Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based CompensationSince 2012, Eos has issued stock options to employees and certain service providers under the 2012 Eos Equity Incentive Plan (“2012 Plan”). In addition to stock options, the 2012 Plan provides for the issuance of other forms of stock-based compensation, including profit interests, unit appreciation rights and restricted units. Subsequent to the closing of the Merger, the Company approved the 2020 Equity Incentive Plan (the “2020 Incentive Plan”) and reserved 6,000,000 shares of common stock for issuance thereunder. The Incentive Plan became effective immediately upon the Closing of the Merger and all equity granted under the 2012 Plan were converted into equivalent equity under the 2020 Incentive Plan. As of December 31, 2020, the Company has stock options and restricted units issued under the 2020 Incentive Plan.

The following table summarizes stock option activity during the years ended December 31, 2020 and 2019. All stock option activity was retroactively restated to reflect the converted options. See Note 2 for the conversion in connection with the Merger.


	Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (years)
Options Outstanding at December 31, 2018	303,028	$	26.20	2.8
Granted	254,882	$	9.54
Cancelled/Forfeited	(165,072)	$	27.24
Options Outstanding at December 31, 2019	392,838	$	15.09	5.4
Granted	1,972,679	$	9.07
Cancelled/Forfeited	(221,881)	$	18.57
Options Outstanding at December 31, 2020	2,143,636	$	9.19	9.5
Options Exercisable at December 31, 2020	15,859	$	26.81	1.7

As of December 31, 2020 and 2019, 3,825,176 and 87,906 shares remain for future issuance, respectively. Options vest generally over three to five years and have a term of five to ten years. During the year ended December 31, 2020, the Company granted stock options with both service and performance conditions. Stock compensation is recognized on a straight-line basis over the requisite service period of the award, which is generally the award vesting term. For awards with performance conditions, compensation expense is recognized using an accelerated attribution method over the vesting period. The performance conditions primarily relate to the completion of project milestones, achievement of operational certifications, and the Company’s closing of financing rounds.

The Company’s Restricted Units (RU) represent the right to receive one common share, subject to vesting and transferability restrictions. For the year ended December 31, 2020 and December 31, 2019, 123,478 and — RUs were granted. During the same periods, 174,761 and — common shares were issued for RUs that had fully vested during the current and prior periods. As of December 31, 2020, 42,318 RUs were outstanding and unvested. These unvested RUs include (1) 31,188 units issued to directors of our Board which will vest at the earlier of our next annual shareholders meeting or December 8, 2021 and (2) 11,130 units issued to a member of our senior management which will be vested on December 16, 2021. These RUs were measured at their grant-date fair value of $13.46 per unit and will be fully vested in 2021.

The Company recorded stock compensation expense of $5,081 for the year ended December 31, 2020 which includes $977 from RUs and $4,104 from stock options, respectively. $135 of stock compensation was recorded for the year ended December 31, 2019, including $4 from RUs and $131 from stock options, respectively. The stock compensation has been recorded in cost of sales, R&D expense and general and administrative expenses in the Statements of Operations. Unrecognized stock compensation expenses amount to $7,416 and include $472 attributable to RUs, which is expected to be recognized within one year, and $6,944 attributable to stock option, which is expected to be recognized over the next four years.

The weighted average assumptions used to determine the fair value of options granted in 2020 and 2019 are as follows:


	2020		2019
Volatility	52.99	%	58.20	%
Risk free interest rate	0.39	%	1.89	%
Expected life (years)	5.19		6.25
Dividend yield	0	%	0	%

The weighted average grant date fair value of all options granted was $5.38 and $1.21 per option for the years ended December 31, 2020 and 2019, respectively.