Stock-based Compensation, Warrants and Shares Reserved

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

Stock-based Compensation, Warrants and Shares Reserved

Note 11: Stock-based Compensation, Warrants and Shares Reserved 

            The Company accounts for stock-based compensation transactions in which the Company receives employee services in exchange for restricted stock units (“RSUs”) or options to purchase common stock and the Company recognizes stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period. Stock-based compensation cost for RSUs is measured based on the closing fair market value of the Company’s common stock on the date of grant. Stock-based compensation cost for stock options is estimated at the grant date based on each option’s fair-value as calculated by the Black-Scholes option-pricing model. The Company accounts for forfeitures as they occur and will reduce compensation cost at the time of forfeiture.  Cash-settled Stock Appreciation Rights provide for the cash payment of the excess of the fair market value of the Company’s common stock price on the date of exercise over the grant price.  The fair value of the SARs is calculated during each reporting period and estimated using the Black-Scholes option pricing model. The SARs will vest over a period of three years and are accounted for as liability awards since they will be settled in cash.  Cash-settled SARs have no effect on dilutive shares or shares outstanding as any appreciation of the Company’s common stock over the grant price is paid in cash and not in common stock.  The Company accounts for forfeiture as they occur and reduces the compensation cost at the time of forfeiture.

            At the Company’s 2020 annual meeting of stockholders, the stockholders approved the Company’s 2020 Equity Incentive Plan (the “2020 Plan”). The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards, and other forms of equity compensation (collectively “stock awards”). In addition, the 2020 Plan provides for the grant of cash awards. The initial aggregate number of shares of common stock that may be issued initially pursuant to stock awards under the 2020 Plan is 2,000,000 shares. The number of shares of common stock reserved for issuance automatically increases on January 1 of each calendar year during the term of the 2020 Plan, commencing January 1, 2021, by 5.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares of common stock determined by the Company’s board of directors before the start of a calendar year for which an increase applies. One of the provisions of the 2020 Plan is that no award may be granted, issued or made under the 2020 Plan until such time as the fair market value of the common stock, which is generally the closing sales price of the common stock on the principal stock market on which the common stock is traded, has been equal to or greater than $3.00 per share (subject to proportionate adjustment for stock splits, reverse stock splits, and similar events) for at least ten consecutive trading days, after which time awards may be made under the 2020 Plan without regard to any subsequent increase or decrease in the fair market value of the common stock. No awards were made pursuant to the 2020 Plan as of March 31, 2022.

            On January 1, 2022, pursuant to the 2020 Equity Incentive Plan the number of shares reserved for the issuance of stock awards increased by 7,479,713 shares.   

Stock Options 

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

Non-Plan Awards:

	Non - Plan Awards		Weighted Average Exercise Price		Weighted Average Remaining Contract Life
Total Outstanding Vested and Expected to Vest as of December 31, 2021		—	$	—		—
Granted		130,000		0.62		—
Options Canceled/Expired		—		—		—
Total Outstanding Vested and Expected to Vest as of March 31, 2022		130,000		0.62		9.88
Vested at March 31, 2022		25,000		0.62		9.88

2009 Equity Incentive Plan: 

	2009 Equity Incentive Plan			Weighted Average Exercise Price		Weighted Average Remaining Contract Life
Total Outstanding Vested and Expected to Vest as of December 31, 2021		4,985,415		$	4.21		4.05 years
Options Canceled/Expired		(199,273	)		4.61		—
Total Outstanding Vested and Expected to Vest as of March 31, 2022		4,786,142			4.19		3.97 years
Vested at March 31, 2022		4,781,209			4.19		3.97 years

             Continuing operations expense related to stock options for the three months ended March 31, 2022 and 2021, was approximately $10,000 and $110,000, respectively. Discontinued operations expense related to stock options for the three months ended March 31, 2022 and 2021 was approximately $0 and $33,000, respectively. As of March 31, 2022, the compensation expense related to stock options issued under the Company’s 2009 Equity Incentive Plan have been fully recognized.

             The aggregate intrinsic value (the difference between the Company’s closing stock price on the last trading day of the year and the exercise price, multiplied by the number of in-the-money options) of 4,916,142 and 4,985,415 stock options outstanding at March 31, 2022 and December 31, 2021 was $0, respectively. The aggregate intrinsic value of 4,806,209 and 4,980,482  stock options exercisable at March 31, 2022, and December 31, 2021 was $0 and $0, respectively.   

Restricted Stock Units

The following table summarizes the RSUs outstanding at March 31, 2022: 

	Number of Shares/Unit			Weighted Average Grant Date Fair Value
Non-vested RSUs as of December 31, 2021		1,039,003		$	4.16
RSUs vested during the period		(139,003	)		3.09
RSUs forfeited during the period		—			—
Non-vested RSUs as of March 31, 2022		900,000		$	4.33

 For the three months ended March 31, 2022 and 2021, continuing operations expense related to RSUs was approximately $362,000 and $737,000, respectively. For the three months ended March 31, 2022 and 2021, there was no RSU related expense within discontinued operations. As of March 31, 2022, the unamortized compensation expense related to RSUs was approximately $784,000 and will be recorded as compensation expense over 1.72 years.

Warrants

The following table summarizes warrants outstanding at March 31, 2022 and at December 31, 2021:  

	Warrant Shares			Exercise Price Per Share		Date Issued		Expiration Date
Old Adamis Warrants		58,824		$	8.50	November 15, 2007		November 15, 2022
2019 Warrants		13,794,000		$	1.15	August 5, 2019		August 5, 2024
2020 Warrants		350,000	**	$	0.70	February 25, 2020	*	September 3, 2025
Total Warrants		14,202,824

*	On September 3, 2020, the Company’s stockholders approved an increase in the number of authorized shares of common stock sufficient to permit exercise in full of all the 2020 warrants, and as a result, the warrants are exercisable effective September 3, 2020.
**	As of March 31, 2022 and as of December 31, 2021, the fair value of the warrant liability related to the 2020 Warrants was $90,268 and $ 99,655 respectively. See Note 8.

At March 31, 2022, the Company has reserved shares of common stock for issuance upon exercise of outstanding options, warrants including all of the warrants in the table above and restricted stock units, as follows:

Warrants	14,202,824
Restricted Stock Units (“RSUs”)	900,000
2009 Equity Incentive Plan	4,916,142
Total Shares Reserved	20,018,966