EQUITY- BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

EQUITY- BASED COMPENSATION

EQUITY- BASED COMPENSATION

NOTE 12 – EQUITY- BASED COMPENSATION

On April 12, 2014, the stockholders of the Company approved the 22nd Century Group, Inc. 2014 Omnibus Incentive Plan (the “OIP”) and the authorization of 5,000,000 shares to be reserved for issuance thereunder. On April 29, 2017, the stockholders approved an amendment to the OIP to increase the number of shares available for issuance by an additional 5,000,000 shares and on May 3, 2019, the stockholders approved an additional amendment to the OIP to increase the number of shares available for issuance by an additional 5,000,000 shares. The OIP allows for the granting of equity and cash incentive awards to eligible individuals over the life of the OIP, including the issuance of up to an aggregate of 15,000,000 shares of the Company’s common stock pursuant to awards under the OIP. The OIP has a term of ten years and is administered by the Compensation Committee of the Company’s Board of Directors to determine the various types of incentive awards that may be granted to recipients under the OIP and the number of shares of common stock to underlie each such award under the OIP. As of June 30, 2020, the Company had available 4,409,969 shares remaining for future awards under the OIP.

Restricted Stock (“RSU”). We grant restricted stock units to employees and non-employee directors which are valued based on the Company’s stock price on the award grant date. The following table summarizes the changes in unvested restricted stock during the current period:

	Unvested RSUs
		Weighted
		Average
	Number of	Grant-date
	Shares	Fair Value
	shares in thousands
Unvested at December 31, 2019	951	$	2.15
Granted	2,696	$	0.70
Vested	(491)	$	2.36
Forfeited	(214)	$	1.11
Unvested at June 30,  2020	2,942	$	0.87

The fair value of RSUs that vested during the six months ended June 30, 2020 was approximately $362 based on the stock price at the time of vesting. As of June 30, 2020, unrecognized restricted stock compensation expense amounted to $2,059 which is expected to be recognized over a weighted average period of approximately 1.94 years.

Stock Options. Our outstanding stock options were valued using the Black-Scholes option-pricing model on the date of the award. A summary of all stock option activity since December 31, 2019 is as follows:

				Weighted
		Weighted		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Intrinsic
	Options	Price		Term		Value
	shares in thousands
Outstanding at December 31, 2019	7,837	$	1.49
Forfeited	(52)	$	2.28
Expired	(362)	$	1.43
Outstanding June 30, 2020	7,423	$	1.49	5.1	years	$	47
Exercisable at June 30, 2020	6,559	$	1.48	5.0	years	$	26

The intrinsic value of a stock option is the amount by which the current market value or the market value upon exercise of the underlying stock exceeds the exercise price of the option. As of June 30, 2020, unrecognized stock option compensation expense amounted to $204 which is expected to be recognized over a weighted average period of approximately 0.7 years. In addition, there is approximately $637 of unrecognized stock option compensation expense that requires the achievement of certain milestones which have yet to be obtained.

Restricted Stock and Stock Option Compensation Expense. The Company recognized the following compensation costs, net of actual forfeitures, related to restricted stock and stock options:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Sales, general, and administrative	$	334	$	446	$	772	$	795
Research and Development		42		71		84		171
Total restricted stock and stock option compensation	$	376	$	517	$	856	$	966