanding, with vesting schedules varying between immediate and one (1) year from the grant date, which options vest at the rate of at least 25% in the first year, starting 6-months after the grant date, and 75% in year two.

A summary of all stock option activity at and for the years ended December 31, 2019 and 2018 is presented below:

	# of Options			Weighted- Average Exercise Price
Outstanding at December 31, 2017		369,006		$	6.47
Options granted		654,000			5.47
Options exercised		(48,715	)		4.56
Options canceled		(78,433	)		4.86
Outstanding at December 31, 2018		895,858		$	5.62
Options granted		79,000			5.01
Options exercised		(3,167	)		4.04
Options canceled		(187,590	)		4.61
Outstanding at December 31, 2019		784,101		$	5.65
Exercisable at December 31, 2019		556,420		$	5.59

The aggregate intrinsic value of options outstanding at December 31, 2019 was $Nil, compared to $558,278 at December 31, 2018.

At December 31, 2019, there were 227,681 unvested options with an aggregate grant date fair value of $582,209. The unvested options will vest in accordance with the vesting schedule in each respective option agreement, which varies between immediate and five (5) years from the grant date. The aggregate intrinsic value of unvested options at December 31, 2019 was $Nil. During the year ended December 31, 2019, 193,072 options vested.

The Company uses the Black-Scholes valuation model to measure the grant-date fair value of stock options. The grant-date fair value of stock options issued to employees is recognized on a straight-line basis over the requisite service period. Stock-based awards issued to nonemployees are recorded at fair value on the measurement date and are subject to periodic market adjustments as the underlying stock-based awards vest.

To determine the fair value of stock options using the Black-Scholes valuation model, the calculation takes into consideration the effect of the following:

● Exercise price of the option

● Fair value of the Company’s common stock on the date of grant

● Expected term of the option

● Expected volatility over the expected term of the option

● Risk-free interest rate for the expected term of the option

The calculation includes several assumptions that require management’s judgment. The expected term of the options is calculated using the simplified method described in GAAP. The simplified method defines the expected term as the average of the contractual term and the vesting period. Estimated volatility is derived from volatility calculated using historical closing prices of common shares of similar entities whose share prices are publicly available for the expected term of the options. The risk-free interest rate is based on the U.S. Treasury constant maturities in effect at the time of grant for the expected term of the options.

The following weighted-average assumptions were used in the Black-Scholes valuation model for options granted during the year ended December 31, 2019:

Risk-free interest rate	2.22	%
Expected term (in years)	6.50
Dividend yield	-
Expected volatility	31	%

The weighted-average grant-date fair value per share of stock options granted during the year ended December 31, 2019 was $1.83. The aggregate grant date fair value of the 79,000 options granted during the year ended December 31, 2019 was $142,189.

For the twelve months ended December 31, 2019, net compensation expense related to stock options was $759,385. At December 31, 2019, the total compensation expense related to stock options not yet recognized is approximately $582,209, which is expected to be recognized over a weighted-average period of approximately 1.80 years.

Warrants

During the twelve months ended December 31, 2019, the Company issued an aggregate of 316,540 common stock warrants, consisting of 146,262 in connection with the acquisition of Craft Canning on January 11, 2019, 140,278 in connection with the private equity offering in September 2019, and 30,000 to a related party consultant. The Company has determined the warrants should be classified as equity on the consolidated balance sheet as of December 31, 2019. The estimated fair value of the warrants at issuance was $297,417, based on a combination of closing market trading price on the date of issuance for the public offering warrants, and the Black-Scholes option-pricing model using the weighted-average assumptions below:

Volatility		31	%
Risk-free interest rate		2.16	%
Expected term (in years)		2.78
Expected dividend yield		-
Fair value of common stock	$	5.61

No warrants were exercised during the twelve months ended December 31, 2019.

A summary of activity in warrants is as follows:

	Warrants			Weighted Average Remaining Life		Weighted Average Exercise Price		Aggregate Intrinsic Value
Outstanding at December 31, 2018		1,083,435			1.04 years	$	6.83	$	-
Twelve months ended December 31, 2019:
Granted		316,540			2.14 years	$	6.78	$	-
Exercised		-			-	$	-		-
Forfeited and cancelled		(663,416	)		-	$	6.61		-
Outstanding at December 31, 2019		736,559			1.18 years	$	6.95	$	-