Note 11 - Employee Stock Option Plans

12 Months Ended

Mar. 31, 2019

Share-based Payment Arrangement [Text Block]

Note

11.

Employee Stock Option Plans

Salon has

two

stock option plans approved by stockholders: the Salon Media Group, Inc.

2004

Stock Plan (the

“2004

Stock Plan

”

) that was approved by Salon’s stockholders in

November 2004

and the Salon Media Group, Inc.

2014

Stock Incentive Plan (the

“2014

Stock Incentive Plan

”

) that was approved by Salon’s stockholders in

March 2014.

The

2004

Stock Plan and the

2014

Stock Incentive Plan, each with an effective term of

ten

years following its approval by the stockholders of the Company, allow the issuance of incentive and non-statutory options to employees and non-employees of Salon. The

2004

Plan expired in

November 2014,

after which

further options were permitted to be granted.

Under the

2014

Stock Incentive Plan, the maximum aggregate number of shares which

may

be issued is

10,000,000

shares, plus an annual increase to be added on the

first

business day of the Company’s fiscal year beginning in

2015

equal to

of the number of shares outstanding as of such date or a lesser number of shares determined by the administrator.

Under the

2014

Stock Incentive Plan, incentive and nonqualified stock options

may

be granted to officers, employees, directors and consultants of Salon. Options generally vest over periods of

four

years. Options generally become exercisable as to

25%

of the option shares

one

year from the date of grant and then ratably over the following

months (

1/48

per month). The exercise price of options is determined by the Board and is equal to the fair market value of the stock on the grant date. Generally, Salon’s options expire, if

not

exercised,

ten

years after the date of grant.

Salon

may

grant restricted stock awards to officers that typically vest over an approximate

four

-year period. Restricted stock awards are considered outstanding at the time of grant, as the stock award holders are entitled to dividends and voting rights.

Salon has also granted options pursuant to Non-Plans. Non-Plans are equity compensation plans

not

approved by stockholders. On

September 6, 2017,

we granted to our CEO an option to purchase

31,260,505

shares of Common Stock pursuant to the terms and conditions of the Salon Media Group, Inc. Non Plan Stock Option agreement, with our standard vesting of

25%

of the option shares

one

year from the date of grant and then ratably over the following

months (

1/48

per month).

September 6, 2017,

we granted to each of the

four

members of our Board an option to collectively purchase

5,384,615

shares of Common Stock pursuant to the terms and conditions of the Salon Media Group, Inc. Non Plan Stock Option agreement, with vesting of

25%

of the option shares

one

year from their service commencement and then ratably over the following

months (

1/48

per month).

As of

March 31, 2019,

Salon has approximately

13,050,000

shares authorized to be issued under the

2014

Stock Incentive Plan of which approximately

10,530,000

shares remain available for future grant.

Stock based compensation expense recognized for the years ended

March 31, 2019

and

2018

and

2017

was

$1,526

and

$1,262,

which consisted of stock-based compensation expense related to stock options.

As of

March

31,

2019,

the aggregate stock compensation remaining to be amortized to expense was

$2,888.

Salon expects this stock-based compensation balance to be amortized as follows:

$1,310

during fiscal year

2020;

$1,134

during fiscal year

2021;

and

$444

during fiscal year

2022.

The expected amortization reflects only outstanding stock option awards as of

March

31,

2019.

amounts were recorded relating to excess tax benefits from the exercise of stock-based compensation awards during the year ended

March 31, 2019,

2018

and

2017

and as a result there were

differences in net cash used in operating and financing activities.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions and fair value per share:

	Year Ended March 31,
	2019				2018
Risk-free interest rates		1.75	–	2.55%		1.75	–	2.55%
Expected lives (in years)		5.7	–	6.3		5.7	–	6.3
Expected volatility		437	–	453%		437	–	453%
Dividend yield			0.0%				0.0%

We did

not

grant any options during the fiscal year ended

March 31, 2019.

Due to insufficient authorized shares of Common Stock as of

November 14, 2016,

the vested options as of

November 14, 2016

a fair value of

$818,

were reclassified from equity to liabilities and re-measured at fair value and presented under accrued liabilities. The balance of this option liability was

$931

as of

March 31, 2017,

respectively. The Amendment was filed on

August 1, 2017,

after which the

$1,010

option liability was reclassified back to equity during the quarter ended

September 30, 2017,

upon the resulting increased authorization of shares of Common Stock.

March 14, 2018,

the Board approved a stock option repricing program (the “Reprice”), authorizing Salon’s officers to reprice certain outstanding stock options held by active employees and directors that have option exercise prices above the current fair market value of Salon’s Common Stock. Salon believes the repricing of such stock options will encourage the continued service of valued employees and directors, and motivate such service providers to perform at high levels, both of which are critical to Salon’s continued success. Salon does

not

expect to incur any additional stock-based compensation charges as a result of this repricing.

The following table summarizes activity under Salon’s plans for the years ended

March 31, 2018

and

2019:

	Outstanding Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding as of March 31, 2017		19,177,000		$	0.21		8.2	$	223
Granted		44,379,000		$	0.06
Exercised		(1,057,000	)	$	0.01
Expired or forfeited		(4,422,000	)	$	0.15
Outstanding as of March 31, 2018		58,077,000		$	0.06		9.1	$	284
Granted		0
Exercised		0
Expired or forfeited		(7,141,000	)	$	0.14
Outstanding as of March 31, 2019		50,936,000		$	0.06		8.1	$	0
Exercisable as of March 31, 2019		24,408,000		$	0.06		7.9	$	0
Vested and expected to vest as of March 31, 2019		70,635,000		$	0.06		8.1	$	0

The following table summarizes information about stock options outstanding as of

March 31, 2019:

			Options Outstanding						Options Exercisable
					Weighted
					Average		Weighted				Weighted
			Number of		Remaining		Average		Number of		Average
Range of			Shares		Contractual		Exercise		Shares		Exercise
Exercise Prices			Outstanding		Life (Years)		Price (1)		Exercisable		Price
$0.05	-	$0.06		50,726,000		8.1	$	0.06		24,198,000	$	0.06
$0.11	-	$0.16		190,000		0.5	$	0.12		190,000	$	0.12
$0.24	-	$0.24		20,000		5.6	$	0.24		20,000	$	0.24
				50,936,000		8.1	$	0.06		24,408,000	$	0.06

(

)

March 14, 2018,

the Board approved a stock option Reprice, authorizing Salon’s officers to reprice

57,835,494

options using a new exercise price of

$0.06.

The stock option originally had a range of exercise prices from

$0.08

$0.24.

We valued this reprice by comparing the original exercise price to the modified exercise price and the difference between the

two

is immaterial and we did

not

incur any additional stock-based compensation charges as a result of this repricing.

The weighted average grant date fair value per share of the stock option awards granted in the years ended

March

31,

2019

and

2018

was

$0.0

and

$0.13,

respectively. The weighted average fair value of options vested during the years ended

March 31, 2019

and

2018

was

$0.15

and

$0.19

per share, respectively.

The total intrinsic value of options exercised during the years ended

March 31, 2019

and

2018

were

nil.

A total of

1,056,477

options were exercised during the year ended

March 31, 2018,

respectively.

options were exercised during the year ended

March 31, 2019.

SALON MEDIA GROUP INC 10-K