EQUITY INCENTIVE PLAN

3 Months Ended

Mar. 31, 2022

NOTE 8 — EQUITY INCENTIVE PLAN:

(a)

Equity Plans:

Effective June 19, 2014, Chembio’s stockholders voted to approve the 2014 Stock Incentive Plan (the “2014 Plan”), with 800,000 shares of common stock available to be issued. Under the terms of the 2014 Plan, the Board or its Compensation Committee has the discretion to select the persons to whom awards are to be granted. Awards can be in the form of Equity Award Units. The awards vest at such times and under such conditions as determined by the Board or its Compensation Committee. Cumulatively through March 31, 2022, there were 732,064 Equity Award Units expired, forfeited or exercised. At March 31, 2022, 46,875 Equity Award Units were outstanding and 21,061 shares were not issued. All shares that expired, forfeited or were not issued rolled over into the 2019 Plan. No Equity Award Units remain available to be issued under the 2014 Plan.

Effective June 18, 2019, Chembio’s stockholders voted to approve the 2019 Omnibus Incentive Plan (the “2019 Plan”), with 2,400,000 shares of common stock available to be issued. At the Annual Stockholder Meeting on June 25, 2021, Chembio’s stockholders voted to approve an increase to the shares of common stock issuable under the SIP by 2,400,000 to 4,800,000. In addition, shares of common stock underlying any outstanding award granted under the 2019 Plan that, following the effective date of the 2019 Plan, expire, or are terminated, surrendered or forfeited for any reason without issuance of such shares, shall be available for the grant of new awards under the 2019 Plan. Under the terms of the 2019 Plan, the Board or its Compensation Committee has the discretion to select the persons to whom awards are to be granted. Awards can be in the form of options, stock appreciation rights, restricted stock, restricted stock units, performance stock units or other stock-based awards under the 2019 Plan (collectively, “2019 Equity Units”). The 2019 Equity Units become vested at such times and under such conditions as determined by the Board or its Compensation Committee. Cumulatively through March 31, 2022, 866,709 2019 Equity Units have been cancelled or forfeited. At March 31, 2022, 4,915,279 2019 Equity Units were outstanding, and 83,234 2019 Equity Units were available to be awarded.

(b)

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
	2022		2021
Cost of product sales	$	54,250	$	28,768
Research and development expenses		91,189		90,920
Selling, general and administrative expenses		605,464		460,101
	$	750,903	$	579,789

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)		6.0
Expected volatility		91.40	%
Expected dividend yield		N/A
Risk-free interest rate		1.91	%

The following table provides stock option activity for the three months ended March 31, 2022:

Stock Options	Number of Shares	Weighted Average Exercise Price per Share		Weighted Average Remaining Contract Term	Aggregate Intrinsic Value
Outstanding at December 31, 2021	1,600,372	$	4.18	6.59 years	$	-

Granted	2,358,539		1.23			-
Exercised	-		-			-
Forfeited	14,883		2.42			-
Expired	183,241		5.63
Outstanding at March 31, 2022	3,760,787	$	2.27	8.65 years	$	-
Exercisable at March 31, 2022	565,215	$	3.68	5.89 years	$	-

The following table summarizes information about stock options outstanding at March 31, 2022:

	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		2,863,910		8.83	$	1.44	$	-		317,758	$	2.36	$	-
2.8 to 4.59999		30,795		9.19		3.05		-		-		-		-
4.6 to 6.39999		819,207		8.43		4.81		-		209,957		4.88		-
6.4 to 8.19999		46,875		1.11		8.15		-		37,500		8.15		-
Total		3,760,787		8.65	$	2.27	$	-		565,215	$	3.69	$	-

As of March 31, 2022, there was $3,073,502 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 3.32 years. The total fair value of shares vested during the three months ended March 31, 2022 and 2021 was $693,290 and $188,179, respectively.

The following table summarizes information about restricted stock, restricted stock units and performance stock units outstanding as of March 31, 2022:

	Number of Shares & Units		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		705,325	$	3.34

Granted		1,210,448		0.76
Vested		167,782		3.60
Forfeited		8,047		2.31
Outstanding at March 31, 2022		1,739,944	$	1.52

As of March 31, 2022, there was $2,120,646 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 2.50 years.