EQUITY COMPENSATION

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

EQUITY COMPENSATION

8. EQUITY COMPENSATION

The Company accounts for the issuance of equity awards to employees in accordance with ASC Topic 718, which requires that the cost resulting from all equity payment transactions be recognized in the financial statements. This pronouncement establishes fair value as the measurement objective in accounting for equity payment arrangements and requires all companies to apply a fair value based measurement method in accounting for all equity payment transactions with employees. All equity compensation is included in operating expenses for the periods as follows:

	Three Months Ended
	March 31,
	2022		2021
Compensation cost recognized:
Selling, general & administrative	$	427	$	4,272
Research & development		165		273
	$	592	$	4,545

Stock Options

The Company uses the Black-Scholes option pricing model to value the options on the grant date. The table below presents the weighted average expected life of the stock options in years. The expected life computation is based on the time to stock option expiration. Volatility is determined using changes in historical stock prices. The interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect on the grant date. Options, generally, vest from one to four years.

As noted in Note 2, option awards no longer qualify as equity awards and instead are classified as liability awards. The fair value of these awards are determined at each reporting period utilizing a Black-Scholes option pricing model, and the associated compensation expense for the reporting period is recorded. The Company reduced equity compensation by approximately $237 in the three months ended March 31, 2022 and increased equity compensation by approximately $3,564 for the three months ended March 31, 2021 as a result of this award reclassification.

Stock option activity under the 2015 Stock Option Plan (the “Plan”) during the period indicated below were as follows:

	Number of Shares Subject to Issuance		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2021		496,424	$	6.13		3.03 years	$	527,937
Granted		-		-		-		-
Exercised		-		-		-		-
Outstanding at March 31, 2022		496,424	$	6.13		2.78 years	$	-
Exercisable at March 31, 2022		228,679	$	6.15		1.01 years	$	-

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had they all exercised their options on March 31, 2022. This amount changes based upon the fair market value of the Company’s stock.

Restricted Stock Units

The Company issues Restricted Stock Units (“RSUs”) which are equity-based instruments that may be settled in shares of common stock of the Company. During the three months ended March 31, 2022, the Company issued RSUs to certain directors as compensation. RSU agreements can vest immediately or with the passage of time. The vesting of all RSUs is contingent on continued board and employment services.

The compensation expense incurred by the Company for RSUs is based on the closing market price of the Company’s common stock on the date of grant, is amortized on a straight-line basis over the requisite service period and charged to operating expenses with a corresponding increase to additional paid-in capital.

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		408,376		$	10.43
Granted		31,177			2.55
Vested and settled in shares		(14,611	)		4.62
Outstanding at March 31, 2022		424,942		$	10.05

Performance Stock Units

On August 7, 2020, the Company issued 265,942 Performance Stock Units (PSUs) to its officers and certain employees as compensation. 50% of the PSUs were to vest based on the Company’s market price and 50% were to vest based on the Company’s Adjusted EBITDA. Both the conditions were to occur over a specified time and were contingent on continued employment services.

On November 4, 2021, the Company amended its PSU Plan so that 100% of the PSUs will vest based on the Company’s market price as the sole vesting criteria. As a result of this amendment, the adjusted EBITDA performance metric from the previous plan is no longer a criteria performance metric.

Compensation expense is based on a Geometric Brownian Motion valuation model based on the closing market price of the Company’s common stock on the date of grant and is amortized ratably on a straight-line basis over the requisite period. If the Company determines that it is probable that the performance criteria will be achieved, the amount of compensation cost derived for this performance metric is amortized over the anticipated service period. If these criteria are not met, no compensation cost is recognized, and any previously recognized compensation cost would be reversed. Compensation expense is charged to operating expenses with a corresponding increase to additional paid-in capital.

	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		228,498	$	7.91
Granted and Vested		-		-
Outstanding at March 31, 2022		228,498	$	7.91

As of March 31, 2022, total unrecognized compensation cost was $3,865, net of estimated forfeitures, related to all unvested stock options, RSUs and PSUs, which is expected to be recognized over a weighted average period of approximately 1.67 years.

The Company had 1,425,570 shares available for future grants under the Plan at March 31, 2022.