Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

8. Stock-Based Compensation

We have adopted equity incentive plans for which stock options and restricted stock awards are available to grant to employees, consultants and directors. Except for certain options granted to certain Swedish employees, all employee, consultant and director stock options granted under our stock option plans have an exercise price equal to the market value of the underlying common stock on the grant date. There are no vesting provisions tied to performance conditions for any options, as vesting for all outstanding option grants was based only on continued service as an employee, consultant or director. All of our outstanding stock options and restricted stock awards are classified as equity instruments.

Stock Options

During the year ended December 31, 2015, our stockholders approved the Neonode Inc. 2015 Stock Incentive Plan (the “2015 Plan”) which replaced our 2006 Equity Incentive Plan (the “2006 Plan”). Although no new awards can be made under the 2006 Plan, it is still operative for previously granted awards. Under the 2015 Plan, 210,000 shares of common stock have been reserved for awards, including nonqualified stock option grants and restricted stock grants to officers, employees, non-employee directors and consultants. The terms of the awards granted under the 2015 Plan are set by our compensation committee at its discretion.

Accordingly, as of December 31, 2019, we had two equity incentive plans:

● The 2006 Equity Incentive Plan (the "2006 Plan").  

● The 2015 Equity Incentive Plan (the "2015 Plan").  

The following table summarizes information with respect to all options to purchase shares of common stock outstanding under the 2006 Plan and the 2015 Plan at December 31, 2019:

Options Outstanding
Range of Exercise Price	Number Outstanding and exercisable at 12/31/19		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price
$ 0 -  $ 15.00		32,500		0.90	$	14.95
$ 15.01 -   $ 30.40		8,000		0.33	$	30.40
$ 30.40 -   $ 62.10		12,000		0.14	$	59.60
		52,500		1.37	$	27.51

A summary of the combined activity under all of the stock option plans is set forth below:

	Options Outstanding
						Weighted-
						Average
				Weighted-		Remaining
				Average		Contractual		Aggregate
	Number of			Exercise		Life		Intrinsic
	Shares			Price		(in years)		Value
Options outstanding – January 1, 2018		175,600		$	41.99		2.18	$	-
Options granted		30,000			15.00				-
Options exercised		-			-				-
Options cancelled or expired		(105,800	)		41.36				-
Options outstanding – December 31, 2018		99,800		$	34.55		1.41		-
Options granted		-			-				-
Options exercised		-			-				-
Options cancelled or expired		(47,300	)		42,35				-
Options outstanding and vested – December 31, 2019		52,500		$	27.51		1.37	$	-

No stock options were granted during the year ended December 31, 2019. There were 30,000 stock options granted in 2018. The assumptions used to value stock options granted to directors, employees and consultants during the year ended December 31, 2018 are as follows:

	For the year ended
	December 31, 2018
Annual dividend yield		-
Expected life (years)		1.5
Risk-free interest rate		2.19	%
Expected volatility		71.12	%

During the years ended December 31, 2019 and 2018, we recorded $0 and $29,000, respectively, of compensation expense related to the vesting of stock options. The estimated fair value of the stock-based compensation was calculated using the Black-Scholes option pricing model as of the grant date of the stock option.

Stock options granted under the 2006 and 2015 Plans are exercisable over a maximum term of ten years from the date of grant, vest in various installments over a one to four-year period and have exercise prices reflecting the market value of the shares of common stock on the date of grant.

Stock-Based Compensation

The stock-based compensation expense for the years ended December 31, 2019 and 2018 reflects the estimated fair value of the vested portion of options granted to directors, employees and non-employees.

	Years ended December 31,
	2019		2018
(In thousands)
Sales and marketing	$	-	$	6
General and administrative		-		23
Stock-based compensation expense	$	-	$	29

There is no remaining unrecognized compensation expense related to stock options as of December 31, 2019.

The estimated fair value of stock-based awards is calculated using the Black-Scholes option pricing model, even though this model was developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which differ significantly from our stock options. The Black-Scholes model also requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. The risk-free rate is based on the U.S. Treasury rates in effect during the corresponding period of grant. The expected volatility is based on the historical volatility of our stock price. These factors could change in the future, which would affect fair values of stock options granted in such future periods and could cause volatility in the total amount of the stock-based compensation expense reported in future periods.