Note 11 - Stock Options and Restricted Stock

6 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 11 – Stock Options and Restricted Stock

Stock Options

On July 27, 2010, the Company’s Board of Directors adopted the 2010 Stock Incentive Plan (the “2010 Plan”). The aggregate number of shares of common stock that could be granted under the 2010 Plan was reset at the beginning of each year based on 15% of the number of shares of common stock then outstanding. As such, on January 1, 2016, the number of shares of common stock available under the 2010 Plan was reset to 381,272 shares based upon 2,541,809 shares outstanding on that date. Options were typically granted with an exercise price equal to the estimated fair value of the Company's common stock at the date of grant with a vesting schedule of one to three years and a contractual term of 5 years. As discussed below, the 2010 Plan has been replaced by a new stock option plan and no additional stock option grants will be granted under the 2010 Plan. As of June 30, 2021, there were no options to purchase shares under the 2010 Plan.

On July 18, 2016, the Board of Directors unanimously approved the adoption of the Enservco Corporation 2016 Stock Incentive Plan (the “2016 Plan”), which was approved by the stockholders on September 29, 2016. The aggregate number of shares of common stock that may be granted under the 2016 Plan is 533,334 shares plus authorized and unissued shares from the 2010 Plan totaling 159,448 for a total reserve of 692,782 shares. As of June 30, 2021, there were outstanding options to purchase 2,934 shares and we had granted restricted stock shares of 182,497 shares of restricted stock that remained outstanding under the 2016 Plan.

During the six months ended June 30, 2021 and 2020, no options were granted or exercised. 

The following is a summary of stock option activity for all equity plans for the six months ended June 30, 2021:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2020		11,569	$	5.87		0.53
Forfeited or Expired		8,635		5.98		-
Outstanding at June 30, 2021		2,934	$	5.55		0.92
Vested at June 30, 2021		2,934	$	5.55		0.92
Exercisable at June 30, 2021		2,934	$	5.55		0.92

There was no aggregate intrinsic value (the difference between the estimated fair value of the Company’s common stock on June 30, 2021, and the exercise price, multiplied by the number of in-the-money options) of our outstanding options.

During the three and six months ended June 30, 2021, the Company recognized no stock-based compensation costs for stock options. During the three and six months ended June 30, 2020, the Company recognized stock-based compensation costs for stock options of approximately $1,000 and $3,000, respectively, in sales, general, and administrative expenses.

As of June 30, 2021, there was no remaining unrecognized compensation costs related to non-vested shares under the Company's stock option plans.

Restricted Stock

Restricted shares issued pursuant to restricted stock awards under the 2016 Stock Plan are restricted as to sale or disposition. These restrictions lapse periodically generally over a period of three years. Restrictions may also lapse for early retirement and other conditions in accordance with our established policies. Upon termination of employment, shares on which restrictions have not lapsed must be returned to us, resulting in restricted stock forfeitures. The fair market value on the date of the grant of the stock with a service condition is amortized and charged to income on a straight-line basis over the requisite service period for the entire award. The fair market value on the date of the grant of the stock with a performance condition shall be accrued and recognized when it becomes probable that the performance condition will be achieved. Restricted shares that contain a market condition are amortized and charged over the life of the award.

A summary of the restricted stock activity is presented below:

	Number of Shares			Weighted-Average Grant- Date Fair Value
Restricted shares at December 31, 2020		24,393		$	7.32
Granted		165,000			1.05
Vested		(5,673	)		8.11
Forfeited		(1,223	)		9.99
Restricted shares at June 30, 2021		182,497		$	1.61

During the three months ended June 30, 2021 and 2020, the Company recognized stock-based compensation costs for restricted stock of approximately $25,000 and $322,000, respectively, in sales, general, and administrative expenses. During the six months ended June 30, 2021 and 2020, the Company recognized stock-based compensation costs for restricted stock of approximately $49,000 and $358,000, respectively, in sales, general, and administrative expenses. Compensation cost is revised if subsequent information indicates that the actual number of restricted stock vested due to service is likely to differ from previous estimates.

The following table sets forth the weighted average outstanding of potentially dilutive instruments for the three and six months ended June 30, 2021 and 2020: 

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Stock options		3,471		103,503		4,845		110,840
Restricted stock		1,193,887		43,667		1,159,082		43,667
Warrants		184,150		67,799		177,282		90,983
Weighted average		1,381,508		214,969		1,341,209		245,489

On January 4, 2021, the Company awarded Company common stock to members of its Board of Directors with an award date fair value of approximately $311,000 based on the closing price of the Company's stock reported on the NYSE American on the date of the award. As of December 31, 2020, the Company accrued Board of Director fees of approximately $221,000 for services rendered from October 2019 through December 2020. During the six months ended June 30, 2021, the Company issued 118,184 shares to settle the outstanding accrual. During the six months ended June 30, 2021, the Company awarded 48,129 restricted shares for 2021 Board of Director fees and has recognized expense of approximately $45,000 related to the award of these shares. The Company will expense the remaining $45,000 related to the award of these shares during the third and fourth quarters of 2021.