EQUITY INCENTIVE PLAN

6 Months Ended

Jun. 30, 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 June 30, 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 June 30, 2022, 1,048,966 2019 Equity Units have been cancelled or forfeited. At June 30, 2022, 4,950,291 2019 Equity Units were outstanding, and 35,629 2019 Equity Units were available to be awarded.

(b)

Stock Compensation Expense:

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

	For the three months ended June 30				For the six months ended June 30
	2022		2021		2022		2021
Cost of product sales	$	57,096	$	43,368	$	111,346	$	72,136
Research and development expenses		112,318		139,469		203,507		223,704
Selling, general and administrative expenses		389,595		403,007		995,059		869,792
	$	559,009	$	585,844	$	1,309,912	$	1,165,632

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

	For the three months ended June 30,		For the six months ended June 30,
	2022		2022
Expected term (in years)		5.5		6.0
Expected volatility		95.80%		91.62%
Expected dividend yield		N/A		N/A
Risk-free interest rate		3.09%		1.97%

The following table provides stock option activity for the six months ended June 30, 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	2,481,968		1.24			-
Exercised	-		-			-
Forfeited	121,159		2.93			-
Expired	184,745		5.63
Outstanding at June 30, 2022	3,776,436	$	2.21	8.37 years	$	-
Exercisable at June 30, 2022	636,924	$	-	5.08 years	$	-

The following table summarizes information about stock options outstanding at June 30, 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		2,924,253		8.57	$	1.42	$	-		317,758	$	2.36	$	-
2.8 to 4.59999		27,720		8.94		3.06		-		8,311		3.07		-
4.6 to 6.39999		777,588		8.04		4.81		-		263,980		4.90		-
6.4 to 8.19999		46,875		0.86		8.15		-		46,875		8.15		-
Total		3,776,436		8.37	$	2.21	$	-		636,924	$	3.85	$	-

As of June 30, 2022, there was $2,667,985 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 3.10 years. The total fair value of shares vested during the six months ended June 30, 2022 and 2021 was $913,063 and $335,579, respectively.

The following table summarizes information about restricted stock, restricted stock units and performance stock units outstanding as of June 30, 2022:

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

Granted		1,308,547		0.75
Vested		172,041		3.73
Forfeited		82,524		2.28
Outstanding at June 30, 2022		1,759,307	$	1.43

As of June 30, 2022, there was $1,829,654 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 2.28 years.