Stockholder's Equity

6 Months Ended

Jun. 30, 2021

Equity [Abstract]

STOCKHOLDER'S EQUITY

NOTE 10 – STOCKHOLDER’S EQUITY

Common Stock

During the six months ended June 30, 2021, shares of common stock were issued as a result of the following non-cash transactions:

● In the first quarter of 2021, convertible notes totaling $120,000 and a portion of their accrued interest at the option of the noteholders were converted into approximately 33,000 shares of common stock of the Company

● Additionally, during the three and six months ended June 30, 2021, the Company received conversion notices from (i) the Stern Trust converting the principal amount, repayment premium and interest in the amount of approximately $3.5 million payable under the Restated Stern Note into approximately 561,000 shares of common stock, (ii) the 8% Note Investors converting principal and interest in the amount of approximately $0.4 million into approximately 180,000 shares of common stock and (iii) the 2020 Note Investors converting principal, repayment premium and interest in the amount of approximately $2.5 million into approximately 398,000 shares of common stock. The Stern Trust is owed approximately $0.7 million in interest under the Restated Stern Note, which has not been converted and remains outstanding. As a result, a total of approximately $6.1 million of Company indebtedness was converted and the Company issued approximately 1,138,000 shares of common stock in the aggregate.

● Certain warrant and stock option holders exercised their respective warrants and stock options by means of the cashless exercise feature and were issued approximately 549,000 common shares of the Company.

Warrants

The following is a summary of the Company’s warrant activity for the six months ended June 30, 2021:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Life
Outstanding at December 31, 2020		1,823,267		$	4.20		3.4 Years
Exercised/cancelled		(411,926	)		3.00		-
Outstanding at June 30, 2021		1,411,341		$	4.41		3.7 Years

Stock Options

Activity related to stock options for the six months ended June 30, 2021 is summarized as follows:

● The Company granted Mr. Thimot and Mr. Smith stock options to acquire 1,200,000 and 600,000 shares of common stock respectively upon their employment of which half of the options vest monthly over four years and the balance vest upon the achievement of certain market capitalization thresholds or performance conditions.

● The Company granted each of Mr. Kumnick and Mr. Broenniman stock options to acquire 583,333 shares of common stock that vest upon the achievement of certain market capitalization thresholds or performance conditions.

● The Company granted each of the four new Board of Directors as of June 2021 stock options to acquire 62,500 shares of common stock or a total of 250,000 that vest one third a year after each Annual Meeting.

● The Company granted the previously serving Board of Directors stock options to acquire 93,470 common shares that are vested as the services were rendered. The stock options were granted in lieu of other forms of Board of Director Compensation and was used to eliminate previously accrued Board of Director compensation. The Company also granted to each of Mr. Selzer and Mr. Stern 22,388 stock options to acquire common shares for service in 2021 prior to their resignation as Board Members. Upon their resignation as directors in June 2021, 6,997 stock options to each of them were vested and the balance were forfeited.

● The Company granted options to acquire 583,334 shares of common stock to employees. The options for 383,334 vest annually over a three-year period, 100,000 vest equally over a four-year period, and the balance of 100,000 vest upon the achievement of certain market capitalization thresholds or performance conditions.

The options have a term of ten years and all options were granted at market value.

Activity related to stock options for the six months ended June 30, 2021, is summarized as follows:

				Weighted Average		Weighted Average		Aggregate
	Number of			Exercise		Contractual		Intrinsic
	Shares			Price		Term (Yrs.)		Value
Outstanding as of December 31, 2020		5,645,802		$	4.50		7.5	$	8,283,639
Granted		3,938,246			7.54		10.0		-
Exercised/cancelled		(416,405	)		1.50		-		-
Outstanding as of June 30, 2021		9,167,643			5.92		7.8	$	55,257,928
Exercisable as of June 30, 2021		4,111,087		$	5.77		6.1	$	27,405,283

The following table summarizes stock option information as of June 30, 2021:

Exercise Price		Outstanding		Weighted Average Contractual Life (Yrs).		Exercisable
$	0.0030		116,667		5.1		116,667
$	1.5000		756,667		6.0		698,334
$	1.8000		34,735		9.0		34,735
$	2.1000		1,666,667		6.7		866,667
$	2.7000		387,667		9.3		-
$	3.0000		906,667		6.1		906,667
$	3.5700		31,111		8.3		20,556
$	3.9000		8,333		7.2		8,333
$	4.5000		93,333		5.2		93,333
$	6.6000		69,444		7.4		69,444
$	7.2000		1,657,463		9.4		107,463
$	7.5000		83,333		7.2		83,333
$	7.8000		2,255,557		9.9		5,556
$	8.7000		33,333		6.7		33,333
$	12.0000		33,333		5.5		33,333
$	13.5000		1,033,333		5.2		1,033,333
			9,167,643		7.2		4,111,087

During the six months ended June 30, 2021, the Company recognized approximately $1,635,000 of stock option compensation expense of which approximately $1,229,000 relates to performance-based awards of directors and officers. As of June 30, 2021, there was approximately $16,527,000 of unrecognized compensation costs related to stock options outstanding that are expected to be expensed through 2025.

Additionally, the Company recorded approximately $625,000 for restricted stock expense as the Company estimated that a portion of its performance-based awards will be earned.

Total stock-based compensation expense consisting of stock options and restricted stock in the six months ended June 30, 2021 was approximately $2,261,000.

At the Annual Meeting of Stockholders held on March 22, 2021, the stockholders approved and ratified an increase of 2,500,000 shares of common stock allocated to the Company’s 2017 Incentive Stock Plan.

See Note 6 for additional information regarding accrued Directors’ compensation.