STOCK INCENTIVE PLANS

12 Months Ended

Dec. 31, 2021

STOCK INCENTIVE PLANS

STOCK INCENTIVE PLANS

NOTE 17 – STOCK INCENTIVE PLANS

On December 29, 2017 (“Effective Date”), the Company adopted the CURE Pharmaceutical Holding Corp. 2017 Equity Incentive Plan (the “2017 Equity Plan”), pursuant to which an aggregate of 5,000,000 shares of the common stock of the Company are available for grant. On November 25, 2020, the Company registered an additional 5,000,000 shares of common stock of the Company that are available to be granted by filing a Form S-8 Registration Statement under the Securities Act of 1933.

The Board of Directors have determined that it is in the best interests of the Company and its stockholders to provide an additional incentive for certain employees, including executive officers, and non-employee members of the Board of Directors of the Company by granting to them awards with respect to the common stock of the Company pursuant to the Plan. The Plan seeks to achieve this purpose by providing for awards in the form of Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards (“Awards”). The Plan will continue in effect until its termination by the Committee; provided, however, that all Awards must be granted, if at all, within ten (10) years from the Effective Date.

The Company did not issue any Incentive Stock Options (“ISO”) during the year ended December 31, 2021 and issued 90,000 ISO’s to an officer of the Company during the year ended December 31, 2020. The Company issued 1,555,526 Nonstatutory Stock Options (“NSO”) to employees of the Company and 338,443 Restricted Common Stock (“Restricted Common Stock”) to various consultants of the Company and 629,338 RSU’s to the members of the Board of Directors during the year ended December 31, 2021. The Company issued 3,510,364 Nonstatutory Stock Options (“NSO”), 150,000 Restricted Common Stock (“RCS”), and 431,578 Restricted Stock Units (“RSU”) to employees, including executive officers, and non-employee members of the Board of Directors of the Company during the year ended December 31, 2020. During the year ended December 31, 2020, 30,000 NSO’s were exercised at $0.74 per share in exchange for $22,200.

Vesting periods for awarded RCS, ISO’s and NSO’s range from immediate to quarterly over a 4 year period. Vesting period for RSU’s is the earlier of (i) the day prior to the next Annual Meeting of Shareholders following the date of grant, and (ii) one (1) year from the Date of Grant. For ISO’s and NSO’s awarded, the term to exercise their ISO or NSO is 10 years.

The Company issued 1,518,194 stock options during the year ended December 31, 2020 to a consultant that contains performance-based vesting conditions where revenue milestones are to be met over a certain period. Such stock option awards would be valued using a Monte Carlo simulation based on the probability of the performance condition being met and the underlying expense would be recognized as the associated vesting conditions are met. No stock options that contain performance-based vesting conditions vested during the year ended December 31, 2021 and the likelihood of meeting the performance-based condition is currently nil.

Stock Options

The Company’s stock option activity was as follows:

	Options			Weighted Average Exercise Price		Weighted Average Contractual Remaining Life
Outstanding, December 31, 2019		3,467,650		$	1.84		8.74
Granted		3,600,364			1.26		9.19
Exercised		(30,000	)		0.74		-
Forfeited/Expired		(752,222	)		1.76		-
Outstanding, December 31, 2020		6,285,792		$	1.52		8.86
Granted		1,555,526			0.95		9.25
Exercised		-			-		-
Forfeited/Expired		(611,250	)		0.97		-
Outstanding, December 31, 2021		7,230,068		$	1.45		8.27
Exercisable at December 31, 2021		4,067,452		$	1.51		7.81

Range of Exercise Price	Number of Awards		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number of Awards Exercisable		Weighted Average Exercise Price
$ 0.61-$4.01		7,230,068		8.27	$	1.45		4,067,452	$	1.51
		7,230,068		8.27	$	1.45		4,067,452	$	1.51

The aggregate intrinsic value of options outstanding and exercisable at December 31, 2021 was $0.

The aggregate grant date fair value of options granted during the year ended December 31, 2021 and 2020 amounted to $1.5 million and $2.2 million, respectively. Compensation expense related to stock options for the year ended December 31, 2021 and 2020 was $2.0 million and $2.0 million, respectively.

As of December 31, 2021, the total unrecognized fair value compensation cost related to unvested stock options was $2.1 million, which is to be recognized over a remaining weighted average period of approximately 1.4 years.

The weighted-average fair value of options granted during the years ended December 31, 2021 and 2020, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows:

	December 31, 2021			December 31, 2020
Significant assumptions (weighted-average):
Risk-free interest rate at grant date		1.18	%		0.59	%
Expected stock price volatility		76.95	%		81.14	%
Expected dividend payout		-			-
Expected option life (in years)		10			10
Expected forfeiture rate		0	%		0	%

Restricted Stock

Subject to the restrictions set with respect to the particular Award, a recipient of Restricted Stock generally shall have the rights and privileges of a shareholder, including the right to vote the Restricted Stock and the right to receive dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld for the recipient’s account, and interest may be credited on the amount of the cash dividends withheld. The cash dividends or stock dividends so withheld and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the recipient in cash or, at the discretion of the Board or Committee, in shares of common stock having a fair market value equal to the amount of such dividends, if applicable, upon the release of restrictions on the Restricted Stock and, if the Restricted Stock is forfeited, the recipient shall have no right to the dividends.

The Company’s restricted stock activity was as follows:

Compensation expense related to restricted shares for the years ended December 31, 2021 and 2020 was $0.5 million and $0.5 million, respectively. Information relating to non-vested restricted award shares is as follows:

	Restricted Stock Shares			Weighted Average Grant Date Fair Value
Non-vested, December 31, 2019		82,086		$	2.69
Granted		150,000			1.60
Vested		(181,849	)		2.08
Forfeited/Expired		(237	)		-
Non-vested, December 31, 2020		50,000			1.60
Granted		338,443			1.20
Vested		(388,443	)		1.26
Forfeited/Expired		-			-
Non-vested, December 31, 2021		-		$	-

At December 31, 2021 and 2020, the Company had approximately $0 and $0.1 million, respectively, of total unrecognized compensation expense related to restricted stock awards. Compensation will be recognized over a weighted-average period of approximately 0 years and 0.14 years, respectively.

Restricted Stock Units

The terms and conditions of a grant of Restricted Stock Units shall be determined by the Board or Committee. No shares of common stock shall be issued at the time a Restricted Stock Unit is granted. A recipient of Restricted Stock Units shall have no voting rights with respect to the Restricted Stock Units. Upon the expiration of the restrictions applicable to a Restricted Stock Unit, The Company will either issue to the recipient, without charge, one share of common stock per Restricted Stock Unit or cash in an amount equal to the fair market value of one share of common stock.

The Company’s restricted stock unit activity was as follows:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Outstanding, December 31, 2019		60,759		$	3.66
Granted		431,578			1.33
Vested		(60,759	)		3.66
Forfeited/Expired		-			-
Outstanding, December 31, 2020		431,578			1.33
Granted		629,338			0.74
Vested		(411,027	)		1.33
Forfeited/Expired		(61,654	)		1.33
Outstanding, December 31, 2021		588,235		$	0.70

At December 31, 2021 and 2020, the Company had approximately $0.4 million and $0.6 million, respectively, of total unrecognized compensation expense related to restricted stock units. Compensation will be recognized over a weighted-average period of approximately 0.85 years and 0.64 years, respectively.

Compensation expense related to restricted stock units for the years ended December 31, 2021 and 2020 was $0.6 million and $0.3 million, respectively. All compensation expense related to restricted stock units were included in selling, general and administrative expenses for the years ended December 31, 2021 and 2020.