Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

On May 25, 2016, the Board of Directors approved the Company’s 2016 Equity Incentive Plan (the “2016 Plan”). On May 21, 2018, the Board of Directors adopted, and the Company’s stockholders subsequently approved, an amendment and restatement of the 2016 Plan that increased the number of shares of Common Stock available for grant under such plan to 4,000,000 shares by adding 2,000,000 shares of Common Stock (the "Amended 2016 Plan"). The 4,000,000 shares of Common Stock available for issuance pursuant to the Amended 2016 Plan was reduced to 400,000 shares when the one-for-ten Reverse Stock Split effectuated on May 28, 2020. On July 15, 2020, the Board of Directors adopted and the Company’s stockholders approved an amendment of its existing 2016 Equity Incentive Plan (the "July 2020 Amendment"). The July 2020 Amendment increases the number of shares available to be granted under the 2016 Plan from 400,000 shares to 4,400,000 shares, plus any shares of its common stock that are represented by awards granted under its 1999 Director Plan and 2009 Equity Incentive Plan that are forfeited, expire or are cancelled without delivery of shares of common stock or which result in the forfeiture of shares of common stock back to the Company on or after May 25, 2016. Generally, shares of common stock reserved for awards under the 2016 Plan that lapse or are canceled will be added back to the share reserve available for future awards. However, shares of common stock tendered in payment for an award or shares of common stock withheld for taxes will not be available again for grant. The 2016 Plan provides that no participant may receive awards for more than 1,000,000 shares of common stock in any fiscal year. At June 30, 2021, under this plan, 1,351,941 shares remain available for issuance pursuant to future grants.

In the interest of maintaining consistency with the Company's 2016 Equity Incentive Plan, on March 13, 2017, the Company entered into (i) an amendment to the option agreements governing each option grant currently outstanding under the Company's 2009 Equity Incentive Plan, and (ii) an amendment to the RSU, agreements governing each RSU grant currently outstanding under the 2009 Plan. The amendments provide for the automatic vesting upon a change of control of the Company of each option grant and RSU grant, as applicable, outstanding under the 2009 Plan.

Total stock-based compensation cost charged against operations for the three-month periods ended June 30, 2021, and 2020 was $0.1 million and $0.2 million, respectively. Total stock-based compensation cost charged against operations for the six-month periods ended June 30, 2021, and 2020 was $0.2 million and $0.7 million, respectively.

The following table summarizes the components of share-based compensation expense in the Condensed Consolidated Statements of Operations for the three and six-month periods ended June 30, 2021 and 2020:


	Three Months Ended June 30,				Six Months Ended June 30,
Dollars in thousands	2021		2020		2021		2020
Cost of goods sold	$	25	$	12	$	45	$	35
Selling, general and administrative	110		151		158		615
Research and development	5		4		7		8
Total non-cash compensation expense related to share-based compensation included in operating expense	$	140	$	167	$	210	$	658

Stock Options

The Company did not issue any shares of common stock upon the exercise of stock options for the three and six-month periods ended June 30, 2021, and 2020. For the three-month periods ended June 30, 2021, and 2020, approximately $0.1 million and $0.2 million, respectively, of stock option compensation expense was charged against operations. For the six-month periods ended June 30, 2021, and 2020, approximately $0.1 million and $0.6 million, respectively, of stock option compensation expense was charged against operations. As of June 30, 2021, there was $1.7 million of unrecognized compensation cost, related to unamortized stock option compensation which is expected to be recognized over a weighted-average period of approximately 2.55 years.

Stock options that contain performance conditions

During the six months ended June 30, 2021, a total of 1,754,120 stock-options were granted to officers, other employees and directors under the 2016 Plan. The stock options are eligible to vest on the fourth anniversary of the grant date based on the continued employment of the recipient and if certain performance requirements have been achieved. The Company

did not record any compensation expense during the quarter ended June 30, 2021 for these performance-based stock options since it is not probable that the performance conditions or criteria will be met.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option-pricing formula that uses assumptions noted in the following table. Expected volatilities and risk-free interest rates are based upon the expected life of the grant.


	Six Months Ended June 30,
Assumptions	2021	2020
Expected dividends	—	—
Risk-free rate	0.19% - 0.22%	0.85% - 1.60%
Expected volatility	165.43% - 166.02%	78.56% - 79.58%
Expected term (in years)	3.20 - 3.30	3.20 - 3.30

Expected volatility was calculated using the historical volatility of the Company's stock over the expected life of the options. The expected life of the options was estimated based on the Company's historical data. The risk free interest rate is based on U.S. Treasury yields for securities with terms approximating the terms of the grants. Forfeitures are recognized in the period they occur. The assumptions used in the Black-Scholes options valuation model are highly subjective, and can materially affect the resulting valuation.

A summary of option activity under the 1999 Director Stock Option Plan, 2009 Equity Incentive Plan, and the 2016 Equity Incentive Plan as of June 30, 2021 and changes during the period are presented below:


	Number of Options	Weighted Average Exercise Price
Outstanding as of January 1, 2021	507,295	$	18.31
Granted	1,994,120	0.82
Exercised	—	—
Forfeited	(9,562)	13.41
Expired	(34,560)	28.41
Outstanding as of June 30, 2021	2,457,293	$	4.42

Exercisable as of June 30, 2021	236,838	$	30.69

The following tables summarize information regarding options outstanding and exercisable at June 30, 2021:

Outstanding:


	Stock Options	Weighted Average		Weighted Average Remaining
Range of Exercise Prices	Outstanding	Exercise Price		Contractual Life
$0.00 - $7.80	2,285,167	$	1.15	9.58
$7.81 - $15.00	49,941	10.27		6.00
$15.10 - $55.00	58,020	26.49		6.57
$55.10 - $106.70	64,165	79.24		4.54
Total	2,457,293	$	3.98	9.31

Exercisable:


Range of Exercise Prices	Stock Options Exercisable	Weighted Average Exercise Price
$0.00 - $7.80	76,479	$	4.40
$7.81 - $15.00	48,035	10.32
$15.10 - $55.00	48,159	28.07
$55.10 - $106.70	64,165	79.24
Total	236,838	$	30.69

As of June 30, 2021, the intrinsic value of the options outstanding was zero.

Restricted Stock and RSUs

During the three-month and six-month periods ended June 30, 2021, the Company issued 247,573 and 1,627,038 shares of restricted stock and RSU's amounting to $0.1 million and $1.3 million in total aggregate fair market value. For the three-month periods ended June 30, 2021 and 2020, approximately $0.1 million and $10 thousand, respectively, of deferred restricted stock and RSU compensation cost was charged against operations. For the six-month periods ended June 30, 2021 and 2020, approximately $0.1 million and $0.1 million, respectively, of deferred restricted stock and RSU compensation cost was charged against operations. At June 30, 2021, 1,587,013 shares remained unvested and there was approximately $1.2 million of total unrecognized compensation cost related to restricted stock and RSUs, all of which will be recognized through March 2025.

The following table summarizes the activity related to the Company's restricted stock and RSUs for the six months ended June 30, 2021.


	Number of RSUs	Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2021	23,686	$	2.59
Changes during the period:
Shares granted	1,627,038	0.78
Shares vested	(181)	35.30
Shares forfeited	(63,530)	0.82
Non-vested balance at June 30, 2021	1,587,013	$	0.80