Stockholders' Equity and Stock-Based Compensation

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Stockholders’ Equity and Stock-Based Compensation

STOCKHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Issuances of Common Stock

The Company is authorized to issue up to 37,500,000 shares of common stock, $0.001 par value per share.

During the three months ended March 31, 2022, the Company issued 500,000 shares of common stock, to its former chief executive officer pursuant to the terms of his separation and release agreement. The restricted stock units (RSU's) were expensed during the third quarter 2021. In addition, during the three months ended March 31, 2022, 1,334 shares of common stock were issued to other employees upon vesting of RSU's issued under the Company's long term incentive plan.

Amended and Restated 2019 Long Term Incentive Plan

The Company has a long term incentive plan (the “Amended and Restated Plan”) which provides for a maximum number of shares of common stock available for issuance of 4,000,000 shares. Awards under the Amended and Restated Plan may be granted to employees, officers and directors of the Company and affiliates, and any other person who provides services to the Company and its affiliates (including independent contractors and consultants of the Company and its subsidiaries). Awards may be granted in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, substitute awards, other stock-based awards, cash awards and/or any combination of the foregoing. No participant may receive a grant covering more than 2,000,000 shares of our common stock in any year and a non-employee member of the Board may not be granted more than 100,000 shares in any year.

Stock-Based Compensation and Awards

During the three months ended March 31, 2022, the Company issued a total of 40,764 restricted stock units ("RSU’s") and 774,505 stock options pursuant to the Amended and Restated Plan. The RSU’s were valued at $0.2 million based upon the closing price of $4.11 on the date of grant and will vest over three years. The Company has estimated the value of the options issued using a valuation model. The full aggregate fair value determined was $1.5 million using observable inputs from trading values of the Company's shares of stock. Assumptions used in determining the valuation of the options included the following:

•A strike price of $6.00 per share with 3-year vesting terms and the closing price of the common stock of $4.11 at date of grant.

•The risk free rate assumed the return of a U.S. Treasury bill of 3 years (the vesting period), which was approximately 1.7% at the date of grant.

•$0 dividends as we have not historically paid dividends.

•A term of 6.5 years, which was determined as the midpoint between the vesting period of 3 years with an anticipated expiration date of 10 years.

•Volatility of approximately 58%.

The Company includes stock compensation expense within general and administrative expenses in the unaudited Condensed Consolidated Statements of Operations. During the three months ended March 31, 2022 and 2021, the Company recognized $0.5 million and $0.1 million of stock compensation expense, respectively. As of March 31, 2022, the Company had $1.3 million of unrecognized compensation costs related to 465,781 outstanding RSUs which is expected to be recognized over a weighted average period of less than two years and $4.0 million of unrecognized compensation costs related to 2,074,505 outstanding options which is expected to be recognized over a weighted average period of less than three years. All RSU's and options are expected to vest.