Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

v3.22.1
STOCK-BASED COMPENSATION
3 Months Ended
Mar. 31, 2022
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

NOTE 9 - STOCK-BASED COMPENSATION

 

Stock Option Plans

 

The Company granted options to purchase 5,065,000 shares of the Company’s common stock to certain executives. The options have an exercise price that range from $2.85 to $21.00. The options will vest and become exercisable if the volume weighted average price of the Company’s common stock during a consecutive 60-day trading period (the “60 Day VWAP”) ranges between $10.50 and $21.00. The Company valued the market-based performance stock option awards using a Monte Carlo simulation model using a daily price forecast over ten years until expiration utilizing Geometric Brownian Motion that considers a variety of factors including, but not limited to, the Company’s common stock price, risk-free rate (1.8%), and expected stock price volatility (53.9%) over the expected life of awards (10 years). The weighted average fair value of options granted during the period was $1.27.

 

[A] Stock options:

 

The following table summarizes the activity relating to the Company’s market based stock options that were granted to certain executives for the three-month period ended March 31, 2022:

 

    Options     Weighted- Average Exercise Price     Weighted-Average Remaining Contractual Terms   Aggregate Intrinsic Value  
                       
Outstanding at beginning of year     -     $ -              
Granted     5,065       14.14              
Exercised     -       -              
Forfeited or expired     -       -              
                             
Outstanding at end of period     5,065     $ 14.14     9.8 years   $ 453  
                             
Exercisable at end of period     -     $ -     -   $ -  

 

The following table summarizes the activity relating to the Company’s stock options, excluding the market based stock options that were granted to certain executives, for the three-month period ended March 31, 2022:

 

    Options     Weighted- Average Exercise Price     Weighted-Average Remaining Contractual Terms   Aggregate Intrinsic Value  
                       
Outstanding at beginning of year     3,470     $ 5.91              
Granted     895       4.08              
Exercised     -       -              
Forfeited or expired     (949 )     6.14              
                             
Outstanding at end of period     3,416     $ 5.92     6.9 years   $ 192  
                             
Exercisable at end of period     1,640     $ 5.72     4.7 years   $ 20  

 

The fair value of each option grant on the date of grant is estimated using the Black-Scholes option-pricing model reflecting the following weighted-average assumptions:

 

    2021     2022  
    March 31,  
    2021     2022  
             
Expected volatility     50.2 %     49.4 %
Expected life of options (in years)     7       7  
Risk free interest rate     0.69 %     1.73 %
Dividend yield     0 %     0 %
Weighted-average fair value of options granted during year   $ 3.81     $ 2.04  

 

Expected volatility is based on historical volatility of the Company’s common stock and the expected life of options is based on historical data with respect to employee exercise periods.

 

The Company recorded stock-based compensation expense of $377 and $34 for the three-month periods ended March 31, 2021 and March 31, 2022, respectively, in connection with awards made under the stock option plans.

 

The fair value of options vested during the three-month periods ended March 31, 2021 and 2022 was $408 and $235, respectively. The total intrinsic value of options exercised during the three-month periods ended March 31, 2021 and 2022 was $451 and $-0-, respectively.

 

 

As of March 31, 2022, there was approximately $6,300 of unrecognized compensation cost related to non-vested options granted under the Company’s stock option plans for the performance stock options that were granted to certain executives. That cost is expected to be recognized over a weighted-average period of 9.81 years.

 

As of March 31, 2022, there was approximately $2,982 of unrecognized compensation cost related to non-vested options granted under the Company’s stock option plans that exclude the performance stock options. That cost is expected to be recognized over a weighted average period of 3.30 years.

 

The Company estimates forfeitures at the time of valuation and reduces expense ratably over the vesting period. This estimate is adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.

 

[B] Restricted Stock Awards:

 

The Company grants restricted stock to employees, whereby the employees are contractually restricted from transferring the shares until they are vested. The stock is unvested at the time of grant and, upon vesting, there are no legal restrictions on the stock. The fair value of each share is based on the Company’s closing stock price on the date of the grant. A summary of all non-vested restricted stock for the three-month period ended March 31, 2022 is as follows:

 

    Number of Non-Vested Shares     Weighted-Average Grant Date Fair Value  
             
Restricted stock, non-vested, beginning of year     629     $ 7.06  
Granted     398       3.99  
Vested     (145 )     7.39  
Forfeited     (120 )     7.12  
                 
Restricted stock, non-vested, end of period     762     $ 5.38  

 

The Company recorded stock-based compensation expense of $665 and $388, respectively, for the three-month periods ended March 31, 2021 and 2022, in connection with restricted stock grants. As of March 31, 2022, there was $3,330 of total unrecognized compensation cost related to non-vested shares. That cost is expected to be recognized over a weighted-average period of 2.97 years.

 

[C] Restricted Stock Units:

 

The Company also has granted restricted stock units (RSUs) to employees. The following table summarizes the activity relating to the Company’s restricted stock units for the three-month period ended March 31, 2022:

 

    Number of Restricted Stock Units     Weighted-Average Grant Date Fair Value  
             
Restricted stock units, non-vested, beginning of year     36     $ 5.60  
Granted     -       -  
Vested     (31 )     5.60  
Forfeited     -       -  
                 
Restricted stock units, non-vested, end of period     5     $ 5.60  

 

The Company recorded stock-based compensation expense of $55 and $35, respectively, for the three-month periods ended March 31, 2021 and 2022, in connection with the RSUs. As of March 31, 2022, there was $17 total unrecognized compensation cost related to non-vested RSUs. That cost is expected to be recognized over a weighted-average period of 0.6 years.