Equity

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Equity

Note 9 – Equity

Capital Stock Issuances

On January 2021, the Company issued 1,057,214 shares of Common stock in connection with a securities purchase agreement (the “December Purchase Agreement”) entered on December 31, 2020, the gross proceeds associated to this exercise were $6,313,943, net of issuance costs.

On February 8, 2021, the Company received $8,305,368 in additional gross proceeds associated with the exercise of 2,516,778 of warrants issued at a price of $ in connection with a securities purchase agreement dated August 4, 2020.

Securities Purchase Agreement Dated December 31, 2020

On December 31, 2020, the Company and an Investor entered into the December Purchase Agreement pursuant to which the Company agreed to sell to the Investor in a registered direct offering pre-funded warrants (the “December Pre-Funded Warrants”) to purchase up to 1,057,214 shares of Common stock, par value $0.001 Common Stock, for gross proceeds of approximately $6.35 million (which includes subsequent payment of the exercise price of the December Pre-Funded Warrants in the amount of $1,057). The shares of Common Stock underlying the December Pre-Funded Warrants are referred to as the “December Warrant Shares.”

The purchase price for each December Pre-Funded Warrant was $6.029, the exercise price for each December Pre-Funded Warrant was $0.001. Net proceeds from the sale were used for working capital. The December Pre-Funded Warrants and the December Warrant Shares were offered by the Company pursuant to an effective shelf registration statement on Form S-3 (File No. 333-239157), which was declared effective on June 19, 2020.

Pursuant to the terms of the December Purchase Agreement, the Company agreed to certain restrictions on future stock offerings, including that during the 45-trading day period following the closing, the Company did not issue (or enter into any agreement to issue) any shares of Common Stock or Common Stock equivalents, subject to certain limited exceptions. The Investor had a right from the date of the December Purchase Agreement until April 30, 2021 to participate in a subsequent financing by the Company or any of its Subsidiaries of Common Stock or Common Stock equivalents for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”), in an amount equal to 50% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing.

The exercise price of the December Prefunded Warrants and the number of December Warrant Shares issuable upon the exercise thereof were subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the December Prefunded Warrants. The December Pre-Funded Warrants allowed for cashless exercise at any time. The December Pre-Funded Warrants contained a beneficial ownership limitation such that none of the December Pre-Funded Warrants could be exercised, if, at the time of such exercise, the holder would become the beneficial owner of more than 9.99% of our outstanding shares of Common Stock following the exercise of such December Pre-Funded Warrants.

Filing of Registration Statement and Sales Agreement

Pursuant to the terms of the Registration Rights Agreement executed on February 5, 2021, the Company filed an initial registration statement for up to $200,000,000 of securities which may be issued by the registrant from time to time in indeterminate amounts and at indeterminate times.

On May 25, 2021, the Company entered into an at-the-market Sales Agreement (the “Sales Agreement”) with Stifel, Nicolaus & Company, Incorporated and Raymond James & Associates, Inc. as sales agents (the “Agents”), in connection with the offer and sale from time to time of shares of the Company’s Common stock, having an aggregate offering price of up to $100,000,000 (the “ATM Shares”), through an at-the-market equity offering program (the “ATM Offering”).

The ATM Shares are being offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-252801), which was filed with the Securities and Exchange Commission (the “SEC”) on February 5, 2021 and declared effective on May 6, 2021. A prospectus supplement relating to the ATM Offering was filed with the SEC on May 25, 2021.

Subject to the terms and conditions of the Sales Agreement, the Sales Agents will use reasonable efforts, consistent with its normal trading and sales practices and applicable law and regulations to sell ATM Shares from time to time based upon the Company’s instructions, including any price, time or size limits or other customary parameters or conditions the Company may impose.

Under the Sales Agreement, the Sales Agents may sell ATM Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations thereunder, including, without limitation, sales made by means of ordinary brokers’ transactions, directly on or through NYSE American LLC, on or through any other national securities exchange or facility thereof, a trading facility of a national securities association, an alternative trading system, or any other market venue, in the over-the-counter market, in privately negotiated transactions, to or through a market maker or a combination of any such methods. The Company agreed to pay the Sales Agents a commission equal to 3% of the gross proceeds from the sales of ATM Shares pursuant to the Sales Agreement.

The Sales Agreement contains customary representations and warranties and also contains customary indemnification obligations of the Company and the Sales Agents, including for liabilities under the Securities Act, other obligations of the parties and termination provisions.

The provisions of the Sales Agreement, including the representations and warranties contained therein, are not for the benefit of any party other than the parties to such agreement and are not intended as documents for investors and the public to obtain factual information about the current state of affairs of the parties to those documents and agreements. Rather, investors and the public should look to other disclosures contained in the Company’s filings with the SEC.

During the period from May 29, 2021, through September 30, 2021, the Company sold 5,705,877 shares of Common stock, par value $0.001, at a stock price between $5.00 and $6.30 per shares, for proceeds of $30,868,703, net of costs.

Issuances of Restricted Stock Units (RSUs)

On May 18, 2020, the Company issued in connection with the commencement of employment of its Chief Executive Officer (“CEO”), 100,000 shares of RSUs under the Company’s 2017 Omnibus Equity Incentive Plan (the “Plan”), which will fully vest after one year of continued employment. The Company determined the fair-market value of the RSUs to be $134,000. In connection with the issuance of these RSUs, the Company recognized $0 and $50,516, respectively in stock compensation expense for the three and nine months ended September 30, 2021. For the three and nine months ended September 30, 2020 the Company recognized $33,688 and $49,794, respectively. All stock compensation costs are included within general and administrative expenses on the condensed interim consolidated statements of operations. There was no remaining unrecognized stock compensation expense as of September 30, 2021.

On March 5, 2021, the Company issued its Chief Financial Officer 10,000 restricted shares of Common Stock and 5,000 restricted shares of Common Stock to another employee of the Company. The Company recognized a total of $0 and $87,600 of expense at a fair value of $5.84 per share within stock compensation expense related to these issuances for the three and the nine months ended September 30, 2021, respectively, which is included in general and administrative expenses on the consolidated statements of operations.

On April 19, 2021, the board of directors of the Company (the “Board”), upon recommendation of the Compensation Committee, approved an award under the Company’s Plan of 100,000 RSUs to the Company’s former Chief Executive Officer, and 125,000 RSUs to the Company’s Chief Financial Officer and EVP of Operations, in accordance therewith with their amended respective employment letters. The Company determined the fair market value of the restricted stock units to be $1,215,000 based on the market price of the Company’s Common stock at the date of grant and will vest equally on a pro-rata basis over one year of continued employment. Upon separation of the former CEO, 91,667 of the RSUs granted were canceled. For the three months ended September 30, 2021, the Company recorded $168,750 related to these awards and $348,022 for the nine months ended September 30, 2021, in stock expenses which are included in general and administrative expenses on the consolidated statements of operations.

On April 19, 2021, the Board approved, in connection with the acquisition of Measure, an award of 125,000 RSUs under the Company’s Plan to Brandon Torres Declet upon his appointment as senior management of the Company. The Company determined the fair market value of the restricted stock units to be $675,000 based on the market price of the Company’s Common stock at the date of grant and will vest equally on a pro-rata basis over one year of continued employment. For the three and nine months ended September 30, 2021, the Company recorded $168,750 and $303,023, respectively in stock expense related to these awards which are included in general and administrative expenses on the consolidated statements of operations.

On April 19, 2021, the Board approved, in connection with the acquisition of Measure, an award of 10,000 RSUs under the Company’s Plan to Jesse Stepler upon his appointment of as senior management of Measure Global, Inc. The Company determined the fair market value of the restricted stock units to be $54,000 based on the market price of the Company’s Common stock at the date of grant and will vest equally on a pro-rata basis over one year of continued employment. For the three and nine months ended September 30, 2021, the Company recorded $13,500 and $24,238 respectively in stock expense related to these awards which are included in general and administrative expenses on the consolidated statements of operations.

During the month of May 2021, pursuant to a review of the compensation of the senior management managements’ performance in 2020, the Board granted 229,750 RSUs to certain senior managers of the Company. These awards were valued at approximately $1,196,565 at the date of issuance, based upon the market price of the Company’s Common stock at the date of the grant, and vested immediately. For the three and nine months ended September 30, 2021, the Company recorded $0 and $1,196,565, respectively in stock-based expense related to these awards which are included in general and administrative expenses on the consolidated statements of operations.

On May 24, 2021, the Company issued to the former Chief Executive Officer, 26,652 RSUs as part of the separation agreement. These awards were valued at approximately $125,000 at the date of issuance, based upon the market price of the Company’s common stock at the date of the grant, and vested immediately. For the three and nine months ended September 30, 2021, the Company recorded $0 and $125,000, respectively in stock expense related to these awards which are included in general and administrative expenses on the consolidated statements of operations.

The following table outlines the restricted stock unit activity for the nine months ended September 30, 2021:

				Weighted
				Average
				Grant Date
	Shares			Fair Value
Non-vested, December 31, 2020		100,000		$	1.34
Granted		631,402		$	5.31
Canceled		(91,667	)	$	5.40
Vested		(475,568	)	$	5.25
Non-vested, September 30, 2021		164,167		$	5.40

As of September 30, 2021, the Company had approximately $773,716 of total unrecognized compensation cost related to RSUs which will be amortized over approximately ten months.

Issuance of common stock for acquisitions

On April 19, 2021, the Company issued 5,319,145 shares of Common Stock in connection with the Measure Purchase Agreement based on a volume weighted average trading price of the Common Stock over a ten consecutive trading day period prior to the date of issuance of these shares of Common Stock at the fair market value of $24,375,000.

On April 27, 2021, the Company issued 540,541 shares of Common Stock in connection with the MicaSense Purchase Agreement based on a volume weighted average trading price of the Common Stock over a ten consecutive trading day period prior to the date of issuance of these shares of Common Stock at the fair market value of $3,000,000.

Options

On March 26, 2018, the 2017 Omnibus Equity Incentive Plan (the “Plan”) became effective. Under the Plan, the Company can grant equity-based and other incentive awards to officers, employees, and directors of, and consultants and advisers to, the Company. The purpose of the Plan is to help the Company attract, motivate, and retain such persons and thereby enhance shareholder value. The Plan shall continue in effect, unless sooner terminated, until the tenth (10th) anniversary of the date on which it is adopted by the Board of Directors (except as to awards outstanding on that date). The Board of Directors in its discretion may terminate the Plan at any time with respect to any shares for which awards have not theretofore been granted; provided, however, that the Plan’s termination shall not materially and adversely impair the rights of a holder, without the consent of the holder, with respect to any award previously granted.

On June 16, 2021, the Company held its 2021 annual meeting of stockholders and approved a proposal to increase the number of shares of Common Stock reserved for issuance under the Plan from 4,000,000 to 10,000,000. To the extent that an award lapses, expires, is canceled, is terminated unexercised or ceases to be exercisable for any reason, or the rights of its holder terminate, any shares subject to such award shall again be available for the grant of a new award. The number of shares for which awards which are options or SARs may be granted to a participant under the Plan during any calendar year is limited to 500,000. For purposes of qualifying awards as “performance-based” compensation under Code Section 162(m), the maximum amount of cash compensation that may be paid to any person under the Plan in any single calendar year shall be $500,000.

During the nine months ended September 30, 2021, the Company issued options to purchase 849,500 shares of Common Stock to directors and employees of the Company at exercise prices ranging from $2.94 to $10.11 per share expiring on dates between January 3, 2025 and September 29, 2026. The Company determined the fair-market value of these unvested options to be $2,787,934. In connection with the issuance of these options to employees and directors, the Company recognized $274,831 and $601,326 in stock compensation expense for the three and nine months ended September 30, 2021, respectively.

The Company previously issued options to purchase 3,469,540 shares of Common Stock to directors and employees of the Company at exercise prices ranging from $0.06 to $3.18 per share expiring on dates between March 30, 2023 and September 29, 2029. In connection with the issuance of these options to employees and directors, the Company recognized $167,200 and $584,391 in stock compensation expense for the three and nine months ended September 30, 2021. The Company recognized $ 91,144 and $214,594 in stock compensation expense for the three and nine months ended September 30, 2020, respectively.

During the nine months ended September 30, 2021, 237,934 options were cancelled for a fair-market value of $307,950 due to employee terminations.

The fair value of options granted during the nine months ended September 30, 2021 and 2020 were determined using the Black-Scholes option valuation model. The expected term of options granted is based on the simplified method in accordance with Securities and Exchange Commission Staff Accounting Bulletin 107 and represents the period of time that options granted are expected to be outstanding. The Company makes assumptions with respect to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, the Company determines the risk-free rate by selecting the U.S. Treasury with maturities similar to the expected terms of grants, quoted on an investment basis in effect at the time of grant for that business day.

The significant assumptions relating to the valuation of the Company’s stock options granted during the nine months ended September 30, 2021, were as follows:

	September 30, 2021
Dividend yield		0.00	%
Expected life		3.01 Years
Expected volatility		84.01	%
Risk-free interest rate		0.37	%
Exercise price		$2.94 - $10.11

A summary of the options activity for the nine months ended September 30, 2021 is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2020		2,255,267		$	1.46		5.31 years	$	10,247,548
Granted		849,500			6.12		3.01 years		1,050
Exercised		(487,876	)		0.23		—		1,356,398
Expired/Forfeited		(237,934	)		5.66		—		28,854
Outstanding at September 30, 2021		2,378,957		$	2.95		4.46 years	$	3,074,130
Exercisable at period end		1,340,832		$	1.68		4.34 years	$	2,649,122

For options granted during the nine months ended September 30, 2021, the fair value of the Company’s Common Stock was based upon the close of market price on the date of grant. The future expected stock-based compensation expense expected to be recognized in future years is $1,878,657 through September 30, 2023.

Intrinsic value is measured using the fair market value at the date of exercise (for shares exercised) or at September 30, 2021 (for outstanding options), less the applicable exercise price.

A summary of the options activity for the nine months ended September 30, 2020 is as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2020		2,480,470		$	0.39		6.28	$	378,111
Granted		481,167			1.52		4.75		—
Exercised/Forfeited		(851,483	)		0.53		—		—
Outstanding at September 30, 2020		2,110,154			0.59		5.67	$	3,605,844
Exercisable at period end		1,156,062		$	0.31		5.89	$	2,276,254