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Share-Based Compensation
 3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
SHARE-BASED COMPENSATION

18. SHARE-BASED COMPENSATION


The Company accounts for share-based compensation costs in accordance with ASC 718, Compensation – Stock Compensation. ASC 718 requires companies to measure the cost of awards of equity instruments, including stock options and restricted stock awards, based on the grant-date fair value of the award and to recognize it as compensation expense over the employee’s requisite service period or the non-employee’s vesting period. An employee’s requisite service period is the period of time over which an employee must provide service in exchange for an award under a share-based payment arrangement and generally is presumed to be the vesting period.


For employee awards, the Company elected to utilize the simplified method of estimating the expected life of options as allowed by SEC Staff Accounting Bulletin (“SAB”) 107. The Company believes this to be a better estimate of the expected life given the lack of historical information. For nonemployee awards, the Company will utilize the stated term of the award. Forfeitures will be accounted for as they occur for both employee and nonemployee awards. Upon exercise or conversion of any share-based payment transaction, the Company will issue shares, generally as new issuances.


Share-based compensation for employees and non-employees is recorded in the Condensed Consolidated Statement of Operations as a component of general and administrative expense with a corresponding increase to additional paid-in capital in shareholders’ equity.


As described in Note 17 – Stockholders’ Equity, effective January 21, 2021, the Company enacted the Split of the Company’s common stock. As a result, the Company has given effect to the Split as if it occurred at the beginning of the first period presented for all share-based compensation. 


2020 Long-Term Incentive Plan


On April 22, 2020, the Company’s Board of Directors adopted the 2020 Long-Term Incentive Plan (the “2020 Plan”) which was approved by the stockholders on or about May 6, 2020. Employees, officers, directors and consultants that provide services to the Company or one of its subsidiaries may be selected to receive awards under the 2020 Plan. Awards under the 2020 Plan may be in the form of incentive or nonqualified stock options, stock appreciation rights, stock bonuses, restricted stock, stock units and other forms of awards including cash awards and performance-based awards.


A total of 3,333,334 shares of the Company’s common stock are authorized for issuance with respect to awards granted under the 2020 Plan. Any shares subject to awards that are not paid, delivered or exercised before they expire or are cancelled or terminated, or fail to vest, as well as shares used to pay the purchase or exercise price of awards or related tax withholding obligations, will become available for other award grants under the 2020 Plan. As of March 31, 2021, 908,505 options have been issued under the 2020 Plan, of which 33,334 were forfeited, 3,333 have been exercised, and 2,458,163 shares authorized under the 2020 Plan remained available for award purposes.


The 2020 Plan will terminate on May 1, 2030. The maximum term of options, stock appreciation rights and other rights to acquire common stock under the 2020 Plan is ten years after the initial date of the award.


Restricted Stock Awards


On December 2, 2019, the Company’s Board of Directors granted an aggregate of 633,336 RSAs to nine officers and directors (“Participant”) at a grant date fair value of $2.46 per share. The original vesting period for these RSAs is as follows: 283,339 were to vest on the one-year anniversary of the grant date; 283,331 were to vest on the two-year anniversary of the original grant date; and 66,666 were scheduled to vest on the three-year anniversary of the original grant date. As of December 31, 2020, 283,339 RSAs had vested. In the first quarter of fiscal 2021, the Company modified the RSA awards for two individuals to accelerate the final vesting of their awards in consideration of the individuals’ separation and/or retirement. This modification resulted in the vesting of an additional 50,000 RSAs. An incremental compensation expense was recognized for the modification totaling $166,920 during the three months ended March 31, 2021. As of March 31, 2021, the remaining unvested RSAs from these awards, totaling 299,997, are scheduled to vest as follows: 233,331 are scheduled to vest on the two-year anniversary of the original grant date; and 66,666 were scheduled to vest on the three-year anniversary of the original grant date.


On January 26, 2021, the Company’s Board of Directors granted an aggregate of 66,667 RSAs to one director at a grant date fair value of $4.50 per share. The vesting period for these RSAs is as follows: 33,334 vest on the one-year anniversary of the grant date and 33,333 vest on the two-year anniversary of the original grant date.


For all RSAs that are currently outstanding, if the Participant’s employment with, engagement by, or service to the Company terminates for any reason (other than due to disability, retirement or death, or termination by employee for “Good Cause” as defined pursuant to a written employment contract) prior to the vesting of all or any portion of the RSAs granted, such RSAs shall immediately be cancelled. If the Participant’s employment with, engagement by, or service to the Company terminates due to the Participant’s death, disability or retirement, or by termination by such employee for “Good Cause” as defined pursuant to a written employment contract, the Participant shall become 100% vested in the RSAs granted as of the date of any such termination. There were no RSAs that were forfeited in the three months ended March 31, 2021. For the three months ended March 31, 2021, the Company recognized $349,080 of compensation expense related to RSAs and had unrecognized compensation cost for RSAs totaling $821,706. There was neither any share-based compensation expense related to RSAs nor unrecognized compensation cost for RSAs for the three months ended March 31, 2020.


Stock Options


No options were granted during the three months ended March 31, 2021 and 2020.


The following tables represent stock option activity for the three months ended March 31, 2021 and March 31, 2020:


   Number of
Options		   Weighted-
Average
Exercise
Price per
Share		   Weighted-
Average
Contractual
Life in
Years		   Aggregate
Intrinsic
Value		 
Outstanding – December 31, 2020   3,433,515   $1.59    2.01   $15,220,798 
Exercisable – December 31, 2020   3,400,181    1.58    1.99    15,128,796 
Granted   —    —           
Exercised   (3,333)   0.15           
Cancelled or Expired   (33,334)   8.70           
Outstanding – March 31, 2021   3,396,848    1.52    1.78    3,984,796 
Exercisable – March 31, 2021   3,380,181    1.52    1.77    3,984,796 

   Number of
Options		   Weighted-
Average
Exercise
Price per
Share		   Weighted-
Average
Contractual
Life in
Years		   Aggregate
Intrinsic
Value		 
Outstanding – December 31, 2019   2,898,347   $1.90    1.92   $2,264,770 
Exercisable – December 31, 2019   2,898,347   $1.90    1.92   $2,264,770 
Granted   —    —           
Exercised   —    —           
Cancelled or Expired   (333,335)   1.89           
Outstanding – March 31, 2020   2,565,012    1.90    1.91    4,898,470 
Exercisable – March 31, 2020   2,565,012    1.90    1.91    4,898,470 

The Company recognized $7,374 of share-based compensation expense related to options for the three months ended March 31, 2021. There was no share-based compensation expense related to options for the three months ended March 31, 2020. Compensation expense related to stock options is recorded in general and administrative in the Condensed Consolidated Statement of Operations. For the three months ended March 31, 2021, the Company has $9,836 of unrecognized compensation expense related to options. There was no unrecognized compensation expense related to options for the three months ended March 31, 2020.


Warrants


On January 26, 2021, the Company issued warrants to purchase an aggregate of 2,751,556 shares of the Company’s common stock as partial consideration for the debt extinguishments disclosed in Note 15 – Debt Agreements and Note 16 – Related Party Transactions. The warrants have an exercise price of $4.50 per share and an expiration date of January 26, 2026. The issuance date fair value of these warrants, using the Black-Scholes Option-Pricing model, was estimated to be $1.597 per share for a total of $4,394,235. None of these warrants were exercised during the three months ended March 31, 2021.


On January 26, 2021, the Company issued warrants to purchase an aggregate of 4,433,734 shares of the Company’s common stock as portion of the Units offered in the Company’s First offering as disclosed in Note 17 – Stockholders’ Equity. The warrants have an exercise price of $4.50 per share and an expiration date of January 26, 2026. The issuance date fair value of these warrants, using the Black-Scholes Option-Pricing model, was estimated to be $1.597 per share for a total of $7,080,673. None of these warrants were exercised during the three months ended March 31, 2021.


On January 26, 2021, the Company issued warrants to purchase an aggregate of 100,000 shares of the Company’s common stock as consideration for certain costs related to the First Offering as disclosed in Note 17 – Stockholders’ Equity. The Representative’s First Offering Warrants are subject to a lock-up for 180 days from the commencement of sales in the First Offering, including a mandatory lock-up period in accordance with FINRA Rule 5110(e), and will be non-exercisable for six (6) months after January 21, 2021. The warrants have an exercise price of $4.15 per share and an expiration date of January 21, 2026. The issuance date fair value of these warrants, using the Black-Scholes Option-Pricing model, was estimated to be $1.703 per share for a total of $170,300. None of these warrants were exercised during the three months ended March 31, 2021.


On January 26, 2021, the Company issued warrants to purchase an aggregate of 154,216 shares of the Company’s common stock as the Representative’s First Offering Warrants as discussed in Note 17 – Stockholders’ Equity. The warrants have an exercise price of $5.1875 per share and an expiration date of January 21, 2026. The issuance date fair value of these warrants, using the Black-Scholes Option-Pricing model, was estimated to be $1.376 per share for a total of $212,201. None of these warrants were exercised during the three months ended March 31, 2021.


On February 12, 2021, the Company issued warrants to purchase an aggregate of 225,882 shares of the Company’s common stock as the Representative’s Second Offering Warrants as discussed in Note 17 – Stockholders’ Equity. The Representative’s Second Offering Warrants are subject to a lock-up for 180 days from the commencement of sales in the Second Offering, including a mandatory lock-up period in accordance with FINRA Rule 5110(e), and will be non-exercisable for six (6) months after February 10, 2021. The warrants have an exercise price of $5.3125 per share and an expiration date of February 10, 2026. The issuance date fair value of these warrants, using the Black-Scholes Option-Pricing model, was estimated to be $1.918 per share for a total of $433,242. None of these warrants were exercised during the three months ended March 31, 2021.


All warrants are valued utilizing the Black-Scholes pricing model using the assumptions listed below. The weighted average grant date fair value of all warrants issued during the three months ended March 31, 2021, was $1.60 per share.


The following table summarizes the assumptions used to estimate the fair value of warrants granted during the three months ended March 31, 2021:


    2021  
Expected dividend yield   0 %
Expected volatility   39.94-45.84 %
Risk-free interest rate   0.42-0.50 %
Contractual life of warrants   5.0 years  

The following tables represents warrant activity for the three months ended March 31, 2021 and 2020:


    Number of
Warrants		     Weighted-
Average
Exercise
Price		     Weighted-
Average
Remaining
Contractual
Life in
Years		     Aggregate
Intrinsic
Value		  
Outstanding – December 31, 2020     890,416     $ 1.46       4.02     $ 4,083,362  
Exercisable – December 31, 2020     890,416     $ 1.46       4.02     $ 4,083,362  
Granted/Issued     7,669,092       4.53                  
Exercised     —       —                  
Forfeited or Expired     (3,704 )     2.97                  
Outstanding – March 31, 2021     8,555,804     $ 4.21       4.72     $ 1,291,622  
Exercisable – March 31, 2021     8,555,804     $ 4.21       4.72     $ 2,291,622  

   Number of
Warrants		   Weighted-
Average
Exercise
Price		   Weighted-
Average
Remaining
Contractual
Life in
Years		   Aggregate
Intrinsic
Value		 
Outstanding – December 31, 2019   167,846   $2.85    1.96   $258,332 
Exercisable – December 31, 2019   167,846   $2.85    1.96   $258,332 
Granted   —    —           
Exercised   —    —           
Forfeited or Expired   —    —           
Outstanding – March 31, 2020   167,846   $2.85    1.72   $414,078 
Exercisable – March 31, 2020   167,846   $2.85    1.72   $414,078