EQUITY INCENTIVE PLAN

3 Months Ended

Mar. 31, 2021

NOTE 8 — EQUITY INCENTIVE PLAN:

(a)

Equity Plans:

Effective June 3, 2008, Chembio’s stockholders voted to approve the 2008 Stock Incentive Plan (the “SIP08”), with 625,000 shares of common stock available to be issued. At the Annual Stockholder Meeting on September 22, 2011 Chembio’s stockholders voted to approve an increase to the number of shares of common stock issuable under the SIP08 by 125,000 to 750,000. Under the terms of the SIP08, which expired during 2018, the Board or its Compensation Committee had the discretion to select the persons to whom awards were to be granted. Awards could be stock options, restricted stock and/or restricted stock units (collectively, “Equity Award Units”). The Equity Award Units became vested at such times and under such conditions as determined by the Board or its Compensation Committee. Cumulatively through March 31, 2021, there were 714,000 options expired, forfeited or exercised, and at March 31, 2021, 36,000 options were outstanding and no Equity Award Units were available to be issued under the SIP08.

Effective June 19, 2014, Chembio’s stockholders voted to approve the 2014 Stock Incentive Plan (the “SIP14”), with 800,000 shares of common stock available to be issued. Under the terms of the SIP14, the Board or its Compensation Committee has the discretion to select the persons to whom Equity Award Units are to be granted. The Equity Award Units vest at such times and under such conditions as determined by the Board or its Compensation Committee. Cumulatively through March 31, 2021, there were 519,782 Equity Award Units expired, forfeited or exercised. At March 31, 2021, 259,157 Equity Award Units were outstanding and 0 Equity Award Units remained available to be issued under the SIP14.

Effective June 18, 2019, Chembio’s stockholders voted to approve the 2019 Omnibus Incentive Plan (the “SIP19”), with 2,400,000 shares of common stock available to be issued. In addition, shares of common stock underlying any outstanding Equity Award Unit granted under the SIP19 that, following the effective date of the SIP19, expires, or is terminated, surrendered or forfeited for any reason without issuance of such shares, shall be available for the grant of new Equity Award Units under the SIP19. Under the terms of the SIP19, the Board or its Compensation Committee has the discretion to select the persons to whom Equity Award Units are to be granted. The Equity Award Units become vested at such times and under such conditions as determined by the Board or its Compensation Committee. Cumulatively through March 31, 2021, 429,724 Equity Award Units has been cancelled or forfeited. At March 31, 2021, 2,400,924 Equity Award Units were outstanding, and 129,865 Equity Award Units were available to be awarded.

(a)

Stock Compensation Expense:

Stock-based compensation expense (net of recovery) recognized in the condensed consolidated statements of operations was classified as follows:

	For the three months ended March 31
	2021		2020
Cost of product sales	$	28,768	$	6,300
Research and development expenses		90,920		63,813
Selling, general and administrative expenses		460,101		316,788
Severance and related costs		-		(423,984	)
	$	579,789	$	(37,083	)

The weighted-average assumptions made in calculating the fair values of options are as follows:

	For the three months ended March 31, 2021
Expected term (in years)		5.0
Expected volatility		78.29	%
Expected dividend yield		1	%
Risk-free interest rate		2.95	%

The following table provides stock option activity for the three months ended March 31, 2021:

Stock Options	Number of Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contract Term	Aggregate Intrinsic Value
Outstanding at December 31, 2020	974,778	$	4.12	2.87 years	$	1,520,910

Granted	899,550		4.72			-
Exercised	-		-			-
Forfeited	1,042		5.39			-
Expired	25,000		5.64
Outstanding at March 31, 2021	1,848,286	$	4.40	5.98 years	$	731,819
Exercisable at March 31, 2021	408,079	$	5.36	4.21 years	$	202,248

The following table summarizes information about stock options outstanding at March 31, 2021:

	Stock Options Outstanding								Stock Options Exercisable
Range of Exercise Prices	Number of Shares		Average Remaining Contract Term (Year)		Weighted Average Exercise Price		Aggregate Intrinsic Value		Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
_$1 to $2.79999		636,364		5.95	$	2.36	$	731,819		175,868	$	2.36	$	202,248
2.8 to 4.59999		1,103		9.97		4.10		-		-		-		-
4.6 to 6.39999		956,069		6.86		4.77		-		14,961		5.49		-
6.4 to 8.19999		161,000		2.80		7.31		-		161,000		7.22		-
8.2 to 12		93,750		2.35		11.45		-		56,250		11.45		-
Total		1,848,286		5.98	$	4.40	$	731,819		408,079	$	5.36	$	202,248

As of March 31, 2021, there was $3,176,611 of net unrecognized compensation cost related to stock options that had not vested, which is expected to be recognized over a weighted-average period of approximately 3.44 years. The total fair value of shares vested during the three months ended March 31, 2021 and 2020 was $188,179 and $182,932, respectively.

The following table summarizes information about the number of shares of common stock underlying restricted stock, restricted stock units and performance stock units outstanding as of March 31, 2021:

	Number of Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020		603,531	$	3.08

Granted		323,243		4.71
Vested		77,863		2.36
Forfeited		1,116		5.39
Outstanding at March 31, 2021		847,795	$	3.63

As of March 31, 2021, there was $2,423,435 of net unrecognized compensation cost related to restricted stock and restricted stock units that had not vested, which is expected to be recognized over a weighted average period of approximately 2.57 years.