NOTE 12. STOCK-BASED COMPENSATION

In connection with the closing of the IPO, on November 26, 2019, the Company granted restricted shares of common stock to each of the non-employee directors under the Individual Plan. Each of the non-employee directors received an award of 2,000 restricted shares of common stock on November 26, 2019. The restricted shares will vest in substantially equal installments on each of the first, second and third anniversaries of the grant date. In addition, the restricted shares are subject to a holding period beginning on the grant date and ending on the date that the grantee ceases to serve as a member of the Board (the “Holding Period”). During the Holding Period, the restricted shares may not be sold, pledged or otherwise transferred by the grantee. Except for the grant of these 8,000 restricted shares of Common Stock, the Company has not made any grants under the Equity Incentive Plans. Any future grants under the Equity Incentive Plans will be approved by the independent members of the compensation committee of the Board. The 2019 non-employee director share awards had an aggregate grant date fair value of approximately $150,000. The Company’s determination of the grant date fair value of the three-year vest restricted stock awards was calculated by multiplying the number of shares issued by the Company’s stock price at the grant date. Compensation cost is recognized on a straight-line basis over the vesting period and is included in general and administrative expenses in the Company’s consolidated statements of operations. During the three months ended March 31, 2020, the Company recognized stock compensation expense totaling approximately $13,000 which is included in general and administrative expenses in the consolidated statement of operations.

A summary of activity for these awards during the three months ended March 31, 2020, is presented below:


		Wtd. Avg.
Non-Vested Restricted Shares	Shares	Fair Value
Outstanding at January 1, 2020	8,000	$	18.80
Granted	—		—
Vested	—		—
Expired	—		—
Forfeited	—		—
Outstanding at March 31, 2020	8,000	$	18.80

As of March 31, 2020, there was approximately $133,000 of unrecognized compensation cost related to the three-year vest restricted shares, which will be recognized over a remaining period of 2.7 years.

Each member of the Company’s Board of Directors has the option to receive his or her annual retainer in shares of Company common stock rather than cash. The number of shares awarded to the directors making such election is calculated quarterly by dividing the amount of the quarterly retainer payment due to such director by the trailing 20-day average price of the Company’s common stock as of the last business day of the calendar quarter, rounded down to the nearest whole number of shares. During the three months ended March 31, 2020, the expense recognized for the value of the Company’s common stock received by non-employee directors totaled approximately $54,000, or 4,098 shares, which were issued on April 1, 2020.

Stock compensation expense for the three months ended March 31, 2020 is summarized as follows:


	Three Months Ended
	March 31, 2020 ($ 000's)
Stock Compensation Expense – Director Restricted Stock	$	13
Stock Compensation Expense – Director Retainers Paid in Stock		54
Total Stock Compensation Expense (1)	$	67

⁽¹⁾

Director retainers are issued through additional paid in capital in arrears. Therefore, the change in additional paid in capital during the three months ended March 31, 2020 is equal to total stock compensation expense of $67,000, less the $54,000 of first quarter 2020 director retainers, as those shares were issued on April 1, 2020, plus the fourth quarter 2019 director retainers of $24,000, as those shares were issued on January 2, 2020.

For the periods prior to November 26, 2019, Predecessor’s stock-based compensation expense, included in general and administrative expenses in the combined statements of operations for the three months ended March 31, 2019, reflected an allocation of a portion of the stock compensation expense of CTO for the applicable periods.