Note 10 - Stock Based Compensation

2019 Equity Incentive Plan

On December 19, 2019, the Oblong, Inc. 2019 Equity Incentive Plan (the “2019 Plan”) was approved by the Company’s stockholders at the Company’s 2019 Annual Meeting of Stockholders. The 2019 Plan is an omnibus equity incentive plan pursuant to which the Company may grant equity and cash incentive awards to certain key service providers of the Company and its subsidiaries. The 2019 Plan replaces the Glowpoint, Inc. 2014 Equity Incentive Plan (the “Prior Plan”), which was adopted by the Company’s Board of Directors on April 22, 2014, and subsequently approved by the Company’s stockholders. Following approval of the 2019 Plan, the Company terminated the Prior Plan and may no longer make grants under the Prior Plan; however, any outstanding equity awards granted under the Prior Plan will continue to be governed by the terms of the Prior Plan. As of the termination of the Prior Plan, 421,000 shares of the Company’s Common Stock remained available for issuance under the Prior Plan. As of March 31, 2020, 23,334 restricted stock units were outstanding under the Prior Plan. As of March 31, 2020, the share pool available for new grants under the 2019 Plan is 3,021,000, which is equal to the sum of (i) 2,600,000 shares of the Company’s Common Stock and (ii) the 421,000 shares of the Company’s Common Stock that remained available for issuance under the Prior Plan. No equity awards were granted under the 2019 Plan during the three months ended March 31, 2020.

2007 Stock Incentive Plan

In May 2014, the Board terminated the Company’s 2007 Stock Incentive Plan (the “2007 Plan”). Notwithstanding the termination of the 2007 Plan, outstanding awards under the 2007 Plan will remain in effect accordance with their terms. As of March 31, 2020, options to purchase a total of 107,500 shares of common stock and 627 shares of restricted stock were outstanding under the 2007 Plan. No shares are available for issuance under the 2007 Plan.

Stock Options

For the three months ended March 31, 2020 and the year ended December 31, 2019, other than the options granted to certain former holders of options to purchase shares of Oblong’s common stock, for which no stock-based compensation was recorded as discussed below, no stock options were granted. A summary of stock options expired and forfeited under our plans and options outstanding as of, and changes made during, the three months ended March 31, 2020 and the year ended December 31, 2019 is presented below:



	Outstanding				Exercisable
	Number of Options		Weighted Average Exercise Price		Number of Options	Weighted Average Exercise Price
Options outstanding, December 31, 2018	118,003		$	19.90	118,003	$	19.90
Exchanged for Oblong Industries stock options	107,845		4.92
Exercised	—		—
Expired	(440	)	16.48
Forfeited	(10,063	)	23.20
Options outstanding, December 31, 2019	215,345		12.27		215,345	12.27
Options outstanding and exercisable, March 31, 2020	215,345		$	12.27	215,345	$	12.27

Additional information as of March 31, 2020 is as follows:



	Outstanding and Exercisable
Range of price	Number of Options	Weighted Average Remaining Contractual Life (In Years)	Weighted Average Exercise Price
$0.00 – $10.00	110,345	0.56	$	5.01
$10.01 – $20.00	97,500	2.81	19.32
$20.01 – $30.00	2,500	2.19	21.80
$30.01 – $40.00	5,000	1.95	30.20
	215,345	1.63	$	12.27

In connection with the Acquisition, all options to purchase shares of Oblong’s common stock held by previously terminated employees of Oblong Industries were assumed by the Company and deemed, in the aggregate, to constitute options to acquire a total of 107,845 shares of the Company’s common stock, at a volume weighted average exercise price of $4.92 per share and a remaining exercise period of one year. No stock-based compensation expense was recorded in the year ended December 31, 2019 for these stock options as the value for these options was recorded as part of the consideration of the Acquisition given that these options were issued to terminated employees.

The intrinsic value of vested options, unvested options and exercised options were not significant for all periods presented. There was no remaining unrecognized stock-based compensation expense for options at March 31, 2020 as all options were vested.

Restricted Stock Awards

A summary of restricted stock granted, vested and unvested outstanding as of, and changes made during, the three months ended March 31, 2020 and the year ended December 31, 2019, is presented below:



	Restricted Shares		Weighted Average Grant Date Price
Unvested restricted stock outstanding, December 31, 2018	11,320		$	14.88
Granted	0		—
Vested	(1,372	)	15.72
Forfeited	(9,321	)	14.70
Unvested restricted stock outstanding, December 31, 2019	627		15.80
Unvested restricted stock outstanding, March 31, 2020	627		$	15.80

Stock-based compensation expense relating to restricted stock awards is allocated as follows (in thousands):



	Three Months Ended March 31,		Three Months Ended March 31,
	2020		2019
General and administrative	—		2
	$	—	$	2

There is no unrecognized stock-based compensation expense for restricted stock awards at March 31, 2020.

Restricted Stock Units

A summary of restricted stock units (“RSUs”) granted, vested, forfeited and unvested outstanding as of, and changes made during, the three months ended March 31, 2020 and the year ended December 31, 2019, is presented below:



	Restricted Stock Units		Weighted Average Grant Price
Unvested restricted stock units outstanding, December 31, 2018	503,518		$	1.94
Granted	55,479		1.30
Vested	(114,505	)	3.05
Forfeited	(421,158	)	1.54
Unvested restricted stock units outstanding, December 31, 2019	23,334		2.20
Unvested restricted stock units outstanding, March 31, 2020	23,334		$	2.20

As of March 31, 2020, 28,904 vested RSUs remain outstanding as shares of common stock have not yet been delivered for these units in accordance with the terms of the RSUs. As of March 31, 2020, there were 11,667 unvested RSUs that have performance-based vesting provisions and are subject to forfeiture, in whole or in part, if these performance conditions are not achieved. Management assesses, on an ongoing basis, the probability of whether the performance criteria will be achieved and, once it is deemed probable, stock-based compensation expense is recognized over the relevant performance period. As of March 31, 2020, there were 11,667 unvested RSUs that have timed-based vesting provisions, and the cost of the RSUs is expensed, which is determined to be the fair market value of the shares at the date of grant, on a straight-line basis over the vesting period.

Stock-based compensation expense relating to restricted stock units is allocated as follows (in thousands):



	Three Months Ended March 31,		Three Months Ended March 31,
	2020		2019
Cost of revenue	$	—	$	4
Research and development	—		4
Sales and marketing	—		19
General and administrative	6		27
	$	6	$	54

There was no remaining unrecognized stock-based compensation expense for restricted stock units at March 31, 2020.

There was no tax benefit recognized for stock-based compensation expense for the three months ended March 31, 2020 or the year ended December 31, 2019. No compensation costs were capitalized as part of the cost of an asset during the periods presented.

Restricted Series D Preferred Stock

In connection with the Acquisition, all options to purchase shares of Oblong Industries’ common stock held by existing employees of Oblong Industries were canceled and exchanged for an aggregate of 49,967 restricted shares of Series D Preferred Stock (“Restricted Series D Preferred Stock”), which are subject to vesting over a two-year period following the Closing Date.

Stock-based compensation expense relating to Restricted Series D Preferred Stock is allocated as follows (in thousands):



	Three Months Ended March 31,		Three Months Ended March 31,
	2020		2019
Research and development	$	14	$	—
Sales and marketing	4		—
General and administrative	8		—
	$	26	$	—

During the three months ended March 31, 2020, 14,441 shares of Restricted Series D Preferred Stock were forfeited. As of March 31, 2020, 1,720,460 shares of Restricted Series D Preferred Stock remain outstanding. The remaining unrecognized stock-based compensation expense for Restricted Series D Preferred Stock at March 31, 2020 was $319,000, and will be recognized over a weighted average period of 1.19 years.