Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Stockholders' Equity Note [Abstract]

Stockholders’ equity:

Common Stock

On July 23, 2020, in connection with the Company’s 2020 Annual Meeting of Stockholders (“the Annual Meeting”), the Company’s stockholders approved, among other matters, an amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 175,000,000 to 235,000,000.

Stock-based compensation

During the six months ended June 30, 2020, a total of 2,435,704 options to purchase Common Stock, with an aggregate fair market value of approximately $14.0 million, were granted to employees, officers, a director and the Interim Chief Executive Officer of the Company. Options have a term of 10 years from the grant date. Options granted to employees, officers and the director will vest ratably over a three-year period. Options granted to the Interim Chief Executive Officer in connection with his role as Interim Chief Executive Officer will vest upon certain performance milestones. Options previously granted to the former Chief Executive Officer vested upon his termination as Chief Executive Officer, and will be exercisable for a period of three years. (See Note 10, Commitments and Contingencies: Employment Agreement Termination and Release Agreement of Herm Cukier.) The fair value of each option is amortized as compensation expense evenly through the vesting period.

The fair value of each option award is estimated on the grant date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on implied volatilities from historical volatility of the Common Stock, and other factors estimated over the expected term of the options.

Expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

The key assumptions used in determining the fair value of options granted during the six months ended June 30, 2020 follows:


Expected price volatility			59.00%-61.76%
Risk-free interest rate			0.43%-1.68%
Weighted average expected life in years			6 years
Dividend yield			—

Option activity during the six months ended June 30, 2020 was as follows:


	Number of shares	Weighted average exercise price per share		Aggregate intrinsic value
Outstanding at January 1, 2020	5,496,971	$	3.64	$	15,455
Granted in 2020:
Officers and Directors	1,234,988	5.84
Employees	1,200,716	5.66
Exercised	(1,090,724)	2.36
Forfeitures	(261,749)	5.13
Outstanding at June 30, 2020	6,580,202	$	4.61	$	3,359

As of June 30, 2020, options exercisable totaled 2,783,869. There are approximately $8.9 million of unrecognized compensation costs related to non-vested share-based compensation awards, including options and restricted stock units (“RSUs”) granted. These costs will be expensed through 2023.

Restricted stock units

During the six months ended June 30, 2020, a cumulative total of 269,769 RSUs were granted to the Company’s executive officers, a member of senior management, a director and the Interim Chief Executive Officer in connection with his role as Interim Chief Executive Officer with a fair market value of approximately $1.5 million. The fair value of restricted units is determined using quoted market prices of the Common Stock and the number of shares expected to vest. RSU grants are time-based, all of which generally vest from a one to three-year period.

Restricted stock activity during the six months ended June 30, 2020 was as follows:


	Number of restricted shares	Weighted average fair market value per RSU
Outstanding at January 1, 2020	1,648,559	$	3.86
Granted:
Executive officers	241,314	5.52
Directors	16,000	4.46
Employees	12,455	5.52
Vested	(571,336)	4.42
Forfeitures	(407,217)	3.45
Outstanding at June 30, 2020	939,775	$	3.74

Warrants

The Company has granted warrants to purchase shares of Common Stock. Warrants may be granted to affiliates in connection with certain agreements. There were no warrants issued during the six months ended June 30, 2020 and as of June 30, 2020, a cumulative of 2,136,019 warrants remain outstanding.

Preferred Stock

During the six months ended June 30, 2020, 175 shares of Series B Preferred Stock (“Series B”) were converted into 972,222 shares of Common Stock. As of June 30, 2020, 443 shares of Series B are outstanding.

During the six months ended June 30, 2020, 2,093,155 shares of Series A Preferred Stock (“Series A”) were converted on a one-for-one basis into shares of Common Stock. There are no remaining outstanding shares of Series A as of June 30, 2020.

Earnings Per Share


	Three months ended June 30,						Six months ended June 30,
	2020		2019		2020		2019
Basic:
Net income (loss) attributable to common stockholders, basic	$	1,165	$	(11,130)	$	6,131	$	(14,963)
Weighted average common shares outstanding	100,136,893		83,821,811		98,541,877		77,571,003
Basic earnings (loss) per common share	$	0.01	$	(0.13)	$	0.06	$	(0.19)
Diluted:
Effect of dilutive securities:
Net income (loss) attributable to common stockholders, diluted	$	1,165	$	(11,130)	$	6,131	$	(14,963)
Weighted average common shares outstanding	100,136,893		83,821,811		98,541,877		77,571,003
Effect of dilutive options and warrants	7,974,308		—		8,520,284		—
Dilutive weighted average common shares outstanding	108,111,201		83,821,811		107,062,161		77,571,003
Diluted earnings (loss) per common share	$0.01		$(0.13)		$0.06		$(0.19)

During the three months ended June 30, 2020 and the six months ended June 30, 2020, outstanding stock options, RSUs, warrants and preferred shares of 7,974,308 and 8,520,284, respectively, were included in the computation of diluted earnings per common share.

During the three months ended June 30, 2019 and the six months ended June 30, 2019, outstanding stock options, RSUs, warrants and preferred shares of 18,131,489 and 17,528,530 , respectively, were not included in the computation of diluted earnings per common share, because to do so would have had an antidilutive effect.