Share-Based Payment Arrangements

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

On June 22, 2018, the Company's stockholders adopted the FalconStor Software, Inc. 2018 Incentive Stock Plan (the "2018 Plan"). The 2018 Plan is administered by the Compensation Committee and provides for the issuance of up to 1,471,997 shares of the Company's common stock upon the grant of shares with such restrictions as determined by the Compensation Committee to the employees and directors of, and consultants providing services to, the Company or its affiliates. Exercise prices of the options will be determined by the Compensation Committee of the Company's Board of Directors, subject to the consent of Hale Capital Partners, LP. The vesting terms shall be performance based and determined by the Committee, subject to the consent of Hale Capital Partners, LP, based on various factors, including (i) the return of capital to the holders of the Series A Preferred Stock and the Company’s Common Stock in the event of a Change of Control, (ii) the repayment of the Company’s obligations under its senior secured debt, and (iii) the Company’s free cash flow.

The following table summarizes the 2018 Plan, which was the only plan under which the Company was able to grant equity compensation as of December 31, 2020:

Name of Plan

Shares
Authorized

Shares Available
for Grant

Shares
Outstanding

FalconStor Software, Inc. 2018 Incentive Stock Plan

1,471,997

25,247

1,386,213

The following table summarizes the Company’s equity plans that have expired but that still have equity awards outstanding as of December 31, 2020:


Name of Plan	Shares Available for Grant	Shares Outstanding
FalconStor Software, Inc., 2016 Incentive Stock Plan	—	3,850
FalconStor Software, Inc., 2006 Incentive Stock Plan	—	5,930

All outstanding options granted under the Company’s equity plans have terms of ten years.

A summary of the Company’s stock option activity for 2020 is as follows:


	Number of Options	Weighted Average Price		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Options Outstanding at December 31, 2019	10,445	$	127.53	4.96	$	—
Granted	—	$	—
Exercised	—	$	—
Forfeited	—
Expired	(665)	$	331.50
Options Outstanding at December 31, 2020	9,780	$	113.66	4.25	$	—
Options Exercisable at December 31, 2020	9,780	$	113.66	4.25	$	—
Options Expected to Vest after December 31, 2020	—	$	—	0.00	$	—

Stock option exercises are fulfilled with new shares of common stock.

The following table summarizes the share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the consolidated statements of operations:


	Years ended December 31,
	2020		2019

Cost of revenue - Support and Service	496		2,250
Research and development costs	942		6,348
Selling and marketing	785		4,030
General and administrative	13,532		19,652
	$	15,755	$	32,280

The Company did not recognize any tax benefits related to share-based compensation expense during the years ended December 31, 2020 and 2019.

The Company has the ability to issue both restricted stock and restricted stock units. The fair value of the restricted stock awards and restricted stock units are expensed at the fair value per share at date of grant for directors, officers and employees. A summary of the total stock-based compensation expense related to restricted stock units, which is included in the Company’s total share-based compensation expense for each respective year, is as follows:


	Years ended December 31,
	2020		2019
Directors, officers and employees	$	15,756	$	23,031

A summary of the Company’s restricted stock activity for 2020 is as follows:


						Number of Restricted Stock Awards
Non-Vested at December 31, 2019						1,147,002
Granted						360,638
Vested						(30,730)
Forfeited						(90,697)
Non-Vested at December 31, 2020						1,386,213

Restricted stock units are fulfilled with new shares of common stock. The total intrinsic value of restricted stock for which the restrictions lapsed during the years ended was $15,365 and $485,519 for the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020, total unrecognized compensation costs for unvested restricted stock unit awards was $683,928, including $649,133 relating to performance-based awards. The performance condition for such awards was not deemed probable at grant dates or at December 31, 2020 and the cost related to such awards will begin to be recognized once the performance condition is deemed probable. The remaining amount of $34,795 is expected to be recognized over a weighted-average period of 2.4 years as of December 31, 2020.

As of December 31, 2020, the Company had 1,421,240 shares of common stock reserved for issuance upon the exercise or vesting of stock options and restricted stock.