STOCK OPTIONS AND WARRANTS

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE 10 – STOCK OPTIONS AND WARRANTS

Stock Options

In 2017, the Company’s shareholders approved the adoption of a stock and option award plan (the “2017 Plan”), under which shares were reserved for future issuance for Common Stock options, restricted stock awards and other equity awards. The 2017 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors. The Company’s shareholders have approved a total reserve of 1,333,333 million shares of Common Stock for issuance under the 2017 Plan.

In April 2019, the Company’s shareholders approved the adoption of a stock and option award plan (the “2019 Plan”), under which shares were reserved for future issuance for Common Stock options, restricted stock awards and other equity awards. The 2019 Plan permits grants of equity awards to employees, directors, consultants and other independent contractors. The Company’s shareholders originally approved a total reserve of 333,334 shares of Common Stock for issuance under the 2019 Plan. At each of the Company’s annual meeting of stockholders held in 2020 and 2021, the Company’s stockholders approved amendments to the 2019 Plan to increase the number of shares of Common Stock available for issuance thereunder by an aggregate of 2,033,333 shares of Common Stock such that, after such amendments, and prior to any grants, 2,366,667 shares of Common Stock were available for issuance.

During the three months ended June 30, 2022 and 2021, the Company issued stock options to purchase 265,000 and 285,000 shares of Common Stock at a weighted average exercise price of $1.29 and $6.27 per share, and for six months ended June 30, 2022 and 2021, the Company issued stock options to purchase 555,000 and 430,000 shares of Common Stock at a weighted average exercise price of $2.32 and $6.27 per share respectively, to certain members of the Board of Directors, employees and consultants. The stock options allow the holders to purchase shares of Common Stock at prices between $1.29 and $6.27 per share. Options for the purchase of 233,335 shares of Common Stock expired as of June 30, 2022. The following table summarizes all stock options as of June 30, 2022 and 2021 (shares in thousands):

	2022
	Shares			Price (1)		Term (2)
Outstanding, beginning of year		2,851		$	5.00		1.1
Grants		555			2.32
Forfeited		(233	)		-
Exercised		-			-
Outstanding, at June 30		3,173	(3)		4.66		2.9
Exercisable, at June 30		2,109	(4)		4.02		4.4

(1)	Represents the weighted average exercise price.
(2)	Represents the weighted average remaining contractual term until the stock options expire.
(3)	As of June 30, 2022, the aggregate intrinsic value of stock options outstanding was $ 0.
(4)	As of June 30, 2022, the aggregate intrinsic value of exercisable stock options was $ 0.

For the six months ended June 30, 2022, the valuation assumptions for stock options granted under the 2017 Plan and the 2019 Plan were estimated on the date of grant using the BSM option-pricing model with the following weighted-average assumptions:

	2022
Grant date closing price of Common Stock	$	1.29
Expected term (years)		3.5
Risk-free interest rate		2.8	%
Volatility		135	%
Dividend yield		0	%

Based on the assumptions set forth above, the weighted-average grant date fair value per share for stock options granted for the six months ended June 30, 2022 was $1.29.

For the three months ended June 30, 2022 and 2021, the Company recognized approximately $0.7 million and $0.6 million, respectively, and for the six months ended June 30, 2022 and 2021, the Company recognized approximately $1.3 million and $1.1 million, respectively, of share-based compensation expense relating to the vesting of stock options. Unrecognized expense relating to these awards as of June 30, 2022 was approximately $3.9 million, which will be recognized over the weighted average remaining term of 2.9 years as of June 30, 2022.

Warrants

The following table sets forth activity with respect to the Company’s warrants to purchase Common Stock for the six months ended June 30, 2022 (shares in thousands):

	2022
	Shares			Price (1)		Term (2)
Outstanding, beginning of year		2,556		$	7.44		2.6
Grants of warrants:
Consultants for services		210	(3)		1.05
Acquisition of assets		-
Outstanding, June 30		2,766	(4)		7.01		2.4
Exercisable, June 30		2,420	(5)		7.24		2.3

(1)	Represents the weighted average exercise price.
(2)	Represents the weighted average remaining contractual term until the warrants expire.
(3)	In February, 2022, the Company granted warrants to consultants in exchange for marketing, business development, investor relations and communication services. Warrants issued in February 2022 provide for the purchase of an aggregate of 80,000 shares of Common Stock and are exercisable at $3.27 per share. The aggregate fair value of the February warrants amounted to $0.1 million which is being recognized over the period that the services are provided. In May, 2022, the Company granted warrants to consultants in exchange for marketing and business development services. Warrants issued in May 2022 provide for the purchase of an aggregate of 130,000 shares of Common Stock and are exercisable at $1.29 per share. The aggregate fair value of the May warrants amounted to $0.1 million which is being recognized over the period that the services are provided. For the six months ended June 30, 2022, the Company recognized expense of $0.3 million.
(4)	As of June 30, 2022, the aggregate intrinsic value of warrants outstanding was $0.
(5)	As of June 30, 2022, the aggregate intrinsic value of warrants exercisable was $0.

For the six months ended June 30, 2022, the valuation assumptions for warrants issued were estimated on the measurement date using the BSM option-pricing model with the following weighted-average assumptions:

	2022
Measurement date closing price of Common Stock (1)	$	1.05
Contractual term (years) (2)		5.0
Risk-free interest rate		2.4	%
Volatility		135	%
Dividend yield		0	%

(1)	Weighted average grant price.
(2)	The valuation of warrants is based on the contractual term of the warrant rather than the expected term.