EQUITY COMPENSATION

6 Months Ended

Jun. 30, 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 as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Compensation cost recognized:
Selling, general & administrative	$	282	$	651	$	709	$	4,922
Research & development		164		98		329		372
	$	446	$	749	$	1,038	$	5,294

Stock Options

The Company uses the Black-Scholes option pricing model to value the stock options on the grant date. The table below presents the weighted average expected life of the stock options in years. The Company uses the simplified method for all grants to estimate the expected life of the option and assumes that stock options will be exercised evenly over the period from vesting until the awards expire. 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. The compensation expense is recognized over the service period on a straight-line basis and reduced by forfeitures when they occur.

As noted in Note 2, certain 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 expense by approximately $74 and $311 for the three and six months ended June 30, 2022 and increased equity compensation by approximately $99 and $3,663 for the three and six months ended June 31, 2021 as a result of the change in fair value of these awards.

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	$	528
Granted		657,228			2.06		-		-
Forfeited		(9,317	)		11.50		-		-
Outstanding at June 30, 2022		1,144,335		$	3.75		3.89 years	$	90
Exercisable at June 30, 2022		323,561		$	5.39		2.10 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 June 30, 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 six months ended June 30, 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, reduced by forfeitures when they occur.

	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		408,376		$	10.43
Granted		62,116			2.29
Forfeited		(25,199	)		11.50
Vested and settled in shares		(215,211	)		9.31
Outstanding at June 30, 2022		230,082		$	9.17

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 be subject to vesting 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, reduced by forfeitures when they occur. 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
Forfeited		(50,810	)		7.91
Outstanding at June 30, 2022		177,688		$	7.91

As of June 30, 2022, total unrecognized compensation cost was $3,419, 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 1.81 years.

The Company had 1,322,729 shares available for future grants under the Plan at June 30, 2022.